Pinterest’s Q2 2024 earnings release shows strong revenue and user growth against management’s expectations, but rising costs and competition warrant attention.
Key Points
- Q2 2024 revenue was $854 million, exceeding the upper end of management’s guidance of $850 million.
- Monthly active users (MAUs) grew 12% year-over-year to 522 million.
- Adjusted EBITDA increased by 68% from the previous year, reaching $180 million.
Visual discovery platform Pinterest (PINS -2.22%) released its Q2 2024 earnings on July 30. The company reported revenue of $854 million, surpassing management’s guidance of $835 million to $850 million. This represents a 21% year-over-year increase, outpacing expectations of 18-20% growth. The company also disclosed significant user growth, with MAUs increasing by 12% to 522 million. However, rising operational costs pose a challenge. In general, this quarter illustrates robust engagement and effective monetization strategies in a competitive market.
| Metric | Current Period | Management’s Expectation | Prior Year Period | % Change from Prior Year |
|---|---|---|---|---|
| Revenue | $854 million | $835 million to $850 million | $708 million | 21% |
| Net Income (GAAP) | $9 million | – | -$35 million | 125% |
| Adjusted EBITDA | $180 million | – | $107 million | 68% |
| Global MAUs | 522 million | – | 465 million | 12% |
| Global ARPU | $1.64 | – | $1.53 | 8% |
| Source: Expectations based on management’s guidance, as provided in the 2024-04-30 earnings report. |
Company Overview and Recent Focus
Pinterest is a visual discovery engine that enables users to find inspiration for various life aspects. Recent focuses have been on user engagement, monetization strategies, and AI-powered product rollouts. The company’s success hinges on increasing MAUs, enhancing advertising revenue, and leveraging AI for better targeting and user experience.
Pinterest’s primary business model revolves around ad revenue. The company has been expanding ad formats and AI capabilities significantly. Key metrics for Pinterest’s success include MAUs, ARPU, and the effectiveness of AI-focused ad products.
Quarterly Highlights
During the quarter, Pinterest posted strong revenue growth with Q2 2024 revenue at $854 million, 21% higher than the previous year’s $708 million. The growth is attributed to efficient monetization and increased user engagement. North America, particularly the U.S. and Canada, accounted for $673 million of this revenue, showing a 19% year-over-year increase.
Net income turned positive, posting a $9 million gain compared to a $35 million loss in the same period last year. Adjusted EBITDA saw a 68% increase to $180 million. The company noted improvements in ARPU, increasing from $1.53 to $1.64 globally.
From a user standpoint, Pinterest achieved 12% MAU growth, bringing the total to 522 million. The geographic breakdown showed that the Rest of World segment saw the highest growth rate at 32%, consistent with the company’s efforts to boost international expansion.
Despite revenue growth, operating expenses increased to $875 million, up from $781 million a year ago. Investments were made into research and development (+16%), sales and marketing (+9%), and general and administrative expenses (+12%). It suggests higher costs associated with innovation and user acquisition strategies.
CEO Bill Ready emphasized AI as a pivotal area, stating, “Advertisers are seeing improved performance across key objectives on Pinterest—from brand awareness to conversion—as we continue to roll out AI-powered products and experiences.” These advancements helped Pinterest’s ad products yield better ROI for advertisers, driving higher ad budgets.
Looking Ahead
For Q3 2024, Pinterest projects revenue between $885 million and $900 million, representing a 16-18% year-over-year growth. Non-GAAP operating expenses are forecasted to range from $485 million to $500 million, signifying a 17-20% increase. The focus remains on user engagement, effective monetization, and technological investments.
Investors should monitor Pinterest’s cost management closely. Rising expenses, particularly in R&D and marketing, could impact margins. Additionally, growth in international MAUs and ARPU will be critical factors in sustaining revenue growth. Continuing advancements in AI will remain a focal point, necessary for maintaining a competitive edge and maximizing ad revenue.
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