Founded in 2010 in San Francisco, Pinterest is a technology company with 450 million monthly users. The platform allows people to discover, organize, and share ideas for everything from daily activities and hobbies to major projects and events. Let’s take a closer look.
The site supports users in organizing and sharing images related to daily activities like cooking or outfit planning, major projects like home remodeling or marathon training, ongoing interests such as gardening or fashion, and significant events like weddings or vacations. Users can curate collections of photos centered around these themes and more, utilizing the platform’s features to create personalized and organized boards.
Pinterest Explore – Daily Explore
Pinterest offers a variety of features for users to explore and interact with visual content. The platform’s Home Feed provides personalized Pins, boards, creators, and brands. Users can discover content by typing queries in the search bar or by using the visual search function to select specific objects within images, such as a pair of shoes in a street fashion scene.
Pinterest Home Feed
The Pinterest Lens camera feature allows users to upload images and search for visually similar Pins that may also be shoppable. This experience is enhanced by computer vision technology, which identifies objects and attributes within scenes, and a catalog of shoppable inventory. Additionally, Pinterest provides organizing and planning tools, enabling users to curate content by saving Pins to boards and sections for easy access later.
Pinterest Explore – Shopping Spotlight
In April 2023, Pinterest announced partnership with Amazon to bring third-party ad demand to the platform. This collaboration aims to boost advertiser performance and user engagement by connecting users with high commercial intent to a broader range of products by enhancing shoppable content and providing a seamless on-Amazon buying experience
Based on 2022 revenue, Pinterest holds a small market share in the digital advertising industry, with a global share of 0.5%, representing 0.9% in the US and Canada, 0.4% in Europe, and 0.1% in the Rest of the World. Despite this, there is a significant ~$550 billion opportunity in digital advertising, particularly as the lower funnel monetizes more effectively and core geographies remain under-penetrated. Over the next 3-5 years, Pinterest aims to accelerate growth and profitability, targeting a mid-to-high teens CAGR for revenue and an EBITDA margin in the low 30s. The platform’s visual discovery experience, positioned at the intersection of social media, search, and commerce, attracts millennial and Gen Z users.
Pinterest – Investor Presentation
During Q1 2024, Pinterest reported a 23% year-over-year increase in revenue, reaching $740 million. Europe experienced the highest growth with a 27% rise to $118 million. The Rest of World followed with a 25% increase to $30 million, while revenue from the US and Canada grew by 22% year-over-year to $592 million.
Pinterest – Investor Presentation
Global Monthly Active Users (MAUs) increased by 12% to 518 million. The Rest of the World saw a 16% year-over-year rise to 279 million MAUs. Europe experienced a 10% increase to 140 million MAUs, while the US and Canada saw a slight increase of 3% to 98 million MAUs. Company’s engagement also growths faster than user growth with 10% in Q3’22 to 14% in Q2’23.
Pinterest – Investor Presentation
Average revenue per user rose by 10% year-over-year. The US and Canada were the primary sources of revenue, with $6.05 per user. Europe saw a 17% year-over-year increase, representing $0.86 per user, while the Rest of the World accounted for $0.11 per user.
Pinterest – Investor Presentation
Pinterest reported a GAAP net loss of $25 million for the quarter, with an adjusted EBITDA of $113 million while total costs and expenses were $794 million. CEO Bill Ready noted that this quarter was a milestone for Pinterest, surpassing half a billion monthly active users and experiencing the fastest revenue growth since 2021. Investments in AI and shoppability have enhanced advertiser returns and expanded access to performance budgets.
Pinterest – Investor Presentation
Substantially all revenue is generated from advertising and failure to attract new advertisers, loss of existing advertisers, or a reduction in its spending could negatively impact Pinterest’s financial results. The growth strategy involves attracting more advertisers, including expanding sales efforts to international markets, scaling business with existing advertisers, and expanding advertising product offerings. The company also faces strong competition from other social media platforms like TikTok, Instagram, Snapchat, and Twitter, all of which offer visual content and ideas to their users.
Pinterest’s valuation is projected to be high for 2024, with a P/E ratio of 101x, reflecting expectations of higher margins and strong cash flow generation. The company’s success hinges on its ability to deliver targeted and relevant advertisements to consumers. Developing shopping tools and streamlining the checkout process will also be crucial for future growth and international expansion, particularly in Europe and the rest of the world, and for increasing revenue per user.
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