Pinterest shared its latest performance update, showing a strong increase in active users in Q1 2024 and steady year-over-year revenue growth.
However, app costs are also rising and quarterly results aren't as strong. Here are the highlights from Pinterest's Q1 update:
First, on the user front, Pinterest's monthly active users have grown from 498 million in the fourth quarter to 518 million today.
The growth momentum here is impressive, and the only downside, as is the case with almost all social apps right now, is that the majority of Pinterest's growth is coming from lower-revenue markets.
As you can see from the chart above, Pinterest added 13 million active users in the rest of the world, but growth in the US was modest and EU users increased by 5 million over the same period.
This is especially evident when you look at this graph.
Pinterest derives the majority of its revenue from the US, so ideally it would like to see this market share grow, with Europe coming in second by a much larger margin. Growth in other regions bodes well for future opportunities, but for now this revenue growth is a bit misleading in terms of driving immediate value to the business.
This is reflected in the revenue data.
As you can see, Pinterest made $740 million in revenue during the quarter, but only a small portion of that came from outside the U.S. and Europe, and that percentage has been declining quarter over quarter.
The bright spot is Europe, which has seen a relative increase in revenues and positive year-over-year figures, but the slowdown in revenue growth is notable.
Because there's also this:
Pinterest's costs are rising, with quarterly sales and marketing up 12% year over year. If this money is spent well, it could boost future potential. However, Pinterest's recent ad campaigns, which were clearly expensive, didn't justify the investment.
Still, Pinterest CEO Bill Ready said the platform saw its fastest quarterly growth in users and revenue since 2021, and he credited the growth to continued development efforts.
“Our investments in AI and shoppability are driving even greater revenue for advertisers and giving them more access to performance budgets. We're executing with great clarity and focus, releasing new products and experiences that users want, and in doing so we're finding the best product-market fit we've seen in years.”
But I mean, it's his job to be the cheerleader for earnings calls, and I don't see much to get excited about in these numbers.
But from a consumer and advertiser perspective, more users means more opportunity, and Pinterest definitely has the potential to reach a large target audience. A large portion of Pinterest users come to the app for shopping purposes, and new innovations like body type matching in search results give users even more ways to find what they're looking for within the app.
Add to this the evolving advertising options and you can clearly see the potential there.
However, I'm not sure market analysts will be as excited about the overall numbers this time around.
