Q1 2024 Summary
Published Feb 4, 2025, 8:51 PM UTC- Pinterest exceeded guidance with Q1 revenue of $740 million, growing 23% year-over-year, driven by multiple growth drivers, including accelerated user engagement, successful monetization of lower-funnel advertising, and emerging contributions from third-party partnerships like Amazon Ads and Google Ads Manager, indicating sustained momentum in the business.
- Advertisers are shifting budgets towards Pinterest's performance ad solutions, moving from experimental budgets to always-on performance budgets, due to enhanced personalization and relevance powered by Pinterest's investments in AI and unique user data, which supports continued growth in advertiser demand and revenue.
- Significant future growth potential exists as Pinterest expands its lower-funnel tools and measurement solutions internationally, with opportunities for value capture still ahead as adoption among advertisers increases, suggesting room for continued revenue growth as these initiatives mature globally.
- Pinterest may face challenges due to tougher comparables in the second half of the year and uncertainties from the deprecation of cookies on Chrome through this year and into early 2025, which could impact measurement and targeting capabilities for advertisers.
- Currency headwinds impacted revenue growth in international markets in Q1, and could continue to affect international revenue growth if exchange rates are unfavorable, potentially dampening overall growth.
- Increased investments in R&D and sales and marketing, particularly in AI and lower funnel capabilities, may lead to higher expenses and result in more modest margin expansion in the second half of 2024, potentially impacting profitability.
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Revenue Acceleration and Guidance
Q: What drove the stronger-than-expected revenue this quarter?
A: The revenue acceleration was broad-based, with strength across multiple initiatives. We saw the best product-market fit in years, growing Monthly Active Users (MAUs) and deepening engagement. Our shopping ads and direct links value capture contributed significantly, doubling the number of clicks to advertisers year-over-year, and particularly strong performance in the U.S. retail sector where we're taking share and penetrating performance budgets. -
Advertiser Budget Capture and Tools Adoption
Q: How is adoption of new tools affecting advertiser performance budgets?
A: We've now achieved 97% adoption of direct links among our lower funnel revenue, and our conversion API covers 40% of revenue. There's a lag effect as advertisers integrate our measurement tools and update their models, but we're starting to see budget shifts, with some advertisers now allocating 5% or more of their total budget to us. Upcoming launches like Dynamic Creative Optimization and ROAS bidding will further enhance our automation suite, compounding benefits for advertisers. -
Competitive Positioning and AI Investments
Q: How are you positioning competitively amid investments in shopability and AI?
A: Over the past seven quarters, we've demonstrably improved our competitive positioning. We've grown users across every geography and deepened engagement by enhancing actionability through AI advancements and our unique user signals. Our platform benefits from the human curation of interests, allowing us to deliver more relevant recommendations. This creates a distinct space separate from social media, offering users a lean-forward commercial intent experience. -
Growth in Advertiser Count and Auction Density
Q: How is progress in shopability translating to advertiser growth and auction density?
A: Our growth is most pronounced in the lower funnel, particularly in U.S. retail among the largest, most sophisticated advertisers. As more retailers adopt privacy-safe measurement, we're seeing broader adoption. While we're less SMB-centric, improvements in shopability benefit a broad range of retailers. Third-party partnerships complement our first-party demand, increasing auction density and enhancing shopability for users. -
Third-Party Partnerships Expansion
Q: Do you plan to add more partners beyond Amazon and Google?
A: We're just getting started with our third-party partnerships. While our current partners are significant, we're exploring opportunities to expand existing partnerships into multiple geographies and are continuously evaluating additional partners to fill gaps in our auction. This approach enhances relevancy and shopability for users while complementing our strong first-party business. -
International Growth and Third-Party Impact
Q: How are U.S. drivers unique, and is there more international growth ahead?
A: While U.S. revenue accelerated this quarter, we see significant opportunities internationally. Shopping improvements that started in the U.S. are now being expanded internationally, contributing to accelerated user growth in every geography. The Google third-party partnership is just beginning and wasn't a contributor this quarter, indicating more potential ahead. Despite currency headwinds, on a constant currency basis, Europe and Rest of World growth was the same or stronger than in Q4. -
Marketing Conversations and Competitive Landscape
Q: How are marketer conversations changing in your favor?
A: Our unique use case with strong commercial intent is resonating with marketers. We're delivering more performance for advertisers, who are now shifting budgets to us and moving Pinterest into always-on performance budgets rather than experimental areas. Our investments in AI and the unique signals from our platform enable us to deliver highly relevant recommendations, further strengthening our competitive position.