PINS Q2 2025: Performance Plus Doubles Lower-Funnel Ad Revenue
- AI and Innovation-Driven Growth: Pinterest’s enhanced AI capabilities—such as its proprietary multimodal visual search that is 30% more effective than off‐the-shelf models—and the strong adoption of Performance Plus (with lower funnel revenue doubling since last year) are key drivers that boost ad performance and user engagement.
- Expanding, Engaged User Base: With over 50% of MAUs coming from Gen Z and a growing trend of users leveraging Pinterest as a search engine, the platform’s ability to drive actionable, intent-based experiences across demographics supports long‑term revenue growth.
- International Expansion and Strategic Partnerships: The narrowing ARPU gap in international markets and the new Instacart partnership—which integrates shoppable food and beverage experiences—open fresh monetization channels and provide additional growth opportunities in underpenetrated regions.
- Reliance on long-term, compounded growth rather than immediate accelerative gains: Management repeatedly emphasized that revenue growth from AI and performance initiatives will compound over time without any “hockey-stick” or step‐function acceleration. This dependence on long-cycle improvements could be seen as a risk if near-term growth falls short of expectations.
- Macroeconomic and geographic volatility affecting ad pricing and spending: The discussion highlighted headwinds such as tariff impacts in the U.S., with some Asia‐based e-commerce retailers pulling back spend. Additionally, increased reliance on under-monetized international markets is contributing to a 25% decline in ad pricing YOY, which could pressure future revenue growth.
- Intense competition for AI and technical talent: Q&A responses noted that while PINS competes on factors like mission and sandbox quality, the highly competitive market for AI talent poses a risk to sustaining technological leadership and innovation, which is critical for continued performance improvements.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Guidance | Q3 2025 | no prior guidance [N/A] | $1,033,000,000 to $1,053,000,000; represents 15% to 17% growth year over year; FX tailwind of 1 point | no prior guidance |
Adjusted EBITDA Guidance | Q3 2025 | no prior guidance [N/A] | $282,000,000 to $302,000,000 | no prior guidance |
Non-GAAP Cost of Revenue Leverage | Q3 2025 | no prior guidance [N/A] | Anticipated year-over-year leverage to be approximately half of what was delivered in Q2 2025 | no prior guidance |
Investment Priorities | Q3 2025 | no prior guidance [N/A] | Continued focus on headcount growth within R&D to support efforts in AI, product initiatives, and global enterprise sales | no prior guidance |
Adjusted EBITDA Margin Expansion | FY 2025 | no prior guidance [N/A] | Expected to deliver margin expansion for full year 2025, albeit at a lower level compared to the elevated expansion in 2024 | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
AI and Innovation-driven Advertising Tools | Q4 2024 emphasized AI integration via the Taste Graph, machine learning investments, and Gen AI implementations ; Q3 2024 highlighted AI as a core competency with prediction models and LLM fine-tuning | Q2 2025 focused on advanced AI for personalization (e.g., creative preview), enhancing ad tech, and a new instacart partnership to drive shoppable experiences | Increasing depth with more actionable features and strategic partnerships, indicating a shift toward more integrated and revenue-driving AI capabilities |
Performance Plus & Lower-Funnel Ad Products | Q3 2024 discussed the launch, beta results (reduced inputs, CPA improvements, and emerging ROAS bidding), while Q4 2024 reiterated early adoption and multiyear product cycles | Q2 2025 reported expanded adoption among mid-market and small businesses with lower-funnel revenue more than doubling and a continued focus on bidding, targeting, and creative tools | Sustained momentum with expanding advertiser adoption and efficiency gains, reinforcing a long-term, compounding growth strategy |
User Base Expansion & Gen Z Engagement | Q3 2024 noted 537M MAUs with rising Gen Z shopping and engagement trends ; Q4 2024 highlighted a record 553M MAUs and strong Gen Z engagement (fastest-growing audience) | Q2 2025 reported 578M MAUs with Gen Z making up over 50% of active users, and continued growth across all regions | Consistent and strong growth with deeper engagement among younger demographics, underscoring the platform’s appeal and long-term user momentum |
International Expansion, Strategic Partnerships & Geographic Volatility | Q3 2024 described international expansion via reseller networks and partnerships with Amazon/Google, with moderate regional volatility ; Q4 2024 focused on scaled international monetization and FX headwinds | Q2 2025 showcased strong international growth (Europe +34%, Rest of World +65%), introduced the instacart partnership, and noted some tariff-related impacts offset by geographic diversification | Enhanced focus on international markets with new strategic alliances and diversified revenue sources, while managing regional macro challenges |
Revenue Growth Dynamics (Long-Term Compounding vs Immediate Acceleration) | Q3 2024 stressed multi-quarter adoption cycles and lower-funnel compounding effects ; Q4 2024 reiterated that product innovations are driving multiyear compounding growth | Q2 2025 reaffirmed a long-term compounding growth approach, emphasizing steady, transformational progress rather than sudden acceleration | Consistent long-term growth strategy with sustained innovation, maintaining a measured yet optimistic outlook |
Food & Beverage Advertising | Q3 2024 reported softness in the food and beverage subsector due to broader industry headwinds ; Q4 2024 acknowledged softness but noted early hints of recovery (green shoots) | Q2 2025 did not explicitly mention softness; instead, a strategic instacart partnership was highlighted, implying proactive steps to enhance shoppability in this category | A shift from noting headwinds to actively addressing the category through new partnerships suggests potential recovery and a more optimistic future outlook |
Macroeconomic Impacts & Declining Ad Pricing | Q3 2024 reported a 17% decline in ad pricing amid a mix shift; Q4 2024 noted an 18% decline associated with international monetization efforts | Q2 2025 disclosed a sharper 25% ad pricing decline but coupled with a 55% increase in ad impressions and ongoing tariff-related impacts in U.S./Canada | Worsened pricing pressures are evident, though higher impression volumes partly offset challenges; macro uncertainties remain a key risk factor |
Intense Competition for AI & Technical Talent | Not mentioned in Q3 or Q4 [N/A] | Q2 2025 acknowledged intense competition for AI and technical talent while expressing confidence in attracting top talent due to compelling AI initiatives | An emerging topic in Q2 2025 with a positive sentiment that underscores a competitive talent landscape critical for future innovation |
Shift from Privacy-Resilient Measurement & Traditional Third-Party Partnerships | Q3 2024 highlighted enhanced privacy-resilient measurement (CAPI, clean rooms) and evolving third-party partnerships with Amazon and Google ; Q4 2024 emphasized shifting from traditional third-party reliance toward stronger first-party demand complemented by third-party support | Q2 2025 did not mention this topic explicitly | The reduced focus in Q2 2025 suggests the topic may have been integrated into broader strategic discussions or deprioritized as other initiatives gained prominence |
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Margin & Instacart
Q: Margin expansion and Instacart details?
A: Management explained that adjusted EBITDA margins will continue to expand, albeit at a more moderate pace in the second half as they invest in R&D and sales teams. They also described the new Instacart partnership as a way to make food and beverage ads more actionable by linking recipes directly to shopping, enhancing the seamless purchase experience. -
Ad Growth Outlook
Q: Can ad revenue accelerate further?
A: Leaders emphasized that Pinterest’s ad revenue is set to compound over time. Despite no sudden “hockey stick” growth, their multi-quarter initiatives—including Performance Plus and international expansion—are expected to drive above-market performance steadily. -
Macro Ad Demand
Q: How does the ad environment look?
A: Management noted a surprisingly constructive digital ad environment even in volatile macro conditions, with strong demand from retail and financial services supporting consistent revenue outperformance. -
Performance Plus
Q: Is Performance Plus gaining traction?
A: They reported robust early adoption of Performance Plus, with lower funnel revenue from these campaigns having more than doubled as they extended features like ROAS bidding and creative preview—highlighting a slow but steady multi-year growth cycle. -
International Monetization
Q: What’s driving international revenue growth?
A: Management highlighted that international markets, especially Europe and the Rest of World, are showing strong gains driven by retail initiatives and diversified sales channels, gradually narrowing the monetization gap with more mature regions. -
Agentic AI Investment
Q: When will agentic AI benefits materialize?
A: They stressed that investments in AI are part of a long-term, compounding strategy, where benefits will roll out incrementally rather than as a sudden leap forward. -
Visual Search Impact
Q: How is visual search boosting engagement?
A: Executives pointed out that their new visual search tool, which is 30% more accurate than off-the-shelf alternatives, is enhancing user engagement, with steady, seasonally influenced growth in monthly active users strengthening the overall user journey. -
User Trends
Q: What about Gen Z and search usage?
A: Management underscored that over 50% of MAUs are now Gen Z, and many are increasingly using Pinterest as a search engine because of its visually rich and personalized recommendation experience. -
Male User & Auction
Q: Are men and auction dynamics improving?
A: They noted rising appeal among male users and highlighted that enhanced visual relevance and engaging auction mechanics are driving stronger, durable performance across all demographic groups. -
AI Talent Competition
Q: How does Pinterest attract AI talent?
A: Leadership mentioned that a combination of competitive pay, a compelling mission centered on positive AI use, and access to a unique, 600+ million user platform helps them secure top AI talent for ongoing innovation.
Research analysts covering PINTEREST.