Q2 2024 Summary
Published Feb 4, 2025, 8:51 PM UTC- Pinterest has more than doubled the number of clicks to advertisers year-over-year for the third straight quarter, indicating strong user engagement and effectiveness of ads. This has led to increased ad spending from large, sophisticated advertisers, particularly in the retail vertical, and is now beginning to attract the next tier of advertisers.
- The company's investments in lower funnel ad solutions and measurement tools, including the upcoming Performance Plus suite, are expected to drive further revenue growth by making it easier for advertisers to create and optimize campaigns and measure performance. Early testers of Performance Plus have seen significant improvements, such as Timberland achieving a 34% lower cost per action, 16% higher click-through rate, and 50% higher return on ad spend compared to traditional campaigns.
- International growth is accelerating, with Rest of World revenue growing 36% on a constant currency basis, driven by third-party demand partnerships and reseller relationships that are monetizing previously unmonetized or under-monetized markets. This expansion provides a new source of revenue growth for the company.
- Pinterest expects revenue growth to decelerate in Q3 2024 to 16%-18%, down from 21% in Q2 2024, due to tougher comparables and ongoing softness in certain advertising categories like food and beverage.
- Despite significant product improvements, user growth in the U.S. remains relatively flat, raising concerns about the ability to expand the user base in mature markets.
- The increase in third-party ad impressions and expansion into lower monetized international markets is leading to a decline in average ad pricing (eCPM), which may pressure overall revenue growth.
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Growth Deceleration
Q: What's causing growth deceleration in Q3 guidance?
A: Julia Donnelly explained that the 16% to 18% Q3 revenue growth guidance reflects continuity of growth factors from previous quarters (see ). Excluding a 1-point FX headwind, growth would have been 1% higher (see ). The underlying growth rate remains stable despite tougher comparisons and softness in the food and beverage sector (see ). -
User Engagement Trends
Q: How are user engagement trends evolving?
A: William Ready highlighted that engagement is a real highlight, with 12% user growth and deeper engagement per user (see ). Users are generating more clicks and conversions, indicating they're finding what they're looking for (see ). Julia Donnelly noted that outbound clicks are becoming a more meaningful part of user behavior, signaling healthier platform evolution (see ). -
Competitive Positioning
Q: How is competitive positioning affecting advertiser demand?
A: William Ready stated that the ad market is relatively stable, with strength in retail due to lower-funnel improvements (see ). They're winning more performance budgets, especially with large retailers, and see strength in technology, autos, and financial services sectors (see ). -
Ad Products Adoption
Q: What's the progress on ad products like direct links and Performance Plus?
A: William Ready shared they've more than doubled clicks for the third straight quarter, with large advertisers responding quickly (see ). Performance Plus is well-received, simplifying campaign creation and optimization, leading to improvements like 10%+ cost reduction and 34% lower CPA for advertisers like Timberland (see ). -
Third-Party Partnerships
Q: How long is the ramp for partnerships like Google and Amazon?
A: William Ready mentioned they're early in 3P partnerships, with Amazon ramping nicely and Google starting to contribute (see ). Julia Donnelly added that Rest of World revenue accelerated to 36% constant currency growth, up from 26% in the prior quarter, primarily driven by these partnerships (see ). -
U.S. User Growth
Q: Why isn't U.S. user growth accelerating despite improvements?
A: William Ready explained that in mature markets like the U.S., the focus is on deepening user engagement rather than mere user growth (see ). They're seeing encouraging signs in engagement per user and are growing across every demographic and geography (see ). -
Value Creation vs. Capture
Q: Where's the biggest opportunity to close the value gap?
A: William Ready identified measurement as a key focus, integrating with third-party tools and clean rooms to help advertisers see and capture value (see ). Performance Plus aids in campaign creation and optimization, making it easier for advertisers to adopt and shift budgets (see ). -
Lower eCPMs from 3P
Q: Are lower eCPMs from third parties expected?
A: Julia Donnelly confirmed that lower eCPMs in Rest of World markets are in line with expectations (see ). As partnerships ramp up and auction density increases, eCPMs are expected to rise over time (see ).