Pinterest: User Growth and Monetization

Here's our initial take on Pinterest's (NYSE: PINS) financial report.

Key Metrics

Pinterest's Growth Surprises Investors

Pinterest's adjusted earnings per share came in a bit light for the fourth quarter, but it's tough to find much else to be disappointed about. Revenue handily beat expectations, and monthly active users (MAUs) increased far more than expected to 553 million.

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Monetization looks rather strong, especially in the crucial international markets, which comprise more than 80% of Pinterest's entire user base. Year-over-year revenue growth was 16% in the U.S. and Canada (where monetization is already quite strong) but was 21% in Europe and 44% in the rest of the world. Not only is the user base growing fastest outside the U.S., but the average Pinterest user outside of the U.S., Canada, and Europe also generates 24% more revenue than a year ago.

Furthermore, expenses as a percentage of revenue declined, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margins expanded by 320 basis points.

Last but not least, Pinterest's first-quarter guidance was strong. The company expects revenue in the range of $837 million to $852 million ($844.5 million at the midpoint), and even at the low end of this range, it's more than the $832.77 million analysts were looking for.

Immediate Market Reaction

Even though the bottom-line number was technically a miss, investors are thrilled to see Pinterest's growth exceeding expectations. As of 4:45 p.m. ET on Thursday, Pinterest was up by about 16% in after-hours trading.

It's worth noting that this reaction comes before management's conference call. The press release specifically stated that further details on the company's outlook would be provided there. Plus, the company's letter to shareholders had not yet been published. Either of these events could move the stock.

What to Watch

Pinterest's first-quarter guidance is certainly a pleasant surprise for investors and is a big driving force behind the post-earnings move. However, there are a few specific things to watch as 2025 continues.

User growth is a big one. Pinterest's user base actually declined for a while after the initial COVID-19 reopening but has returned to growth in a big way, so it will be important for that to continue. Monetization of the user base -- especially international -- could make or break the company's profits this year. After all, there are three times as many "rest of the world" users as there are in the U.S. and Canada, and the average person in this area accounts for just 2% as much revenue as the typical U.S. Pinterest user today.

Helpful Resources

• Full earnings report
• Investor relations page

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Matt Frankel has positions in Pinterest. The Motley Fool has positions in and recommends Pinterest. The Motley Fool has a disclosure policy.