Pinterest (PINS) Analysis and Q4 2020 results

I’ve decided to do a deep-dive into Pinterest after it came on my radar due to the bullish comments of nilvest and others. I start with the founders, then the historical numbers and then look a bit more deeply into the Feb 4 Q4 2020 conf call and the March 2 investor conference with the CFO.

Q4 PR:…
Q4 prezzo:…
Q4 Letter to shareholders:…

KEY WRITE UPS Bullish comments from AnalogKid on Q4 results and additional context and numbers from nilvest in the thread.… Bullish comments from junomean2. And nilvest’s concise and very bullish comments in the thread, 76321.

→ Nilvest very nicely summarises the investment thesis; I really recommend reading his thoughts.


Ben Silberman
Yale graduate with degree in political science. Founded Pinterest in 2010 after working in Google’s online ad group. Married with two children and lives in SF. Owns about 8.3% of the outstanding shares and has about 24.8% voting rights.

Evan Sharp
University of Chicago graduate with degree in history. Co-founded Pinterest in 2010 and worked at Facebook. Married and lives in SF. Leads the product and design teams. Owns 1.6% of the outstanding shares and has 4.8% voting rights.

How it started and how Ben and Evan met:…

Other execs:
Head of engineering is the ex CTO of Walmart; CFO is ex VP of Finance for Twitter; CMO is ex Gap Inc. and IDEO.…

→ Looks good to me: founder-led, lots of skin in the game, lots of passion. I really liked this quote about their culture from the CEO:

“I would say that the culture really values diversity of all forms. Diversity certainly of skillsets. We have people that went to college and people that didn’t go to college. People that studied engineering and people that studied design. It’s one thing to recruit people from lots of different backgrounds; it’s another thing to create a culture where all of those different skillsets can actually be knit together and can work towards a common good.”

I also like how he answered a question about Privacy (and this was back in 2018) in the Businessinsider interview above:

“Unlike a lot of services where advertising is kind of bolted on, on Pinterest there is a very, very close alignment between what people are there to do, which is get ideas, and what the advertisers are there to help them do, which is to get ideas. That basic alignment is really important. If I’m using Pinterest to redecorate my home, I actually want advertisements from furniture providers or from a paint provider because I can use those to make my home better. That alignment, I think, makes a lot of the conversation and expectation setting with users a lot easier because people can see why there’s an exchange in value between advertisers and Pinterest and between the users and the advertisers. That’s something that’s important for us to preserve over time.”


Rev $m	Q1	Q2	Q3	Q4
2018	131	161	190	273
2019	202	261	280	400
2020	272	272	443	706

2018		23%	18%	44%
2019	-26%	29%	7%	43%
2020	-32%	0%	**63%	59%**

2019	54%	62%	47%	47%
2020	35%	4%	58%	77%

Revenue growth took a big hit in Q1 and Q2 of last year, as advertisers panicked and cut ad budgets at the start of the pandemic, but exploded towards the end of the year as ad budgets came back and the number of advertisers increased. Q4 came in at a huge 77% yoy growth. Looks like proper acceleration, although Q4 was boosted by an extended holiday season.


GP %	Q1	Q2	Q3	Q4
2018	61%	64%	67%	75%
2019	64%	70%	71%	76%
2020	64%	61%	75%	82%

2018	-34%	-20%	-7%	19%
2019	-18%	-10%	1%	19%
2020	-19%	-13%	21%	42%

Both GP and EBITDA margins showing improvements over time. The business is quite seasonal, but looking over the last 3 years, GP% has inched up very nicely improving yoy for the same quarter of the year in both prior years. GP% increased from low 60%’s to around 80%. So GP% is excellent.

EBITDA% has shown increasing operating leverage, increasing by more than 20%pts in Q3 and Q4 of last year vs the same quarter in 2019. If that theme persists in Q1 of 2021, then EBITDA% could be positive for Q1, which is seasonally their weakest, which would be a big inflection point.


MaU m	Q1	Q2	Q3	Q4
2018	239	231	251	265
2019	291	300	322	335
2020	367	416	442	459

QoQ m				
2018		-8	20	14
2019	26	9	22	13
2020	32	49	26	17

QoQ %				
2018		-3%	9%	6%
2019	10%	3%	7%	4%
2020	10%	13%	6%	4%

2019	22%	30%	28%	26%
2020	26%	39%	37%	37%

MaU growth was extremely impressive - they added 124m MaU’s in 2020 vs 70m in 2019. A very large part of the customer base and growth is from outside of the US and is still relatively un-monetised. 369m MaU’s are outside of the US (+46% yoy) and International currently generates only 17% of revenue (13% prior year); 98m MaU’s inside the US (+11% yoy) and the US generated 83% of revenue.


ARPU	Q1	Q2	Q3	Q4
2018		0.69	0.79	1.06
2019	0.73	0.88	0.90	1.22
2020	0.77	0.69	1.03	1.57

ARPU Expansion is basically my key investment thesis. They have 450m MaU’s of which the US based ones - 98m have an ARPU of $5.94 ($4 in prior year Q: 48% up) and 369m have an ARPU of $0.35 ($0.21 in prior year Q: 67% up!!). In their shareholders letter they state: “International ARPU remains in the early stages, as we have only begun to execute on our strategy to provide ads that are useful and inspiring to our users in regions outside of the U.S.“

They seem to have a good strategy for monetising their huge base - a staggering 27% of which they acquired in 2020 - and they have secular tailwinds as advertisers look for safer places for their brands and ad budgets get expanded once the economy reopens. The Q4 conf call gives a good feel for their plans, which to me look very robust.



Mission: bring everyone the inspiration to create a life they love.

→ very much in tune with the zeitgeist; people remodelling houses, wanting to focusing on positives


“Unlike other services, where ads are sometimes seen as a distraction, ads on Pinterest can actually enhance the user experience because people come there with the intent to buy things for projects like remodelling a home or buying a new outfit. And relevant ads for businesses help them discover what they want.”

4 Priorities:

  1. Inspiring content - video/storytelling?
  2. Deepening Pinner experience - shopping tools, AR, collaboration, Story Pins, content safety?
  3. Helping advertisers succeed - automation, goals, scaling our sales team significantly, insights?
  4. Shopping - we introduced new features from merchants, all of which led to a 6x increase in shopping advertisers on Pinterest in Q4. Planning to expand this globally?

→ They are significantly scaling the sales team and they’re taking shopping capabilities global - shopping advertisers grew 6x in Q4! And looking at their competition they have huge scope to grow ARPU, with Facebook’s Q4 ARPU around $10 and Twitter’s $6 vs Pinterest’s $1.57


We added over 100 million monthly active users globally in 2020, that’s more than we’ve ever added in a year

International: 17% of total and grew 145% yoy
Biggest improvement & growth came from retail

→ $1.9tr stimulus probably very good for retail which has been their biggest growth area.


70%+ rev growth, Opex at similar level as Q4
We expect positive trends from our investments in add tools like shopping and automation, and sales coverage expansion to continue. We plan to expand our international coverage further in existing geographies, and also expand monetization into Latin America in the first half of the year.

→ So assuming a beat - let’s say growth at 80% - would give revenue of $490m in Q1. That’s a 31% qoq slowdown, which is similar to Q1 qoq slowdown of last year which had COVID headwinds. If the slowdown is less pronounced, like it was 2 years ago (26%) then we could be looking at $520m and 91% yoy growth. I’m thinking it will be something like that or even better. With Opex at similar levels - $280m - and assuming same GP% of 82%, that would give EBITDA of $146m/28% vs negative EBITDA’s in all prior Q1 periods. So this also looks good to me.


Q: Which are the key verticals driving growth in advertising? International: how are the return of lockdowns impacting Pinterest?
A: I’d start with really the retail vertical like I called out in the opening remarks. We had a longer holiday shopping season this year than we’ve seen historically. And that built around seasonal moments tended to coincide with a big return of demand in retail.
The COVID environment impacts our user growth and impacts engagement trends and then it impacts the ad market. What I would say is that we saw a great strength in international markets. As we mentioned, we’ve grown – we grew in the fourth quarter 145% year-over-year, which was remarkable performance and coming on the back of scaling those teams and putting in place a great playbook. And as you referenced as markets open and close, that impacts demand to some extent, but we were able to navigate through that to still post remarkable growth in the fourth quarter.

Q: Can you just sort of lay out for us what you see as some of the key investments you need to keep making it 2021 and 2022 and beyond?
A: Let me just start by saying, we have a long roadmap ahead of us on both the consumer side and as well as on the advertising side.
Consumer side: we’re going to continue to innovate on the form in which people get inspiration: invest in video, enable traders to publish directly, making the platform more useful and finally shopping: the bridge between inspiration and action. For merchants: catalog upload, storefronts.
Advertiser side:
So in 2020, we introduced a lot of tools to support a diversified advertiser base, really focused on making it easier for mid-market advertisers, and manage SMBs to scale their spend.
Moving into 2021, one of the big areas that we’re focused on is driving more relevant ads, and we’re going to do that by growing the number of advertisers.
On the tool front, we want to make Pinterest easier to use, easier to deploy your budgets at scale, and easier to get results. So examples of investments there, a continued investment in automation, investment in agency tools, and this is especially important internationally where agencies control a lot more of the spend. It’s the number one pain point is having a better agency tool.
On the measurement front, we want to be more accessible, comprehensive and better with our first-party insights. And last but not least, formats are important for advertisers. We’ve already talked a little bit about investment in video. And we’re also going to invest in sponsored story patents over time.

→ For me this sounds exceptionally encouraging: lots of activity to make Pinterest more appealing to pinners, grow the number of advertisers and make the platform more appealing and lower friction for advertisers. In 2020 they laid the groundwork for a diversified advertiser base incl the mid-market, and in 2021 they intend to capitalise on that by growing the number of advertisers. And to grow international even more, they want to build better agency tools, which is what that market wants.

Q: One of the concerns was the demographic. Did you see progress, like expanding demographic out of your core this year? And where do you Ben see the next half a million half a billion users coming from? And then the privacy concerns - does this cause you to maybe try to accelerate first party activity, and shopping on Pinterest versus other platforms?
A: In terms of specific segments, we saw real strength with Gen Z. So once again, people that are under 25, move faster than the overall population, we see that as a positive sign.
The next wave of growth: one obvious area continues to be international growth. While we’ve seen really, really strong growth patterns there, we still are relatively underpenetrated, relative to the number of internet users globally. The ability to publish natively on your phone, and in particular, the use of video, we think represents over the long term, a really compelling growth opportunity.
On shopping: The final thing I’ll say is that we don’t think of things like shopping as direct drivers of growth. But people want to use useful products. It’s that much better when you can go from something inspiring the scene to a product from a retailer that you trust at a price that makes sense for you. So as we begin to roll out shopping features internationally, as well as just mature those features so they’re more consistent and experiences that much better. We think over time that utility will attract more users.
On privacy: I would summarize by saying that we’re investing to address this issue in ways that we can control. So what are we investing in? I think you nailed it first party signals are important. And while we’re less mature than other platforms on this front, our roadmap in 2021 starts to chip away at the gap around converging visibility. There are headwinds as many people have been commenting on Apple’s new rules and the enforcement around those rules.

→ Very positive commentary about International growth prospects. And on shopping they don’t see it as a direct driver of growth, but more of a utility for pinners that will attract more users over time.

Q: Given the success with shopping content and advertising in Q4. I mean, it sounds like it’s still early days in the opportunity. But hoping you will provide a little more context on the growth in shoppable inventory, and maybe the rate of ingestion of listings some product catalogs. And then as a follow-up to Justin’s question on privacy, just curious, I think we all gather the fact that with direct response advertising that a search orientation has advantages relative to some of the other advertising models. And it seems like Pinterest would be in a relatively advantaged situation from that perspective. Just curious if you agree with that?
A: So just stepping back and the shopping is indeed really important. The strategy is really twofold. On one side, we want to make sure that there’s great shoppable inventory from great retailers with up to-date metadata. And then once we have an inventory, we want to be able to seamlessly move our users from inspiration, whether that’s while they’re searching, while they’re browsing, or they’re using a product that blends into their shopping experiences.
Going from Q3 to Q4, we increased the number of active catalogs by over 60%. And we also have really improved the discoverability of those products. we allowed Pinterest to pivot into that shopping mode from any search query. That’s resulted in a really significant uptick in product search. It’s grown roughly 20x in the last year. But I do still think that we’re in early days. We’re certainly in early days in terms of international rollout.
We do see shopping, advertising growing faster, as a proportion of our overall revenue growth.
Being advantaged re privacy changes: Lots of uncertainty. But what we do know about our platform is that we have a high degree of commercial intent and planning behavior. And that planning behavior drives a fair amount of on platform signal. And so relative to other platforms, offsite signal is probably less important for us, because of the intent that we’re able to capture first party on our platform. I think from a targeting perspective, we’re in an enviable position based on the use cases and the planning behavior of our user base.

→ Lots and lots of new sellers coming on board and exponential growth in product search. And they have comparative advantage wrt privacy due to clear intent on platform/first party insights of their user base vs other platforms. All great.

Q: Could you clarify a little bit around what you’re seeing with volume and pricing dynamics. And the degree to which you’re also growing the advertiser base and how much that might be contributing to auction density, and what you’re seeing on the pricing side there?
A: We’re seeing more balance these days in terms of both impression growth and pricing growth. So in the past most of our revenue if not all of our revenue growth being driven by impressions, as opposed to effective CPMs or pricing. What we’ve seen and saw in the fourth quarter and through the course of 2020, is that – there’s far more balance. And eventually pricing will start to contribute more to our revenue growth.
That’s in part due to industry-wide demand, and auction pressure, we’ve continued to grow the number of advertisers on the platform and gotten more share of wallet with our incumbent advertisers, which has been important. And the most encouraging part about this, as well, pricing is increased across objectives. we were better utilizing or becoming more efficient in delivering against the ad inventory that we have.”

→ This is great, basically they are expanding ARPU and there are multiple tailwinds to further ARPU expansion, which is I guess the basic investment thesis, namely: 1) industry growth, 2) auction pressure (Pinterest becoming more popular with advertisers), more advertisers (land = good sales execution), more share of wallet of existing advertisers (expand) and better utilisation of ad inventory. Also sounds like this only really started in Q4 so bodes well for 2021.

Q: I think we’ve talked in the past just about the degree to which you’re able to kind of have, let’s say, contracted type of spending as you look out on the year, for example, an bigger partnerships with agencies. Anything that you can add there in terms of commentary, just as you think about 2021, perhaps how that’s increase over the last couple of years?
A: I would say a couple things. One, we’re hearing really positive feedback from advertisers. We’re hearing that ads are working, they really value the brand safety of the platform. And this is the year where we are really able to deliver value around the commercial intent of our users by packaging insights. Hence the insights trend that we’ve been talking about generally is getting out in front of consumer trends to help advertisers map their campaigns to that kind of behavior. And that creates both more relevant advertising, as well as better results for the campaigns for both from a user and an advertiser perspective. That’s great. But in this COVID environment, what we’re hearing from advertisers is they’re looking for more flexibility. Long range, large commitments are fewer and far between in this environment, but we’re hearing a lot of feedback, positive feedback about wanting to spend, it’s just less contractual than it was probably in prior years.

Q: I guess, as you look into 2021, can you just sort of talk to us about the qualitative investments? So the areas that you really need to execute on, to continue to grow that advertiser count healthy throughout the course of the year, whether it’s Shopify people, whatever it takes, just curious what we should be monitoring to grow that advertiser count?
And then secondly, on the international side, can you guys give us some examples of technologies and ad products that are currently rolled to the United States that have not yet enrolled internationally that you think could help the international growth throughout the course of 2021?
A: And so we are going to continue to focus on investing in automation features, and that disproportionately benefits advertisers. So especially those midsize businesses that can kind of fill out the middle and long tail of advertising.
Related to that and actually related to your second question about what specific features we haven’t rolled out globally, fully, really comes down to things like those agency tools. So look, the number one pain point from agencies is actually only having full access options to manage business accounts versus granular permission access. So that being able to allow multiple people kind of in the agency to have access control. And that’s really important. And so, we’re looking forward to bringing that out later in the year.
And then other thing internationally that we’re doing is we’re simply going to be opening up new markets. And what’s enabling that is of hiring of sales teams in new geographies.
And then on marketing, one of the things we haven’t talked about here on today’s call, but its talked about in the past was our ambition to drive more comprehension of the product, which we think will benefit users engagement and the advertising market. Our expectation is that the deferred marketing spend that we were anticipating last year will be rolled out this year. And we’ll do that not only in the U.S., but in key international markets to help set up Latin America.

→ Extremely bullish commercial stance imo. They will continue to build automation tools so that midsized advertisers can effectively use Pinterest, roll out agency tools and improve agency tools for international markets, and then hire a ton of sales people to open up new markets and spend a ton of marketing money in all markets.

Q: First, just can you talk about how the improvements you’ve made in ad tools, like automated bidding have impacted same advertising spend - are you seeing existing advertisers scale up budget on the back of this in ways that can kind of build as adoption increases? And then second one, how do you guys think about bringing shopping activity more directly into Pinterest, similar to what we’re seeing from some other players in the space? Seems like it could help with both attribution and the changing privacy landscape.
A: We saw growth being driven by new advertisers more prominently than existing advertisers this quarter, but there was a balance in growth from both. The biggest driver of that was our expansion internationally where we were starting to see Greenfield accounts come on board. We are generating additional growth through existing accounts suggests that we’re beginning to see some of that new budget that you described, but for sure, clearing existing budget better, because by taking the manual control out of those campaigns, and making them perform better, finding more efficient places for those ads, and more efficient rates on CPAs, that we’ve seen budgets clear more effectively.

About bringing shopping more directly into Pinterest: I think maybe the question behind the question is, when is Pinterest planning to do things like make a checkout, am I thinking of holding inventory, if you’re thinking about building a marketplace. And the answer to that is we certainly recognize the friction introduced by not being able to easily check out. If you solve that there’s a big win there. But we don’t have any products yet ready to announce on that front. We still are seeing a lot of returns and a lot of work candidly ahead of us.
One is increasing inventory by increasing the number of catalogs through partnerships such as the one that we have with Shopify, and intelligently matching that inventory to inspiring season and making it really easy for Pinners to make that switch, and sort of walk in that line between making sure that Pinterest feels inspiring, but when you are ready to buy, when you’re excited about that scene or you’re excited about that outfit, it’s really easy to switch over and find where to buy it from a trustworthy retail or the price that makes sense to you. So definitely hear the spirit of the question. I’m more focused on those two priorities right now. And we’ll let the community know when we’re ready to announce something but nothing yet today.

→ Good stuff. It sounds to me like he’s saying ARPU expansion in existing customers was driven by new ad budget and by clearing existing budget more efficiently through automation, and that growth come mainly from new customers, especially international. Given that overall ARPU expanded that must mean that they generated a lot of relatively large new deals. And that they’re not ready to change Pinterest into a marketplace YET, preferring to work with partners like Shopify for now.

Q: We’re seeing basically every platform out there, really interested in creators. How should we understand why a creator comes to Pinterest versus an Instagram, a Snapchat or TikTok? What makes Pinterest unique from a creator’s perspective? And maybe someone could just talk about the roadmap for helping those creators make money on Pinterest?
A: I think that, the question is, what’s in it for a creator? I mean, it actually comes down to, what’s the heart of the difference between what people come to these platforms to do.
And so, we’re starting to bring on creators who want to be known more for the ability to teach how to do something than just shining a spotlight on what they’re doing day to day. So more on actionable content, educational content, than pure entertainment content. And as a result of that, story pins, for example, on Pinterest, they don’t disappear. Because if you’re teaching somebody how to cook that great recipe or how to do that great workout, that could be as good today, as it is in the future. And so from the creator’s perspective, you get a few things. So one is 450 million people around the world that are really excited about getting inspiration to go do something in real life.
The second is, you’re in an environment where there’s a strong search dynamic, much more similar to a video centric place like YouTube, than more social centric place where things tend to be more ephemeral. And then over time, we absolutely do want to find ways to make sure that creators can be rewarded, and the best creators can often do what’s in their future, which is maybe doing this full time. So we’re experimenting with things like sponsored story things. But we are looking at a range of different revenue models that are aligned with what the creator is there to do.
Our belief is that the same alignment in incentives between what Pinners are there to do and what advertisers are there to do, can offer new monetization opportunities between creators and advertisers as well. So as I mentioned at the top of the call, we’re still in early days. You’re right, it is a noisy environment out there. People are reading about this all the time. But we do think that we have a lot to offer. And we’re excited about the progress that we’re seeing.

→ Ok, so they are working on monetization possibilities for creators and believe there is a compelling reason for creators to choose Pinterest.

Q: The macro heading into 2021 for both Google and Facebook pointed to stable to accelerating growth in 1Q and 2Q. And I know you guys have stepped down as you get into March and April. So in the context of the low 70s it sounds like what you’re seeing thus far in January, and we’re not factoring in anything in terms of March or April in terms of an uptick. And then maybe contrast, the brand versus DR side of the business?
A: if you take a step back, I think there are three themes that are persistent. One is that the strategy is working, Ben walked through a lot of what we’re building from a technology perspective. But the goal of having an advertiser bring their budget, their goals and their content and having us automate the rest is something that we’re early in the journey to deliver. But the progress we’ve made is resonating, especially in the mid market. The second big theme that will persist is the value of insights led selling. Because of the early commercial intent of our user base and our ability to increasingly package those insights while in advanced and seasonal moments and help advertisers design campaigns. It helps us deliver more relevant advertising and also better performance. That will persist. And the third is brand safety. So, that we saw this a fair amount during the election season. But in general, the secular trend around brand safety being important to advertisers will persist. So those are three things that I’m really excited about coming out of the back half of last year that we expect to persist. What’s different about Q1, two things, one, we had a little bit easier compare, which will become more pronounced in the second quarter and then much tougher as we get into the back half of the year.
But we benefit really strongly in the retail segment from that longer holiday season. And for platform that has a lot of retail exposure, and a lot of value delivered through that insights based selling on seasonal moments. In the fourth quarter with an unusually strong and longer shopping period, we just have fewer seasonal moments in the first quarter to sell again. So all those macro themes are there. But the number of seasonal moments and the particular strength we saw in the retail segment I think much longer than usual shopping period was probably related to us.

→ Analyst basically questioning the guidance as being too conservative. CFO’s response is that all is going well strategy and business-wise and that there are easy comps vs the depressed Q1 and Q2 of last year, but that the extended shopping season of last year in Q4 was a big booster which won’t be there in Q1.

Q: If we think back on 2020 one of the big goals as I understand it was driving incremental use cases for the users. Anything you could share about how successful that was? It certainly sounds like there was a lot of success bringing folks kind of across the funnel. But anything around those incremental use cases and other reasons to kind of use the Pinterest platform?
A: So, we did see some success with use case diversification. Look, we also were benefited by the fact that a lot of people’s lives changed pretty dramatically in 2020. And so a lot of these core use cases that Pinterest has been great at suddenly became that much more relevant for people at a time when they were working from home. You know, parents became teachers. People started cooking at home more and so we saw a lot of benefits from that as well. Now some of the use case work that we’ve done in the past, including things like search guides, and diversifying the results that we show and just improving the overall relevance. Those will continue as sort of evergreen investments.
But the reason that we framed this year, to be more about overall providing inspiring content is because we see a lot of long term value and making sure that the format that people get inspiration in is the most inspiring format for the future. There were three things that we’ve mentioned around that, that theme of more inspiring formats. One is video. And I think we’ve already covered that video grew tremendously last year both in terms of views and the number of uploads. And the second is making everything shoppable. And we talked at length about how we want to be able to people pivot from looking at that home office set us to buying all the things in it. And then the third, which is the newest is going to be this investment in story pins.



Q: Progress with advertising?
A: 1) Focus on SME 2) measurement/tooling to understand ads 3) Format: video “We’ve seen a ton of growth in video. Video views were up over 100% year-over-year in Q4. And we’re introducing new types of content to the platform like Story Pins and shopping services. So we’re really happy with the progress we’ve made, and we know we’ve got a compelling road map going into next year.”

Q: That core value proposition of helping people find inspiration, how has that changed?
A: The evolution around it is that we’ve got a lot more opportunities to act on that inspiration and turn ideas for that inspiration into reality. we’ve expanded content diversity. We’ve improved the relevance of our recommendations. We provided search guides, and we’ve added a lot of shopping features and surfaces to help people find what they’re looking for and ultimately transact.

Q: Reflect on 2020?
A: At the highest level, 1) it’s really underpinned the importance of supporting an outlet for people to find new ideas and things for themselves, which is very different than social media. And when you complement that with shopability, this platform is becoming a recipe to unlock online commerce and that’s been a big change. 2) The environment also reinforced the importance of performance-based advertising, ROI accountable advertising
Just to remind folks, one of the things that’s different about Pinterest versus social media is that our users come with commercial intent. They come with a planning mindset where they’re looking for new ideas to bring into their life, not to follow other people or to communicate or read the news.

Q: Last year you added over 100 million new users to the platform where did they come from/demography?
A: we added 10 million U.S. monthly active users in 2020. users under the age of 25, grew faster than the users over the age of 25.
Internationally, all of our major tracked regions grew faster than the U.S.
COVID, obviously, played a role in the trend - the stickiness of that COVID cohort is still kind of unknown.
And if vaccines allow people to return to pre-COVID behaviors, that could adversely affect our user and engagement growth. What we’ve seen generally is that as restrictions become more stringent, we’ve seen an uptick in users and engagement. And as restrictions have loosened, we’ve seen it move in the other direction.

Q: Impact of auto-bid on advertisers?
A: Support esp SME’s. Customers recently adopted auto-bid as well for their search campaigns on Pinterest and we’re able to get 4x as many clicks with an 80% decrease in cost per click across 3 major markets, the U.K., France and Germany. And what that means is that we get much more efficient monetization of our existing ad slot supply. So it’s been a win for our advertisers and good for our business.

Q: Measurement - roadmap?
A: Big topic, big focus area: 1) first-party Pinterest tag through tag manager integrations 2) first-party products for non-cookie conversion capture 3) holistic measurement & conversion insights 4) first-party insights such as brand lift study for advertisers.

Q: Stories - how are they different?
A: Stories on Pinterest are different than what you’d see on other platforms, where they’re designed for entertainment or for watching what other people are doing. On Pinterest, though, the story pins are designed for productivity. So less about entertainment and more about upper funnel inspiration that will eventually feed action or purchases. So taking that inspiration and turning it into action.
And what makes them different than other story formats that you may have seen on other platforms is really a question about what makes Pinterest as a platform different than social media and search.
So with Story Pins, we’re intentionally cultivating content and experiences that focus on inspiration and lifestyle decisions. It’s not about entertainment, it’s not about eyeballs. They’re designed to inspire and help our users discover, plan, consider and ultimately take action on something in their real life.
In addition, unlike other platforms, the content lives forever, which is another core differentiator. It’s not ephemeral. We believe that out of a richer user experience will come more user growth and more monetization opportunities. We’re still really early on this journey and in the potential for Story Pins, and I would be very careful to say, we’re excited about launching it, but we’re really early in the evolution and the traction here.
But we’re exploring a range of ways to get paid for that, the monetization opportunities that will help our creators get rewarded for their inspiring content and then help us build a business against it.

Q: Impact of IDFA opt-in??A: what we have, it’s a little different is – we have on-platform engagement. People are searching, using text and visual queries, they’re clicking and saving and doing born creations that they’re naming themselves. So it’s not shallow engagement. It’s actually rich engagement on platform with our content. What that means is that we get a lot more complicated or complex signals than the likes and follows that are typical of on-platform engagement on social media and news apps. We’re not in danger of losing that on-platform signal as a result of IDFA.
we’re getting better at identifying or matching conversions using machine learning, which is something others in the industry have done, and we’re obviously less mature than some of the incumbents. And so those things that we’re doing around machine learning-based conversion visibility are areas that we’re excited about and are opportunities in the road map.

Q: Impact of Shopify partnership??A: Catalogs grew 60% sequentially from Q3 to Q4 last year, and we expanded the scope of shopping engagement by allowing our Pinners to pivot into shop mode from any search queries, so that got better. And we added new formats like dynamic collections and auto-bids for shopping objectives. What that led to is a 6x increase in the number of shopping advertisers year-over-year in the fourth quarter and an increase in product searches on the site that grew 20x in the last year.

→ This is exciting and it’s interesting that he’s linking the growth directly to the Shopity partnership. So my bet is there is much more to come here.

Q: International expansion?
A: International revenue grew 145% year-over-year in the fourth quarter and is becoming a bigger piece of our revenue base now at 17% of total revenue in Q4 versus just 13% a year ago. But the revenue we’re getting today is mostly Western Europe and English-speaking countries outside of the U.S. We wouldn’t expect LatAm, as an example, to be a meaningful contributor to revenue in 2021


Pinterest is a founder-led company where the two key founders have almost 30% of the voting rights in the company and there is an honest alignment with the company’s mission.

All of the numbers are pointing in the right direction: revenue growth is in hyper-growth and has accelerated the last couple of quarters, GP% is above 80%, customer growth has been phenomenal and international growth is accelerating at a tremendous pace.

Their relatively recent partnership with Shopify is bearing fruits in terms of shoppability with exponential growth in the number of shopping advertisers, with more to come.

They have easy Q1 and Q2 comps which will make for very high yoy revenue growth numbers, and they have a chance to get to EBITDA positive territory in Q1, their seasonal low point of the year, which will be a big inflection point imo.

Their strategy seems very much on target - they are accelerating their commercial investments and really stepping on the gas ito new sales hires, opening new geographies, marketing spend while their technology investments are geared towards increasing ARPU, which still has a huge runway ahead if you compare it to Facebook and Twitter for example. In addition their International ARPU is still tiny, and their plans to monetise that are just starting, with international already contributing 17% of revenue last year vs 13% the year before; so lots of room to grow there.

The only negative I have in the story is to what extent the COVID tailwinds of Q3 and Q4 persist, however I’m quite bullish as, contrary to say ETSY, where the huge growth in users have already been translated into revenue, with Pinterest the monetisation of the incredibly large customer base is still to come.

After doing this analysis, I’m very comfortable with my current mid-sized position in PINS and may even add a bit.



One thing PINS has to their advantage, is a move away from the “hostility” issue. FB and TWTR suffer from this issue. PINS is a place to get away from the hostility found on FB and TWTR. PINS is a place of positive inspirational respite and advancement of business innovation. This translates into great Revenue numbers for TTM and NTM.


Thanks for the write-up!

In 2019, Beth once pointed out that a concern of Pinterest was its extremely low international ARPU while most of their user growth came from international. 2 years later, the situation looks still the same. Even though they made huge progress on international monetization, the revenue base is still low and the ARPU out of US is still extremely low. In my opinion, their ability to monetize international user base is still an uncertainty.

Before the pandemic, Pinterest was more like a 30-40% grower. Even though they accelerated their growth in the pandemic to 70%+, it’s uncertain whether they could sustain a hyper growth on revenue after the tailwind fades out. In 2020, their monthly active user in the US barely grew 11%, despite the tailwind.

Given Pinterest’s current forward P / EV ratio would be well above 15, I’d pass it for now.



Great write up WSM… thanks for sharing this in-depth view.

Luffy, effect of pandemic on PINS was both very negative and then turned quite positive… so for first half of this year, PINS has incredible opportunity to showcase strong growth… management already guided to Q1 at 70% which I am sure they intend to beat by good margin… Just think about that… how many of the SaaS companies are guiding 70% y/y for this quarter? not many…
Mighty CRWD just guided to 62% growth (which again, they will beat… but you see the point)…
BTW, I believe the June quarter will see y/y growth at even higher than 70%… talk about acceleration…
What happens in 2nd half… will quite depend on how economy evolves with re-opening… arguably growth will decelerate… but it is unlikely to go below 400% y/y… my guess is it will still be in 50%s… why because of improved monetization…

On international monetization, it has certainly taken longer than I would like… but understand this, ARPU is just a result of ratio or revenue and users… their international user base has been growing at a very high rate and in more countries than they were set up to monetize… so for last two years, they are setting up sales offices into as many countries as they can to accelerate monetization… this means international is a big big opportunity… they grew international revenue by 146% for each of the last two quarters… and still it is ~17% of total revenue in Q4… and international ARPU is <10% of US ARPU … all of these means loooong runway for growth in international revenue…

To look at this from different view point - I distinctly remember, not long ago (may be two years)… CRWD used to fetch lower valuation (PS ratio) than likes of AYX and DDOG and MDB and TTD despite showing much stronger metrics… because investors were worried about security product companies gone boom and bust in the past… however, folks on this board stuck with actual metrics and benefited both from revenue growth and PS multiple growth…

Not long ago, ROKU was being beaten down as lower margin, hardware product, too difficult to understand… and in last two quarters it grew in both revenue and multiples delivering one of the best performance in the market…

I don’t intend to compare PINS with SaaS plays or CTV plays… comparison is more to highlight higher growth metrics being delivered by the company yet valuation multiple not reflecting that. I see PINS as that type of opportunity today… accelerating growth, delivering free cash, huge growth coming down the pipe and investors continue to value it lesser… this goes on until it does not and once multiple starts rising, stock delivers much higher returns.

Lets also look at why does it fetch less than deserved multiple?
Here are few popular snubs I have seen about Pinterest and why I dont worry about them as much.

  1. US MAUs not increasing - ofcourse through Pandemic, they increased US user base significantly but before that, it was stalling… and I would agree that US MAUs may be flat for next year or two…
    Here is why it does not bother me - in a word “monetization” - US ARPU has been growing thanks to better monetization and I see that continue to grow at ~30% pace for many years… So to me, this sets a base line for growth.
    And once you add torrid growth in international - both MAUs and ARPU - you can see 50% or higher growth for a long time to come

  2. Pinterest is social network and they stall after a while…
    People who put Pinterest in social network bucket just do not have right frame of view… there is social aspect of sharing and following etc. but no one really goes to Pinterest to socialize…

Pinterest is more akin to search function on rather than FB or TWTR.
People go to Pinterest to “do something”… start a project or throw a party or something like that… and that’s where the intent difference is… the intent here is most connected to actual shopping than any of those social networks…
That enables higher value to advertisers which is why I think PINS can continue to see growth in ARPU for a long time to come

  1. Pinterest is primarily catering to female audience…
    While this is true to some extent, they are seeing higher growth of male audience… and more importantly, users <25 years of age… which means again, there is sustained growth to expect

To summarize, I think PINS is few hypergrowth companies with proven metrics and yet trading at reasonable valuation to offer much higher upside in todays market.

Hope this is helpful.