Social commerce platform Pinterest (NYSE: PINS) reported Q4 CY2024 results topping the market’s revenue expectations, with sales up 17.6% year on year to $1.15 billion. Guidance for next quarter’s revenue was better than expected at $844.5 million at the midpoint, 1% above analysts’ estimates. Its non-GAAP profit of $0.56 per share was 13.5% below analysts’ consensus estimates.
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Pinterest (PINS) Q4 CY2024 Highlights:
- Revenue: $1.15 billion vs analyst estimates of $1.14 billion (17.6% year-on-year growth, 1.2% beat)
- Adjusted EPS: $0.56 vs analyst expectations of $0.65 (13.5% miss)
- Adjusted EBITDA: $470.9 million vs analyst estimates of $444.6 million (40.8% margin, 5.9% beat)
- Revenue Guidance for Q1 CY2025 is $844.5 million at the midpoint, above analyst estimates of $836.2 million
- EBITDA guidance for Q1 CY2025 is $162.5 million at the midpoint, above analyst estimates of $138.5 million
- Operating Margin: 22.7%, up from 20% in the same quarter last year
- Free Cash Flow Margin: 21.7%, down from 27.2% in the previous quarter
- Monthly Active Users: 553 million, up 55 million year on year
- Market Capitalization: $22.51 billion
“2024 was a banner year for Pinterest, capped off by a milestone Q4 – achieving the company’s first billion-dollar revenue quarter and a record 553 million monthly active users, as we continue to drive profitable growth and free cash flow," said Bill Ready, CEO of Pinterest.
Company Overview
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Social Networking
Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, Pinterest’s 12.2% annualized revenue growth over the last three years was decent. Its growth was slightly above the average consumer internet company and shows its offerings resonate with customers.
This quarter, Pinterest reported year-on-year revenue growth of 17.6%, and its $1.15 billion of revenue exceeded Wall Street’s estimates by 1.2%. Company management is currently guiding for a 14.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 14.5% over the next 12 months, an acceleration versus the last three years. This projection is noteworthy and indicates its newer products and services will fuel better top-line performance.
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Monthly Active Users
User Growth
As a social network, Pinterest generates revenue growth by increasing its user base and charging advertisers more for the ads each user is shown.
Over the last two years, Pinterest’s monthly active users, a key performance metric for the company, increased by 10% annually to 553 million in the latest quarter. This growth rate is solid for a consumer internet business and indicates people are excited about its offerings. 
In Q4, Pinterest added 55 million monthly active users, leading to 11% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating user growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track for social networking businesses like Pinterest because it measures how much the company earns from the ads shown to its users. ARPU can also be a proxy for how valuable advertisers find Pinterest’s audience and its ad-targeting capabilities.
Pinterest’s ARPU growth has been mediocre over the last two years, averaging 4.2%. This isn’t great, but the increase in monthly active users is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Pinterest tries boosting ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace. 
This quarter, Pinterest’s ARPU clocked in at $2.12. It grew by 6% year on year, slower than its user growth.
Key Takeaways from Pinterest’s Q4 Results
It was great to see Pinterest beat analysts' revenue and EBITDA expectations this quarter. We were also glad its quarterly guidance for both metrics outperformed Wall Street’s estimates. Overall, we think this was a good quarter with some key metrics above expectations. The stock traded up 15.4% to $38.79 immediately after reporting.
Pinterest put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
