Pinterest Q4 Earnings Mixed Bag, Google partnership announced

Pinterest this week reported mixed results in its Q4 2023 earnings release, causing initial stock prices to dive before settling at a nearly 10% decline. While monthly active users reached an all-time high, revenue missed analyst expectations and the company issued a weaker-than-expected forecast.

Missed Revenue Expectations: Revenue of $981 million fell short of the expected $991 million.

Earnings Beat: Adjusted earnings per share of 53 cents topped the expected 51 cents.

Record Users: Monthly active users surged 11% to 498 million, exceeding estimates.

Global ARPU Steady: Global average revenue per user remained at $2, below analyst expectations.

Weaker Q1 Outlook: Projected Q1 revenue of $690 million-$705 million is below analyst estimates.

Stock Price Drop: Shares initially plummeted 28% but rebounded after a Google partnership announcement.

Mixed Market: Despite improved digital ad spending overall, Pinterest's performance lagged behind competitors like Meta, Alphabet, and Amazon. However, Ready expressed optimism about the market recovery and Pinterest's focus on performance-driven advertising.

Financial Snapshot:

• Revenue: $981 million (+12% YoY)
• Adjusted EPS: $0.53 (+4% YoY)
• MAUs: 498 million (+11% YoY)
• Global ARPU: $2
• Q1 Revenue Guidance: $690 million-$705 million (+15-17% YoY)

Investor Reaction: After an initial plunge, Pinterest stock settled at a nearly 10% decline.

Outlook: Despite a strong user base, concerns about revenue growth and future guidance overshadowed positive aspects of the report. While the new Google partnership offers potential, it remains to be seen if it can drive the significant revenue boost needed to satisfy investors.

Google Partnership

CEO Bill Ready highlighted a new Google partnership similar to their Amazon collaboration, aiming to increase ad revenue and user experience. He emphasized the global potential of this integration, as 80% of users come from outside the US but only generate 20% of sales.

The new Google partnership with Pinterest announced on February 8th, 2024, is a "third-party app integration" focusing on enabling Google-powered advertisements to appear on the Pinterest platform. This is similar to Pinterest's existing partnership with Amazon, where sponsored products from Amazon are displayed alongside relevant Pins.

Unclear details:

• Specific ad formats: It's not confirmed what types of Google ads will be shown on Pinterest (search ads, display ads, etc.).
• Revenue sharing model: The specific terms of revenue sharing between Pinterest and Google haven't been disclosed.
• Global availability: It's unclear if the partnership will be global or initially limited to certain regions.