Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Pinterest Inc (PINS, Financial) achieved a record high of 522 million global monthly active users (MAUs), growing 12% year over year.
- Q2 revenue reached $854 million, up 21% year over year, driven by strong performance in lower-funnel ad offerings.
- Adjusted EBITDA for Q2 was $180 million, with a 21% margin, up 600 basis points from the previous year.
- Significant improvements in AI and automation tools, including the launch of Performance+, which has shown promising early results.
- Increased engagement and actionability on the platform, with outbound clicks to advertisers more than doubling year over year for the third consecutive quarter.
Negative Points
- Despite improvements, the US user growth remains relatively flat, indicating challenges in mature markets.
- Ad pricing declined 11% year over year, influenced by lower average pricing in newly monetized markets and third-party ad impressions.
- Revenue growth in the food and beverage category remains soft due to broader industry headwinds.
- Q3 revenue guidance reflects a deceleration to 16-18% growth year over year, partly due to tougher comps and a 1-point headwind from foreign exchange rates.
- The rollout of new ad products like Performance+ is expected to be a multi-quarter process, potentially delaying immediate revenue benefits.
Q & A Highlights
Q: Could you flesh out the factors contributing to the deceleration in Q3 growth compared to Q2?
A: Julia Donnelly, CFO: The deceleration is mainly due to tougher comps from last year and a 1-point FX headwind. Excluding FX, the growth rate would be consistent with Q2 and Q1. We also face softness in the food and beverage category.
Q: Can you provide more details on user engagement trends and the impact of seasonality?
A: William Ready, CEO: Engagement continues to grow, with a steady improvement in our WAU to MAU ratio. We're seeing more clicks and conversions, indicating users are finding what they need. Ad load remains a lever for growth, especially as ads are seen as great content in commercial contexts.
Q: Are there any differences in end demand by geography for digital ads?
A: William Ready, CEO: The ad market is relatively stable. We see strength in retail due to lower-funnel improvements. Weakness is noted in the food and beverage category. Julia Donnelly, CFO: Rest of world revenue accelerated due to the ramping of the Google third-party partnership and reseller partnerships.
Q: Can you discuss the progress and adoption of direct links among advertisers?
A: William Ready, CEO: Direct links have doubled clicks for the third quarter in a row. Larger advertisers adopted quickly, and we're now seeing the next tranche of retailers adopting. Performance+ will further ease campaign creation and optimization, aiding broader adoption.
Q: How long do you expect the ramping of third-party partnerships like Google and Amazon to continue?
A: William Ready, CEO: We're still early in these partnerships, and they continue to build sequentially. We see a lot more opportunity ahead, not just with 3P but also in monetizing more of our platform.
Q: Why isn't the improved product translating into significant US user growth?
A: William Ready, CEO: In mature markets like the US, the focus is on deepening engagement rather than user growth. We're seeing record levels of new users and deepening engagement, particularly in curation and clicks, which are becoming strengths.
Q: Where do you see the biggest opportunity to close the gap between value creation and value capture?
A: William Ready, CEO: Measurement is key. We're integrating with third-party tools and clean rooms to make it easier for advertisers to adopt lower-funnel measurement tools. Performance+ will also ease campaign creation and optimization.
Q: Are the lower eCPMs from third-party ads in line with expectations?
A: Julia Donnelly, CFO: Yes, the lower eCPMs are in line with expectations for rest of world markets. We expect eCPMs to rise as we add more auction density in these markets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
