Pinterest - Record Breaking Q4 2024 - Financial Report Review
As soon as the financial report came in, I knew it would be one of the best the company had ever published. As we discussed in the Q3 2024 report, Q4 is by far the strongest quarter for Pinterest. Reaching $1 billion in revenue for the first time in a single quarter is already a great achievement—but trust me, there’s even more to uncover.
So, let’s dive in.
Key numbers in Q4-2024
When looking through key financial numbers, we can see that Net Income has always been highest in Q4. So, it makes more sense to compare year-over-year (YoY) growth, where we see an increase of 19% (from $3,055 million in 2023 to $3,646 million in 2024). In the same period, Free Cash Flow surged by an impressive 55%, reaching around $939 million.
Surprisingly, the biggest revenue increase came from the "Rest of the World" region, rising by approximately $169 million, or 36%, compared to FY 2023. At the same time, the European region generated $593 million, marking a 23% increase. Meanwhile, revenue from the US and Canada grew by only 18%, reaching around $2,884 million.
Despite these shifts, the US and Canada remain the primary revenue drivers for Pinterest. Here is good to mention that Pinterest have very strict rules of advertising on their platform, for example, they don't allow political advertising which was very important during last quarter especially in US.
Monthly Active Users (MAUs) and Average Revenue Per User (ARPU)
Monthly Active Users (MAUs) are growing by double digits, up 11% globally, reaching a record high of 553 million users. Once again, the biggest increase came from the "Rest of the World" region, where Pinterest saw a 15% rise, bringing the total to 307 million users. In comparison, Europe and the US & Canada saw more modest growth of 7% and 4%, respectively.
It's clear that user growth in the US and Canada is slowing, but in the next paragraph, we'll see how this impacts Pinterest’s revenue.
As we can see in the following graph that Average Revenue Per User (ARPU) has increased globally by 8%, now reaching approximately $2.12. Looking at it by region, we notice an interesting pattern: users in the US and Canada have an ARPU of around $9, while in Europe and the "Rest of the World," it stands at $1.38 and $0.19, respectively. This explains why a 4% increase in MAUs from the US & Canada has a much bigger impact on revenue than user growth in Europe or the "Rest of the World.
Big progress in AI-powered ADS and use of Pinterest Trends
Pinterest made a big bet by adopting AI early as an ad optimization engine—and this quarter, it paid off. They also started dynamically displaying ads based on how far users are in the search funnel. For example, if a user is browsing pins at the start of their shopping journey, they’ll see fewer ads. But as they move into the "lower funnel phase," Pinterest gathers better data on what they’re looking for, allowing it to show more relevant ads.
Pinterest is becoming a place where people can "rest" their eyes, knowing they’ll never come across political, gambling, or disturbing content. Last holiday season, the platform saw a rise in users with high commercial intent—people actively searching for the best ideas and products to buy.
Speaking of trends, Pinterest Trends are now predicting future trends with an 80% accuracy rate. For example, they expect cherry-themed designs to be the trend of the year among Gen Z and millennials. Meanwhile, for Gen Z and Gen X, mountain travel is becoming an increasingly popular destination choice.
Conclusion and Guidance
Pinterest is a platform that still has plenty of room to grow. Even in its most saturated regions— the US, Europe, and Canada—it's still achieving around 5% YoY growth. This, combined with the platform’s unique concept, where users come to brainstorm new ideas or simply take a break from everyday topics makes it a one-of-a-kind space on the internet.
Currently, Pinterest has a Forward P/E of 17.14, a drop from Q4 2023’s 29.98. Its P/B ratio remains relatively high at 4.13 but is nearly half of what it was in Q4 2023 (8.08). With these valuation metrics, Pinterest looks like a company worth considering, especially compared to its competitors.
Daan
For Q1 2025, Pinterest expects revenue to be in the range of $837 million to $852 million, representing 13%-15% YoY growth. From perspective of numbers, this guidance looks more than realistic, with actual price of a stock around 31$ I am confident to say that this stock is having "Buy" sign near it.