February 14, 2021

Update - Talking about companies that over deliver, Pinterest has continued to execute. Since I mentioned it in stock ideas #4, Pinterest is up around 140%. After both its most recent earnings reports, the company popped around 10% with better than expected numbers. On Thursday, Pinterest announced revenue growth of 76%, a clear acceleration. US revenue grew 67%, whilst international grew 145%. Pinterest are benefiting from the general increased spend in digital marketing, as companies feel more optimism looking toward the future. Monthly active users grew 37%, continuing their steady trajectory. Average revenue per user (ARPU) was up 29% on average, but it’s useful to look deeper here. ARPU for US customers was $5.94. ARPU for international customers was just $0.35. Clearly, Pinterest has an opportunity to better monetise its international users, the fastest-growing segment of the business. Having said that, Pinterest is relatively early in its commercial efforts and also has a huge opportunity to increase its US ARPU. For comparison, Facebook’s ARPU for the US & Canada was over $50 last quarter. All of this is to say that Pinterest still has a large opportunity ahead. Whenever a company has risen by such a large amount in a short space of time, its tempting to think you’ve missed the chance. But with steady user growth, a growing international opportunity and opportunity for ARPU expansion, Pinterest is still a growth story. It’s been able to carve itself a niche in the digital marketing sphere, whilst avoiding much of the negative headlines attributed to Facebook or Google.

chart showing Pinterest ARPU development

Written by Stevan Popovic, growth investor, web developer and founder of this site.