Pinterest (NYSE:PINS), in its Q3 2023 earnings conference call, reported accelerated revenue growth, increased user engagement and significant improvements in its advertising offerings. CEO Bill Ready emphasized the company's focus on enhancing user engagement and monetization, particularly through efforts to make Pinterest a more shoppable platform.
Key takeaways from the call:
- Pinterest ended Q3 with a record 482 million monthly active users and total revenue of $763 million, an 11% increase YoY.
- The company delivered adjusted EBITDA of $185 million and an adjusted EBITDA margin of 24%, a significant improvement from the previous year.
- Pinterest is focused on three key priorities: growing users and engagement per user, improving monetization, and delivering profitable growth through operational rigor.
- The company aims to achieve mid to high-teens compound annual growth rate in revenue and expand adjusted EBITDA margins to reach the low 30% range in the next three to five years.
- Specific product updates mentioned include the More Ideas tab, the Shop the Look module, and the AI-driven guided browsing experience.
- New ad formats and measurement solutions are being offered to improve monetization.
- The company's partnership with Amazon (NASDAQ:AMZN) Ads has shown promising results, including a 50% improvement in relevance on search and a 100% improvement in relevance on related items.
During the call, Pinterest also highlighted its progress in improving performance solutions, specifically in the lower funnel and better measurement. The company reported a steady acceleration in their Q3 results and expects the same for Q4. They also aim to triple their margin expansion target to 600 basis points for 2023 and reach the low 30s percent range within the next three to five years.
The company's partnership with Amazon Ads has resulted in significant improvements in ad relevance and performance. The ad delivery has been optimized to match relevant ads to user preferences and display them at the right time. Pinterest expects the revenue impact of this partnership to be significant by early 2024.
The company also discussed its focus on privacy-safe measurement and integration with partner platforms. Pinterest believes it is well-positioned to continue serving relevant ads to users without relying on cookies as the industry moves towards a cookie-less future.
Pinterest also mentioned the positive impact of Asian e-commerce exporters, such as Timo, on their retail strength. The company's strength in retail is broad-based and not concentrated or exposed. They expect revenue growth in the 11% to 13% range in Q4, with further margin expansion.
Lastly, Pinterest provided an update on the adoption of API for conversions, stating that as of August, 28% of total revenue has adopted the API, up from 14% at the beginning of the year. They expect adoption to continue increasing gradually.
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