The news: Pinterest reached over 500 million monthly active users (MAUs) for the first time, reporting 518 million global MAUs for Q1. That’s a 12% year-over-year increase, representing the highest user growth since 2021.

What’s working: Revenues rose by an impressive 23% YoY to $740 million, nearly doubling the growth rate from the prior quarter—well over the $699 million analysts expected.

• Average revenues per user (ARPU) increased across all geographic regions, with a 19% YoY increase in the critical US and Canada market.
• The company provided optimistic revenue guidance for the current quarter, projecting 18% to 20% YoY growth.

Needs improvement: Despite the revenue strength, Pinterest reported a net loss of $24.8 million for Q1.

• While user growth was robust globally, MAU growth in the US and Canada was a modest 3%.
• Costs and expenses remained high, increasing by 9% year-over-year to $630.1 million, while sales and marketing expenses rose by 12%.

Performance is priority: This past quarter, Pinterest introduced "The P is for Performance" campaign, spotlighting its advertising tools that drive action. It reported increases of up to 28% in conversions and 96% in traffic for participating advertisers.

• Pinterest's collaboration with Tastemade on its first streaming show illustrates its commitment to integrating entertainment with shopping, enabling viewers to interact with shoppable pins via QR codes.
• A key aspect of Pinterest's strategy is its focus on data transparency and precision in advertising. Through its partnership with CVS and LiveRamp, Pinterest says it has improved its ability to measure attributed sales and refine promotional strategies.
• Pinterest’s “inclusive AI”-powered filters are also helping to increase engagement with shoppable content.

Our take: Pinterest appears poised for continued growth and innovation. Its efforts to diversify income streams and expand into new global markets, coupled with strategic partnerships and enhanced advertising solutions, suggest a promising future.

• The potential integration of Google ad units, as suggested by recent Piper Sandler reports, builds on a Google partnership announced in February. This move will further bolster Pinterest's advertising capabilities and market reach.
• We expect Pinterest's US ARPU to grow 16.4% this year to $30.44 and reach $38.15 just two years later. That's a fantastic ARPU story.
• The problem is that we also forecast negligible US user growth of between 0.7% and 1.0% for this year through 2027.
• With its engaged user base, especially among younger demographics with high purchase intent, and an evolving suite of performance-driven tools, Pinterest stands as an underrated but compelling choice for diversifying digital ad strategies.