Some not-so-great numbers in Pinterest’s latest performance update, with revenue increasing year-over-year, but declining quarter-over-quarter, while user growth has returned, though only slightly, with 2 million more monthly actives logging in in Q1.
As you can see in this chart, Pinterest usage has declined significantly from its peaks early on in the pandemic, when it was the big winner of the forced eCommerce push due to lockdowns and other pandemic mitigation measures.
With people stuck at home, they turned to Pinterest to browse and shop, which pushed the app up to 478 million users. It’s been on the decline ever since – though it may now be stabilizing at 433m.
As explained by Pinterest:
“In Q1 2022, we continued to experience year-over-year engagement declines primarily due to pandemic-influenced growth in the year-ago quarter as well as lower search traffic (largely driven by Google’s algorithm change in November 2021). Time spent on competitive video-centric consumer platforms remains a headwind, particularly in our more mature markets. These declines were most pronounced for our desktop web and mobile web users, with mobile app users showing more resilience. The decline in global MAUs from February 1 to March 31 was primarily due to Russia's recent invasion of Ukraine, and was particularly pronounced in Europe.”
So the war in Ukraine is a factor here, as it will be for almost all social apps.
On balance, that could suggest that Pinterest is actually stabilizing pretty well, with a solid user base that it can then pitch ads to, while also increasing its appeal to brand partners. Pinterest’s focus is on becoming a key hub for shopping, and it may well be able to fulfill that niche – though I do think the mention of the impact of a Google change is an ongoing concern.
Google is essentially looking to build in the same areas, with increased emphasis on product discovery and shopping. And if Google has the power to hurt Pinterest’s results so significantly, what’s to stop them doing so again, if it feels that Pinterest is intruding on its turf? At some stage, there would be a question about anti-competitive behavior, but I’m not sure that Pinterest has adequately detailed how it plans to mitigate this impact moving forward.
In terms of revenue, as noted, Pinterest posted a better YoY result, though it’s actually declined on a quarterly basis.
It’s hard to take anything definitive from that, though Pinterest points to the decline in active users as being a key cause, with its processes actually working well to better monetize the audience that it does have in the app.
As you can see in these charts, Pinterest is also highly reliant on the North American market for its revenue intake, which points to more opportunities as it branches out into new areas, while Pinterest also notes that the number of Pinners engaging with shopping surfaces has continued to grow year over year.
So there is significant potential there, if you dig a little deeper. How much you want to bank on Pinterest being able to capitalize on such comes down to your perspective, and your view of the latest usage trends in the app.
But there’s clearly still opportunity on Pins, even if it’s not hitting the highs it was early in the pandemic, and there is still opportunity for Pinterest to carve a niche within the eCommerce sphere, becoming a virtual shopping mall for a wide range of artisan goods.
Pinterest has continued to evolve its discovery tools, and newer elements like Idea Pins are showing promise (Idea Pins grew 17x year over year) - and the fact that 90% of weekly active Pinners use the app to inform their purchase decisions can’t be overlooked.
But just how big can Pinterest actually be?
Slowing growth, even as it expands into new markets, is not a good sign - and you can expect the market to react in kind - while it still remains to be seen what, exactly, is a realistic expectation for the app, in the wake of the pandemic push for online shopping.
Can Pinterest get things back on track, and get back to solid growth, and become a more essential shopping companion for more users, or is that COVID bump now gone and this is what it stabilizes to?
Depending on your target market, the total usage number itself may not matter, and it’s definitely worth familiarizing yourself with Pinterest’s ever-improving analytics tools to get a gauge on the potential for your products.
But right now, it’s also not an essential platform, and the lack of significant growth is not going to spark a bigger rush on Pin ads moving forward.
And again, there is also the question of competition with Google, and how much the search giant will allow Pinterest to grow, and encroach on its own core functionality.
Many questions remain, and while the results here are okay, they don’t provide a heap of answers at this stage.