Pinterest Expects Accelerated Revenue Growth and Partnership with Amazon Helps Ad Business

During its first investor day, Pinterest announced its expectations for compound annual growth rate in the mid to high teens over the next three to five years. This is an improvement from its previous guidance of growth in the high single digits for the third quarter. The company also revealed that it anticipates accelerating year-over-year revenue growth after a slowdown in 2022 and 2023. In 2021, Pinterest experienced a revenue growth of under 9%, and analysts are projecting a growth rate of around 8% for this year.

To support its growth plans, Pinterest aims to achieve an adjusted margin for earnings before interest, taxes, depreciation, and amortization in the low 30s within the next three to five years, compared to 15% in the second quarter.

Since its debut on the New York Stock Exchange in 2019, Pinterest has faced both momentum and challenges. The onset of the Covid-19 pandemic in 2020 and 2021 boosted its business, but the economy’s downturn had a significant impact on digital ad companies, including Pinterest. To address this, the company has made efforts to streamline operations and improve efficiency through headcount reduction and management changes, including the appointment of Bill Ready as the CEO.

As part of its strategy, Pinterest is now focusing on collaborating with retailers to enhance the shopping experience for users. One such collaboration is its advertising partnership with Amazon, which was announced in April. According to Martha Welsh, Pinterest’s strategy chief, tests indicate that ads resulting from this partnership are more relevant than current ads. This partnership with Amazon is contributing to the improvement of Pinterest’s ad business.

Following this news, Pinterest’s stock rose by as much as 5% on Tuesday. The company’s shares were up 4.4% to $26.52 in afternoon trading, and the stock has gained 9.3% this year.

Source: CNBC (source URL)