Pinterest IPO: Is the Company Profitable?

Pinterest IPO: Is the Company Profitable?


Pinterest isn’t your typical social media
company. The company describes itself as a visual discovery engine, and there’s hardly
anything else like it on the web. Pinterest has more than 250 million monthly active users
sharing images of home decor, fashion trends, articles, recipes, and much more, and all
of those users have created more than 175 billion pins. But how does Pinterest make
money from all of that content? The bulk of the company’s revenue comes from
Pinterest’s advertising sales on its platform. In 2018, Pinterest generated $756 million
in sales, up 70% from 2017. The company says that more people use it service to find or
shop for products than on social media networks, and that advertising is native content on
its platform. Additionally, the majority of the pins that are saved on Pinterest have
actually been created by businesses. That’s great news for advertisers because Pinterest
users are the primary decision-makers when it comes to buying services and products for
their household. 83% of all women ages 25-54 in the U.S. are Pinterest users, and the company
calls them deciders because they’re the ones calling the shots for household expenses. But
even as Pinterest’s advertising revenue grows, the company is still losing money. In 2018,
Pinterest lost $63 million, which was a huge improvement from its loss of
$130 million in 2017. So if Pinterest brought in $756 million in
sales, but lost $63 million, where did all that money go? Much of it went to expenses
for sales and marketing, which totaled $260 million in 2018. Additionally, Pinterest spent
about $252 million on research and development and about $242 million for its costs of revenue
expenses, which include web hosting, mobile app expenses, and employee salaries. When
you add all that up, along with additional general and administrative expenses, Pinterest
spent more than $830 million in 2018. While Pinterest is still working towards turning
a profit, the company has managed to increase its average revenue per user. In the U.S.,
Pinterest’s most lucrative market, average revenue per user jumped 47% in 2018 to $9.04.
Pinterest has lots of opportunity to grow its international sales as well. The majority
of its users are outside of the U.S. and the company’s average revenue per international
user increased 22% in 2018. The challenge for Pinterest will be to convince
more advertisers to spend their money on its platform instead of on popular social media
sites like Facebook and Instagram. So far, Pinterest’s sales and user growth have shown
that this company can compete in the ultra-competitive digital advertising space. And with Pinterest’s
unique way of blending content with ads, the company may not be far off from turning its
visual discovery engine into a profitable business. Thanks for watching this video! If you have a company you’d like to see us break down,
mention it in the comments section below. Be sure to like the video and subscribe to
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About the Author: Oren Garnes

14 Comments

  1. Their data sounds great, but I don't know anyone that uses Pinterest. I've even explained what people use Pinterest for and I've been told they can search hashtags on Instagram for that. $700M+ Revenue shouldn't be ignored though.

  2. Pin interest is very confusing to use. I couldn't save photos or navigate their website at all. I think it tries to appear like a hip google image platform but I was unimpressed.

  3. I's always good to stay away from IPOs, esp during first few weeks! Btw, we are putting out some free finance related content on our new Youtube channel, so please check them out and let us know if you would like us to add more videos!

  4. "Visual Discovery Engine" or "Visual Search Engine" – it's a great place to find just about anything and how to cook it, make it or buy it. I love Pinterest, it's my favorite place on the net.

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