Pinterest's strong third quarter proves that the app is a pleasant, dependable distraction during a challenging time.
- Pinterest reported blow-out third-quarter earnings this week, with revenue up 58% year-over-year.
- Its strong quarter was due to a combination of factors, most of which are related to the coronavirus pandemic: increased engagement during COVID lockdowns, a rise in online shopping, and people seeking an escape from a grim news cycle.
- "At Pinterest, we continued to focus on what we can control: supporting all of our stakeholders in this unpredictable time," CEO Ben Silbermann and CFO Todd Morgenfeld wrote in a letter to shareholders. "This included giving Pinners and brands a positive place to be online during a divisive election in the United States."
- Pinterest saw a 37% increase in monthly active users since last year, with strong growth among young users. The company also noted user growth after the release of iOS 14, when users were looking for home
- screen inspiration.
- Pinterest is unique among social media apps for its lack of news posts and internet trolls. Its strong quarter proves that the app is a pleasant, dependable distraction during a challenging time.
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If you open up Pinterest right now, you'll see pictures of people are wearing expertly applied makeup and well-tailored outfits, beautiful home decor, delicious-looking recipes, and travels to the American Southwest or the Amalfi Coast.
In the world depicted on Pinterest, employment is high, the election isn't a factor, and no one is wearing a mask, because there is no pandemic.
Throughout the last eight months, I have turned to Pinterest almost religiously as a brief escape from everyday life. The app serves as a virtual mood board and recommendation engine, and offers up an endless stream of content curated around both my current interests and those I haven't discovered yet. For me, it's a pleasant, dependable distraction.
It seems I'm not alone. After a decade of being something of an anti-social-network with a devoted following of hobbyists, Pinterest is surging. The company posted blow-out third-quarter earnings this week, reporting $443 million in revenue, up 58% year over year. The app is now boasting 442 million users worldwide, a 37% growth in monthly active users since last year. Pinterest's strong quarter sent its stock soaring 27% on Wednesday.
Pinterest isn't shying away from its position as a positive place to hang out in an otherwise bleak landscape.
"In Q3, the world was still dealing with the economic and health challenges brought on by COVID-19. Nobody knows exactly how all of this will play out," CEO Ben Silbermann and CFO Todd Morgenfeld wrote in a letter to shareholders.
"But at Pinterest, we continued to focus on what we can control: supporting all of our stakeholders in this unpredictable time. This included giving Pinners and brands a positive place to be online during a divisive election in the United States," they wrote.
High engagement during lockdowns
Pinterest's strong quarter was fueled by a swell of new users on the platform, particularly those under 25, Silbermann and Morgenfeld noted in the shareholder letter.
Many of those young users flocked to Pinterest after the release of iOS 14, Apple's latest smartphone operating system, which allows iPhone users to customize their home screens using widgets. The hunt for home screen inspiration led to millions of new users, Pinterest said.
"We experienced a particular benefit of about 4 million global MAUs at the end of the quarter as younger users upgraded their iPhones to iOS 14 and used Pinterest for inspiration for customized background filters," Silbermann and Morgenfeld wrote.
Overall, app usage seems closely tied to the pandemic: The company said it saw higher engagement during coronavirus lockdowns — when those lockdowns lifted, Pinterest saw engagement decrease. Users who joined during the pandemic have been relying Pinterest to search for something specific, the company says, and have "higher commercial intent" — meaning, those users are looking to shop. Pinterest says that the number of users engaging with its built-in shopping platform is risen 85% since March.
Andrew Lipsman, a principal analyst at eMarketer, said following Pinterest's earnings that the company is a beneficiary of the rise in online shopping.
"The company is especially well positioned for the moment, with users flocking to the site for inspiration amid new pandemic habits and also benefiting from the surge in ecommerce buying," Lipsman wrote.
Analysts at MKM Partners said that although it's still "early days" for shopping on Pinterest, growth will only continue, according to CNBC.
"Catalog growth and integration with leading eCommerce ecosystem stakeholders such as Shopify is going to increase the importance of Pinterest in the overall shopping funnel," the firm wrote.
But there's more to Pinterest's growth than bored young people stuck inside or a global acceleration in online shopping: advertisers are looking for a more pleasant place to spend their money.
Pinterest has billed itself to advertisers as a smarter alternative to Facebook, Twitter, and other social media sites given its lack of news-related content and its reputation for having fewer internet trolls. This past summer, when civil rights organizations urged brands to stop advertising on Facebook over its hate-speech moderation and major companies like Starbucks, Unilever, and Verizon joined the boycott, it seems to have paid off for Pinterest, at least in the near-term.
"Spend from the group of advertisers boycotting social media accelerated in Q3, though it's not yet clear how sustainable this trend will be, particularly after the US presidential election cycle ends," Silbermann and Morgenfeld wrote in the shareholder letter.
Morgenfeld said during the company's earnings call though Pinterest isn't banking on the trend to continue, it believes "the positivity of Pinterest is a long-term competitive advantage."
While there's no telling if Pinterest's welcoming and stress-free platform will continue to fuel it's growth in the fourth quarter and beyond, one thing remains true: for anyone overwhelmed by the news cycle or looking for a few minutes of escape, Pinterest remains one of the most relaxing places on the internet.