A key part of Pinterest's growth strategy is international expansion — specifically in Western Europe.
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Pinterest reported its first quarterly earnings as a publicly company on Friday, showing solid revenue and user growth. The site, which recently called itself a "productivity tool for planning your dreams," grew revenue 54% year-over-year (YoY) to $202 million in Q1 2019. The company expects its yearly revenue to top $1 billion for 2019.
A key part of Pinterest's growth strategy is international expansion — specifically in Western Europe. The vast majority (71%) of Pinterest's 291 million MAU come from outside of the US, and that international user base is also fueling growth: International users are up 29% YoY, compared with domestic, which are up only 6% from last year.
That's likely the result of Pinterest's active effort to expand its international footprint. The company now operates in 13 countries, and in Q1, it expanded to six countries.
Pinterest is mostly eyeing Western Europe for further expansion, as it most likely hopes to grow in developed countries before forging ahead into developing markets.
Pinterest's growing popularity in overseas markets is a positive indicator, and its next step will be to monetize those users. Even though 71% of Pinterest's users come from outside the US, 93% of the company's total revenue came from the US.
ARPU for international users was just $0.08, versus ARPU of $2.25 for US users. That's largely because Pinterest's ad products have only recently become available outside of the US, which is why Pinterest's international user base monetizes so poorly compared with the US.
Expanding the availability of its ad tools — particulary self-serve — should help Pinterest better monetize its international user base in the long term. Self-serve ad platforms have helped social companies like Snap and Facebook to scale advertising because they enable companies to broaden and diversify their advertiser base.
That's because small- and medium-sized businesses can easily purchase low-cost ads. As of now, Pinterest's self-serve ad tool is only been available in English-speaking regions, but the company is likely to roll it out more broadly in time.
Pinterest is in the process of first calibrating its platform to new geographies, ensuring a smooth experience that will allow it to add and retain users it can eventually monetize. Pinterest's success has largely come from the fact that it excels when it comes to performance products — which aim to more directly drive purchases — which is rare when it comes to the self-serve ad business.
This is largely due to the nature of Pinterest's users' habits: People search for exactly what they're interested in and build out pages related to that content. This allows the site to target users with supreme accuracy.
As the company grows, and pulls in more users, it will be able to build out these troves of information in other markets and target those users with similar ads too. For now, Pinterest seems focused on getting users hooked on its platform before serving them ads.
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