Pinterest's AI Tools, Revenue Growth, and International Opportunities
2023-07-30
In the recent earnings call meeting, the company discussed several important topics, including the transition of the Chief Financial Officer (CFO) and the progress of mobile app engagement and revenue. The CEO expressed gratitude towards the outgoing CFO and highlighted the strong interest from potential candidates for the role. The company also emphasized the growth in mobile app users and the opportunities it presents for advertisers.
One of the most interesting points discussed in the meeting was the use of generative AI tools on the Pinterest platform. The CEO mentioned that the company is already utilizing next-generation AI to enhance user experience and drive business growth. The use of AI enables Pinterest to provide better recommendations, improve product experiences, and deliver more relevant ads that convert better. Additionally, AI has the potential to enhance visual recommendations, such as users creating collages on Shuffles. However, there are still unresolved issues surrounding the value exchange between platforms and publishers, as well as image rights. Pinterest intends to approach the integration of AI tools thoughtfully and methodically to ensure effective utilization.
The market outlook for the company suggests that they expect consistent year-over-year revenue growth in line with the previous two quarters of 2022 and the first quarter of 2023. They anticipate a small impact from foreign exchange headwinds in the second quarter but remain confident in their execution and investments. Operating expenses are expected to increase in the low-teens percentage range due to shifting investments, and stock-based compensation is expected to rise sequentially from Q1 levels. The company plans to share more about their progress and long-term strategy at their first Investor Day in September.
The key drivers of the business discussed in the meeting include user satisfaction, video engagement, international growth, monetization potential, and growth in both large advertisers and small and medium-sized businesses (SMBs). The company's plans for its product and service involve a focus on balancing video and images to provide the best user satisfaction and intent. They aim to progress in a thoughtful and methodical way to help users satisfy their intent. The company believes that video can drive engagement and revenue, setting them apart from other platforms. They also see significant monetization opportunities internationally, particularly in Europe, and plan to invest in ad capabilities and sales teams to capitalize on this potential. Additionally, they mentioned that large advertisers and SMBs are growing with them in the international market, indicating a balanced mix of opportunities.
Several key performance indicators (KPIs) were discussed in the meeting, including the adjusted EBITDA margin, monetization and engagement per user, and user growth and engagement. The adjusted EBITDA margin, which indicates the profitability of the business, was reported to be 4%. The company's strategic priority is to grow monetization and engagement per user, reflecting their focus on generating revenue and increasing user engagement. User growth and engagement were also highlighted, with the company experiencing growth in the number of users, particularly among Gen Z users.
The meeting participants included Neil Doshi, the Head of Investor Relations, as well as Bill Ready, the Chief Executive Officer, and Todd Morgenfeld, the Chief Financial Officer and Head of Business Operations. Analysts from various firms, including Goldman Sachs, Morgan Stanley, Barclays, UBS, LightShed Partners, Robert W. Baird and Company, JPMorgan Chase and Company, and Piper Sandler, also participated in the call.
The meeting outcome revealed that the company is currently going through a CFO transition, with Todd Morgenfeld being acknowledged for his contribution and engagement in managing the transition. The company expressed confidence in the progress of the transition and highlighted exceptional engagement from multiple candidates. Additionally, the company announced a restructuring plan that involves reducing their real estate footprint and downsizing or closing offices globally. They have also made a 4% reduction in their workforce to align talent with strategic priorities. The company is committed to delivering margin expansion and is investing in making Pinterest a more positive and safe platform, particularly for minors. Measures such as mandatory birth state information and making Pinterest private by default for users under 16 have been implemented. The company believes these investments will attract advertisers and contribute to their business. Furthermore, Sabrina Ellis has been appointed as the chief product officer.
Overall, the earnings call meeting provided insights into the company's CFO transition, progress in mobile engagement and revenue, and the use of generative AI tools. The company's focus on profitability, revenue generation, and user growth and engagement were evident through the discussion of key performance indicators. With a positive market outlook and strategic plans in place, the company aims to continue its growth trajectory and capitalize on monetization opportunities both domestically and internationally.