Pinterest's IPO filing shows surging revenue, shrinking losses
By the numbers
The San Francisco-based visual discovery platform has been losing money, but its revenue has also been surging. Pinterest – which plans to be listed as "PINS" on the New York Stock Exchange – says it lost nearly $183 million in 2016, but only $63 million in 2018.
Overall revenue, meanwhile, has increased, from $300 million to $756 million during the same time frame. The company has an ad-driven business model, with brands paying for offerings including "promoted pins," or ads that appear alongside images selected and "pinned" to the service by ordinary users.
For context, eMarketer said last October that Pinterest would generate $500 million in revenue in 2018, adding that it would hit the $1 billion mark come 2020. Based on Pinterest's S-1 filing, it appears the platform is a full year ahead of that prediction. EMarketer now says the company will surpass the $1 billion mark come 2019, adding that revenues should climb to $1.6 billion in 2021.
Competition for ad dollars
The company says Google, Facebook, Instagram, Twitter, Snapchat and Amazon are its biggest rivals. "Many of these competitors have longer operating histories, significantly greater financial, technical, marketing and other resources and larger user bases than we do," Pinterest said in the filing. "These competitors also have access to larger volumes of data and platforms that are used on a more frequent basis than ours, which may enable them to better understand their user base and develop and deliver more relevant content."
The company highlights how hurdles in regulation – such as GDPR or California's Consumer Privacy Act – may stunt its growth. At the same time, it's also somewhat reliant on the duopoly that is Google and Facebook.
"Additionally, if Facebook or Google discontinue single sign-on or experience an outage, then we may lose and be unable to recover users previously using this function, and our user growth or engagement could decline," the filing says.
Pinterest says it has more than 250 million monthly active users, two-thirds of whom are female. Roughly 43 percent of those users are also from the U.S. "This includes eight out of 10 moms, who are often the primary decision-makers when it comes to buying products and services for their household, as well as more than half of all U.S. millennials," it says.
Pinterest has a unique value proposition in that its users search for and save things they want to buy. The company calls itself a "visual search discovery engine," and it has poached key people from outfits such as Google to build a platform for marketers to bid on keywords in similar fashion to Google.
Its differentiator, it says, is the visual aspect of its platform. Some 97 percent of the top 1,000 most popular searches on Pinterest are unbranded, meaning someone who searches for "brown leather jacket" will see styles, but they won't carry a name like Frye, for example. A tool called "Shop the Look" applies computer vision to find similar, branded items for sale. "Shop the Look" ads aim to challenge Google's retail ads, called "Product Listing Ads."
Companies such as Target have long been counted among Pinterest's top customers. Although consumer packaged goods are its biggest bread-and-butter category when it comes to generating ad revenue, auto, entertainment and travel have been marked as areas of significant growth for the company.