• by Colin Kirkland , November 8, 2024

Pinterest's latest performance update shows a record high in usage, with a solid increase in revenue year-over-year, positively positioning the social media company ahead of the holiday season. However, the company's sales continue to be impacted by a weakness in CPG brands, while user growth remains relatively stagnant in the U.S., a key market.

Pinterest added 15 million more users in the third quarter, marking a major leap in user growth compared to Q2, when the company added only 4 million more active users.

Now, with 537 million monthly active users, the platform has shown that it has recovered from a slip in usage after pandemic lockdowns lifted and brick-and-mortar stores reopened.

But while Pinterest's new user numbers far surpass its highest numbers during the height of the COVID pandemic, the platform's new users are not coming from key revenue markets like the U.S. and Canada, where year-over-year growth is 3%, compared to 11% in the global category.

Stagnant user growth in the U.S. and Canada may affect the platform's overall ad business, as average revenue per user in these two regions is up 13%, compared to 5% in global markets.

Still, as Pinterest has boosted its AI-powered ad-creation tools and in-app shopping features, like virtual try-ons and digital matching, total revenue for the quarter reached $898 million, surpassing analysts' expectations, and showing 18% growth year-over-year.

During an earnings call, however, Pinterest CFO Julia Donnelly told analysts that ongoing weaknesses from food and beverage advertisers has negatively impacted the social media company's overall sales. According to Donnelly, a slump by this CPG sector is likely to continue into the fourth quarter.

The company is also spending more than it ever has, reporting a 25% increase in research and development costs over the past year.

The company’s expenditures are likely necessary as it works to keep up with the AI-powered ad tools being developed by its competitors, as well as the ecommerce technologies that drive brands to the platform.