Specialist
Former senior manager, TPM at Pinterest Inc
Agenda
- User growth challenges for Pinterest (NYSE: PINS), notably continuing MAU (monthly active user) growth deceleration/declines
- Increasing importance of commerce and video, and transition from a discovery platform to a shopping-focused one
- 1-3-year outlook – risks and possible M&A scenarios, highlighting cancelled PayPal (NASDAQ: PYPL) discussions and management’s continued “lack of urgency”
Questions
1.
Pinterest recently released its Q3 2021 financial results, which indicated a continuing deceleration in MAU [monthly active user] growth from earlier in the year. What do you think of this trend and is it something you find surprising? Do you expect the company will pivot to emphasise more engagement-related activity rather than user-growth-related activity?
2.
Could you explain the differentiation in behaviour depending on demographics, particularly around age? It sounded as if there was a more pronounced decline in some of the metrics related to younger users, whereas maybe older users did not drop off as much.
3.
Pinterest’s MAU numbers for Q3 2021 were essentially flat, with 1% growth and 10% decline in the US, continuing that trend. When consider the US, in particular, those are comparable user numbers pre-pandemic vs now. How much normalisation of user activity has Pinterest encountered so far? It seems some behaviours have continued. Some people have realised this is a great website and activity and so they’ve continued on. However, in some cases these were temporary changes in behaviour where people discovered something they liked to do but were just eager to return to their pre-pandemic activities, as you referenced.
4.
Where do you expect Pinterest’s MAU rate to settle over the next 6-12 months? Are there factors in addition to the pandemic that could support MAU growth or protect remaining MAU? We’ve monitored a continuing decline in growth with sequential deceleration through the entirety of 2021. There were 89 million MAUs in the US at the end of Q3, with 356 million internationally.
5.
You highlighted how retention of existing users is of primary importance. However, as Pinterest aims for growth, I imagine engagement becomes more important because when considering the levers to growth, you think of user growth, engagement growth and then pricing. How do you think about engagement? It’s seems a large focus for the company has been initiatives it thinks can help drive engagement and, resultingly, revenue.
Private and confidential 5
E-commerce has been a point of emphasis, along with video, as Pinterest TV is launching November 8th, though I believe that has been a missed opportunity. Could you discuss Pinterest’s work with e-commerce and video, along with its efforts to reach out to creators to jump-start engagement?
6.
What do you think of this notion that creators might find a lot to like about Pinterest due to MAU numbers being very substantial and actually larger than other properties we’ve discussed, despite the company’s MAU challenges? There’s also a powerful discoverability factor in the context of what Pinterest is and the types of
users it attracts and has as loyal users. Could creators increasingly aim to use Pinterest as more of a top-of the-funnel solution and then push people to other platforms such as YouTube? Could that be an appealing niche for creators in the near term?
7.
Users are increasingly focused on shopping within the platforms they happen to be on and serve the ad regarding. Pinterest has done a good job with shopping and shopping Pins. Could connecting creators, video and shopping be a path forward for the company, where leaving the site isn’t such a detrimental conclusion because someone is buying something as a result of what they find on Pinterest? What’s to come for the company with respect to shopping?
8.
Do you think one of the challenges Pinterest is facing is pivoting from a visual search and discovery platform to a shopping and buying platform? It seems the company is more more advanced in making that transition among users, but the remaining challenge is about execution, as you referenced. You also discussed management’s identification of the importance of this shift and its commitment with capital to back that up. Can you elaborate on that point? What is necessary to make the transition to a shopping-focused platform successful?
9.
A lot of people were surprised, perhaps not as much by Pinterest being discussed as a takeover candidate, but that the would-be suitor was PayPal. Why would such a deal have made sense for PayPal, given our conversation about Pinterest transitioning to a shopping-focused platform? What do you think of the reporting regarding PayPal potentially buying Pinterest?
10.
It seems Pinterest has historically intentionally priced advertising below the market, in part to win market share. Do you expect the company to be more aggressive regarding pricing, given the current circumstances? Could that help the company combat its MAU challenges and have growth there?
11.
It seems there’s a lack of urgency in Pinterest and perhaps that emanates from Ben Silbermann, the Co founder, Chairman, President and CEO. Is that a fair way to characterise some of the issues the company has had? You alluded to how there are so many different projects and priorities that it’s difficult make an impact. What do you think of its management and what could help inject a sense of urgency that hasn’t been there previously?
12.
What’s next for Pinterest? We have discussed some of the growth challenges and why PayPal was interested and why that deal didn’t come to fruition. Do you think 1-3 years from now Pinterest is an independent company? You highlighted the notion that a player such as Amazon might make a logical buyer for it. Given the legal and regulatory scrutiny on big tech, I’m not sure a USD 40bn-50bn acquisition would pass muster.
