Pinterest (PINS): Funneling & Monetization To Outpace User Growth—Key Catalysts and Impact on Ad Revenue Expansion- Major Drivers, Thesis, 3-Year Outlook, Earnings, Forecasts/Estimates, Valuation, Peer Analysis & Major Risks!

Pinterest faces several headwinds entering Q3 2024, notably tough year-over-year revenue comparisons following a sharp acceleration in growth from Q2 to Q3 last year. Weakness in the CPG sector, particularly among food and beverage advertisers, and a modest foreign exchange headwind of about one percentage point are additional challenges, marking the first such FX impact in five quarters. Despite these pressures, Pinterest is benefiting from broad-based user growth across all regions and the expansion of its full-funnel ad solutions. Key tailwinds include higher advertiser adoption of lower funnel tools, which have driven outbound clicks to advertisers to double for the third consecutive quarter. The rollout of Performance Plus, an AI-driven solution enhancing campaign outcomes, has delivered meaningful improvements in cost per acquisition and return on ad spend, further bolstering Pinterest’s monetization potential. Guidance for Q3 2024 calls for revenue between $885 million and $900 million, representing 16% to 18% year-over-year growth, with continued strength in the lower funnel and third-party ad demand scaling. Non-GAAP operating expenses are forecasted at $485 million to $500 million, up 17% to 20% year-over-year, primarily due to investments in AI talent and R&D aimed at bolstering automation and lower funnel capabilities. The company reaffirmed its outlook for adjusted EBITDA margin expansion, though at a more tempered pace compared to earlier in the year, balancing growth investments with profitability improvements. Overall, Pinterest’s strategic focus on lower funnel ad offerings, AI-driven personalization, and enhanced shopping functionality is driving solid growth. However, softness in CPG and the integration of third-party ad demand remain risks. With 2024 revenue projected to grow 19%, driven by stable economic conditions and improved monetization, can Pinterest sustain advertiser adoption and capture long-term growth amid these headwinds? We delve into Major Drivers, Our perspective/investment thesis & follow up to our Initiation of Coverage :Earnings Review F2Q24, Forecasts,DCF, Valuation, Peer Analysis, ESG & Risks