Breakingviews – Pinterest's future is anchored in global sales

SAN FRANCISCO (Reuters Breakingviews) – Pinterest's future lies in anchoring global sales growth. The social scrapbooking app has a healthier record than other startups become public. Revenue growth exceeded expenses, reducing its net loss by 65% ​​over two years to $ 63 million. However, the bulk of its users' expansion comes from overseas enthusiasts, who are still far less lucrative than their compatriots.

Most technology startups that become public lose money. Pinterest has improved its finances: its turnover has increased by more than 150% over 2016 to reach $ 756 million in 2018, while its costs have increased by about 70%. According to media reports, it could rise to about $ 13 billion, up from $ 12 billion after a fundraiser in 2017. The success of this multiple multiple of about 17 times its advertising sales will however depend on its international growth.

Pinterest's US user growth remained virtually unchanged last year and grew only 2.5% from the first quarter of 2018 to reach 82 million active users per month in the fourth quarter . Its overseas base has grown faster, reaching 184 million users, up 15% in 2018.

Yet most of Pinterest's revenues come from America, which accounted for about 94% of fourth-quarter sales and is still far more lucrative. In the United States, a user generated an average turnover of $ 9.04 compared to $ 0.25 abroad. In contrast, Facebook generates approximately half of its advertising revenue outside the United States and Canada. Nevertheless, its average revenue per user in this region is 34.86 USD, about three times that of a user in Europe.

It could just be a matter of timing. Pinterest claims to have initially focused on sales in the United States and is now targeting other markets. But as digital advertising grows on the other side of the Atlantic, the traditional version remains dominant. According to eMarketer, online spending is expected to increase by 3.6% in Europe in 2018, representing around 40% of the total market. The region's new privacy rules could also hinder efforts.

Pinterest has logical business benefits. There is a natural connection between users, mostly women, looking for ideas for weddings or vacations, and advertisers. The trick will be to leverage it to clear more funds from abroad.