Pinterest, the social networking company that popularized virtual pinboards, recently released the prospectus for its upcoming IPO. The company, which was valued at $12.3 billion after its last funding round, plans to debut on the NYSE under the ticker "PINS" in April. Let's take a look at the six key numbers from Pinterest's filing.
1. 265 million MAUs
Pinterest's monthly active users (MAUs) rose 6% sequentially and 23% annually to 265 million during the fourth quarter. For comparison, Twitter's (NYSE:TWTR) MAUs dipped 2% sequentially to 321 million in its latest quarter, as Facebook's (NASDAQ:FB) MAUs rose 2% sequentially to 2.32 billion.
Pinterest is growing at a faster rate than those bigger platforms, but it doesn't necessarily compete against them. Unlike Twitter, where users share and react to news, or Facebook, where users share content with friends and family, Pinterest enables users to pin things and ideas (like outfits, recipes, and products) that they like.
2. $755.9 million in revenue
Pinterest monetizes its users through ads, which are naturally pinned across a user's feed. Pinterest revenue rose 58% annually to $273 million during that quarter, and 60% to $755.9 million for the full year.
Its revenue from the United States rose 58% annually during the quarter and accounted for 94% of its top line. Pinterest's growth rate in the US market is impressive compared to that of many other social networks. Twitter, for example, grew its US revenue just 24% annually to $506 million last quarter. However, Pinterest's heavy dependence on the US market raises questions about its ability to expand overseas if its domestic growth decelerates.
3. $3.14 in ARPU
Pinterest's ARPU (average revenue per user) improved 25% annually to $3.14 in 2018. In the fourth quarter, its ARPU grew 28% annually to $1.06. Yet that's much lower than the average ARPU for other major social networks. Facebook, for comparison, grew its global ARPU 19% annually to $7.37 last quarter.
4. A $63 million net loss
Pinterest is unprofitable, but its losses are narrowing. Its net loss narrowed from $130 million in 2017 to $63 million in 2018, while its adjusted EBITDA loss narrowed from $93 million to $39 million.
If Pinterest's losses continue to narrow at that rate, it could become profitable in the near future. Furthermore, it isn't heavily dependent on stock bonuses. Its stock-based compensation expenses accounted for less than 2% of its revenue in 2018, but that percentage could rise after its public offering.
5. 48% of Pinterest users use the platform for product searches
A recent Cowen & Co. study found that 48% of U.S. social media users used Pinterest to find and shop for products. Only 14% of Facebook users, 10% of Instagram users, and 7% of Twitter users used their respective social networks to do the same.
Meanwhile, an Oracle (NYSE:ORCL) study of retail transactions from 2016 to 2017 (cited in the prospectus) indicated that Pinterest households were 39% more likely to buy retail products and spent 29% more than the average household.
Those numbers highlight Pinterest's niche advantage in the nascent market for social shopping experiences, which Facebook, Instagram, Amazon (NASDAQ:AMZN), and Snap (NYSE:SNAP) are all targeting with experimental platforms. That's why Pinterest recently allowed companies to upload their entire catalogs to its platform.
6. Two classes of shares
Lastly, Pinterest's offering will be a dual-class offering, in which "co-founders, executive officers, employees and directors and their affiliates" will receive super-voting Class B shares worth 20 votes each. During the IPO, investors will be sold Class A shares worth one vote each.
This means that it will be very difficult (and likely impossible) for major investors to influence Pinterest's decisions or make activist moves against the company's management.
Should you invest in Pinterest's IPO?
Pinterest controls an interesting niche in the crowded social media market, and its growth metrics are decent. However, it's tough to make a call until Pinterest announces the size of the offering and prices the IPO to give the stock a clearer valuation. Therefore, investors should keep an eye on this stock until more details emerge.