Pinterest (NYSE:PINS) delivered a stellar first-quarter report Tuesday afternoon. Revenue surged 78% from a year ago to $485 million, and adjusted EBITDA weighed in at $83.8 million compared to a loss of $53.3 million in Q1 2020. However, two of the best metrics in the last report were growth in international users and average revenue per user (ARPU) outside of the U.S. Historically, digital advertising has been far less lucrative in foreign markets. But these latest results look incredibly promising for the internet search and social media company. 

A big boost for a challenging metric

The foundation of Pinterest's incredible revenue increase in Q1 2021 was another big jump in monthly average users (MAUs). The company finished March with 478 million worldwide -- up from 459 million just three months prior, and up 30% from the 367 million MAUs at the end of Q1 2020.

Of those users, 380 million were outside of the U.S. Clearly there's plenty more room for Pinterest to continue growing the number of people it interacts with. To wit, it expects global MAUs to increase by a mid-teens percentage year over year in Q2. That would be a big deceleration in growth, but bear in mind the company is running up against a tough comparison: It picked up an unusually large number of new users during Q2 2020, when people were adjusting to the initial lockdowns put in place to stem the spread of COVID-19.

A woman using a laptop in a coffee shop.

Image source: Getty Images.

In that light, Pinterest's guidance bodes well for its overall growth story. In fact, international expansion is especially promising as the number of U.S. MAUs is actually expected to be flat year over year in Q2. But even better than international MAUs carrying the day was the jump Pinterest reported in international ARPU. Between the impact of stricter laws on digital ads and privacy in areas like the European Union, and lower ad value per user in emerging markets, international ARPU tends to be far lower than domestic ARPU for companies like Pinterest. But the company just reported a huge increase in this metric. And with management forecasting about a 105% increase in revenue in Q2, but only a mid-teens percentage increase in MAUs, that implies a big increase in ARPU this spring. 

Average Revenue Per User (ARPU)

Q1 2021

Q1 2020

 Change

U.S.

$3.99

$2.66

50%

International

$0.26

$0.13

91%

Data source: Pinterest.  

Time to buy this dip

Based on Pinterest's second-quarter revenue guidance (105% year-over-year growth would amount to roughly $560 million), Pinterest stock is trading at 27 times 12-month sales. Premium price tag? You bet. But given how quickly the company is growing and the even faster pace at which the bottom line is expanding, I'm a buyer of Pinterest stock after this latest quarterly report. Shares are down over 20% from their all-time highs as of this writing.

The international segment in particular is great news for Pinterest. While I expect the value of advertising in foreign markets to remain far lower than in the U.S. for the foreseeable future, the visual search company is investing heavily to help brands build stronger connections with consumers. It also isn't plagued with the sorts of issues that keep drawing the ire of regulators to peers like Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG). Given this dynamic, Pinterest's user base and ARPU overseas should continue rising at a rapid pace. It's quickly amassing power in the digital advertising space, and is my best bet to emerge as a dominant force in the industry in the coming years. With 478 million active users worldwide and counting, it's already well on its way.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.