Faced with an uncertain context and fierce competition between social networks, Pinterest struggles to find the winning recipe to win in the big leagues.
Slow growth, declining user numbers, plummeting valuations… Pinterest is looking for inspiration to relaunch.
The photo-sharing platform has published its results for the second quarter of 2022, which ended in late June on Monday, August 1. It recorded a turnover of 666 million dollars (+9% over the year) for a net loss of 43 million dollars.
On the user side, the American company claims to have 433 million monthly active users worldwide – a drop of 5% in a year. This drop is attributed to “decreased search engine traffic (largely due to Google’s November 2021 algorithm update)”, but also to the “persistent impact of the slowdown of the pandemic (…), which had consequences”. in the commitment ” from users, details the letter to investors.
The consequences of the pandemic
Pinterest was unable to capitalize the interest generated during the coronavirus pandemic. Like most social networks, it saw its activity jump during this period – successive lockdowns drove users to take refuge behind their screens.
Launched in 2010, the platform was profitable for the first time last year with a profit of 316 million dollars for a turnover of 2.6 billion (+ 52% over a year).
Persistent acquisition rumors surfaced. In early 2021, Microsoft would be willing to shell out $51 billion to get its hands on Pinterest. A few months later, it was PayPal’s turn to take an interest in 44 billion.
As the platform is completely free for users, its monetization is based solely on displaying ads. Like other tech giants, Pinterest is now experiencing slow growth due to advertisers’ reluctance.
“The macroeconomic environment has created significant uncertainty for our advertising partners,” says new CEO Bill Ready in the letter to shareholders.
Many of them “cut advertising spending due to concerns about weakening consumer demand,” the document continues.
Something to worry the markets. Valued at $13.14 billion, Pinterest has seen its stock drop more than 65% between February 2021 ($85.90), at its highest peak, and this month ($19.99).
Diversification for e-commerce
In order to diversify its sources of income, the “lifestyle” platform has started a shift to e-commerce since 2019. The stated objective: to go from inspiration, through simple photo consultation, to purchase in a few clicks.
That’s why Pinterest partnered with online sales platform Shopify in 2020. To lower the purchase barrier, the site now offers to buy the products seen in the images by clicking a link that takes you directly to the advertisers’ website.
To accelerate this transition, new features were rolled out in early July: a shopping tab on merchant profiles, allowing them to more easily view products to buy, or even augmented reality to preview a product in situ for US markets. and from the UK.
“We accelerated our investments in e-commerce this quarter,” said the group. “Pinterest is uniquely positioned to address unresolved industry issues… and help people move from inspiration to achievement.”
A fierce competition between social networks
As competition is increasingly fierce among social networks, Pinterest is forced to renew itself.
The advertising market is dominated by the Google-Facebook duopoly. Instagram, which is also focused on lifestyle themes, takes advantage of the firepower of Facebook to develop online sales without leaving the app.
As for TikTok and Snapchat, popular for their short video format, they have become the apps to emulate. In its letter to investors, Pinterest thus recognizes “the impact of competition on the share of time spent [par les utilisateurs] on video-centric platforms”.
A reorganization in progress
Faced with its challenges, co-founder and CEO Ben Silbermann was expelled. He was replaced in June by Bill Ready, former president of Google Commerce. Activist fund Elliott, known for attacking tech companies in pursuit of profitability, said on Monday, Aug. 1, that it has acquired 9% of Pinterest.
“I don’t subscribe to a race for growth at all costs,” said Bill Ready after the quarterly results were published, reports the street newspaperadding that it would closely examine spending to increase profitability in the coming year.
“While I believe that we need to invest in long-term growth, I also believe that constraints breed creativity and can lead to even better product results,” he said.