Pinterest Loses 10 Million More Active Users as Shoppers Return to Physical Stores

Pinterest has released its latest earnings report, which indicates a sustained drop in active users as more regions come out of lockdown and customers return to physical stores, while revenue remained stable amid market headwinds.

First and foremost, in terms of usage, Pinterest's total MAU count fell to 444 million in Q3, down 10 million from the previous quarter.

As you can see, Pinterest's Q2 stats were down 24 million MAUs from the previous quarter, meaning that after a lengthy period of steady growth, Pinterest has lost 34 million active users in total over the last two quarters. That's not a good indication, but fluctuating market conditions as a result of COVID are difficult to foresee, and Pinterest, with its focus on shopping, was always the most likely to be struck hard by the reopening of physical stores of all the social platforms.

Pinterest promoted itself as a virtual shopping mall and a replacement for in-person browsing during the shutdown period, which saw the platform gain over 100 million new active users. Which fueled significant development, but the negative today is that, with actual retail malls reopening, Pinterest's utility will be diminished, at least to some extent.

People have embraced life outside their homes as lockdowns have loosened, a trend that resulted in a sharp drop in our year-over-year growth rate of monthly active users (MAUs) in Q2 and Q3, as consumer preferences switched away from our primary at-home use cases. This will be the platform's main storyline in its Q2 report, but there are reasons to be optimistic in other areas, and there's also a case to be made that Pinterest shouldn't be measured on usage growth in the same way that other social networks are, because it's not as reliant on it for its business growth.

This is mirrored in Pinterest's average revenue per user (ARPU), which climbed again in Q3:

Pinterest's foreign ARPU growth is still modest, but the company is working to expand its shopping tools to new regions, while its APRU in the United States continues to rise consistently. Because the focus is on rewarding direct action with each Pin, rather than reaching the biggest possible audience, the thesis here is that Pinterest has a better chance of making money from shopping activity than from relying on broader exposure to adverts.

Of course, Pinterest still makes money from ad exposure, but the app's focus is different, which could mitigate the impact of slower growth if Pinterest can optimize the people it now has.

The number of Pinners engaging with shopping surfaces is up more than 20% quarter over quarter and 60% year over year, indicating that shopping engagement is still strong.

Pinterest is currently developing this, but even with lower comparative usage rates, it has a lot of room for revenue growth if it starts charging fees on purchases, for example, and if it can improve sales results for certain verticals. In terms of revenue, it took in $633 million in the third quarter, increasing 43 percent year over year.

Pinterest claims that significant retail advertisers have boosted their demand, and that overall product searches have climbed by more than 100 percent year over year. Gen Z Pinners' searches on the Shop page have surged by more than 200 percent. The CPG sector, on the other hand, suffered a slowdown owing to “supply-chain interruptions, inventory and labor shortages, and rising commodity prices,” according to Pinterest. Still, its income growth rate is stable - though there's a risk that if it continues to lose users, advertiser interest could decline as well, forcing it to hunt for alternative revenue sources.

In recent months, Pinterest has unveiled several new features, like its advanced AR Try On choices, 'Takes' for Idea Pins, which adds an interactive element, and its Watch feed, which is a full-screen, scrolling, vertical stream of Pin material.

Pinterest is seeking to match with the increased interest in video consumption, which includes live-stream purchasing, another element it's presently experimenting with, by drawing inspiration from the latest consumption trends (aka TikTok). Although there hasn't been a large test yet, the platform's continuous evolution as a crucial product discovery and shopping tool is noteworthy, with Pinterest hoping to benefit from the COVID-led surge in online commerce to maximize its potential.

Pinterest believes that Idea Pins, its new video-first native content format, will lead to longer and more frequent engagement on the network. On other platforms, creator-driven content has shown to be a driver of engagement, but Idea Pins provide a unique value proposition for both Creators and Pinners because they are designed to encourage action rather than merely entertain. Again, Pinterest's devoted focus on commerce, rather than social engagement, will ideally create more options for it to maximize the users it does have, so even if it has fewer, its more defined focus could still yield higher reaction for marketers and business partners.

And that could end up being a far more valuable approach than some other social apps – while it's worth noting that, despite recent declines in usage, Pinterest's overall user count has seen a big jump over the past year, and all businesses are operating in an unfamiliar environment, so it's difficult to fully project how indicative jumps and shifts of this type are.

As a more indicative gauge, you might be better off comparing Pinterest's Q3 2021 stats to Q3 2019:

That's not to say we shouldn't blame Pinterest for its recent slowness; other social applications have witnessed greater usage, and internet lockdowns and other measures have resulted in more internet usage, not less. But I wouldn't underestimate the app's two-year surge, as well as the platform's relative stickiness for the app's more engaged user base (previous research has shown that up to 90 percent of weekly Pinners use the platform to make purchase decisions)

Indeed, Pinterest is producing more direct sales for more businesses than ever before, and with 444 million monthly active users, it's difficult to overlook the opportunity. And as it expands its shopping tools to new regions, its opportunities expand as well. While this may not be the ideal conclusion for Pinterest at this time, its continued development, innovation, and growth could lead to significant opportunities in the future.