Pinterest Inc. capped off a roaring 2020 by adding a record 100 million-plus users for the year and posting 76% year-over-year growth in fourth-quarter revenue on the strength of holiday retail, the company said Thursday.
Pinterest PINS, +0.91% shares rose sharply, as high as 10% after hours, after rising 0.9% in the regular session to close at $77.85.
In the company’s news release, Chief Financial Officer Todd Morgenfeld attributed a “remarkable year of growth” to “continued product innovation, execution and an earlier and longer holiday season.”
Pinterest made more pins “shoppable” and rolled out new formats like video as it tried to make its platform more engaging, and Chief Executive Ben Silbermann promised more efforts in those areas.
Besides investing in automated ad tools, he said the company plans new technology and products “to improve how folks explore and find products they love with tools… [to] visualize and plan,” mentioning a tool that lets users try on eyeshadow within the Pinterest app, for example.
For the full year, the company had a loss of 22 cents a share on revenue of $1.69 billion. Analysts had forecast a loss of 35 cents a share on $1.6 billion in revenue.
On the San Francisco-based company’s earnings call, Morgenfeld said he expects first-quarter revenue to grow about 70% year over year, but said he would be “keeping an eye on the impact of COVID on engagement,” which could be negatively affected if restrictions ease.
Another thing the company is watching, according to Morgenfeld, is privacy and the regulatory environment around the issue. He mentioned that a change in Apple’s operating-system update that will allow users to opt out of some targeted advertising could affect Pinterest. (Facebook and Apple are engaged in a war of words over the upcoming change.)
As for the record annual growth in users, Silbermann said on the call that it was helped by an increase in Gen Z users. He said the next wave of growth could come from international markets, which represent 17% of total revenue: “We’re still relatively under-penetrated there.”
Shares of Pinterest have risen 17% year-to-date (and are up 245% in the past 52 weeks), compared with a 2% increase in the S&P 500 index SPX, +1.09% so far this year.