Brief Overview
Phillip Securities Research (PSR) initiates coverage on Pinterest Inc. (NYSE: PINS) with a BUY recommendation and a discounted cash flow (DCF) target price of US$30, based on a 6% weighted average cost of capital and a 3.5% terminal growth rate. PINS delivered 18% year-on-year revenue growth to US$1.18bn in 2Q26, while global monthly active users (MAUs) reached a record 640 million. Adjusted EBITDA rose 24% year-on-year to US$311mn, and free cash flow grew 37% year-on-year to US$270mn. PSR forecasts FY26e revenue to grow 16% year-on-year to US$4.9bn, with adjusted EBITDA of US$1.5bn, implying a 30% margin.
Investment Positives
Significant international monetisation potential. PINS generated approximately 75% of its revenue from the US and Canada (UCAN), despite those markets accounting for only around 17% of MAUs. International markets contributed roughly 83% of MAUs but only 25% of revenue, highlighting a substantial monetisation gap. In FY25, ARPU stood at US$30.84 in UCAN, compared with US$5.12 in Europe and just US$0.83 in the Rest of World. We believe this gap presents a meaningful long-term growth opportunity. PINS’ efforts to expand international advertising through retail partnerships, including with Amazon, alongside AI-powered Performance+ tools that automate campaign setup and optimisation, could encourage greater advertising budget allocation to the platform and gradually narrow the ARPU gap.
Differentiated product with a high-commercial-intent user base. PINS operates at the intersection of search, social and commerce, differentiated by its focus on visual search and discovery. Users primarily visit the platform to seek inspiration, plan projects and discover products, creating opportunities for advertisers to reach consumers early in the shopping journey. Notably, 96% of PINS’ top searches are unbranded, suggesting users are open to discovering new products and brands. This creates opportunities to attract a broader range of small and medium-sized advertisers to its self-serve advertising tools. Furthermore, PINS reaches 40% of US households earning over US$150,000 annually, providing advertisers access to consumers with strong purchasing power.
Strong financial performance and capital-light model. PINS reported revenue of US$4.22bn in FY25, up 16% year-on-year, with adjusted EBITDA of US$1.27bn, reflecting improved operating leverage. Free cash flow increased 33.2% year-on-year to US$1.25bn in FY25. The company operates a capital-light model, with capital expenditure at approximately 0.8% of revenue. PINS has maintained a net cash position since its IPO and authorised a new US$3.5bn share repurchase programme in March 2026.
Challenges
Slower user growth and advertiser spending. As PINS’ user base skews towards women and Gen Z, further user growth may become more challenging as the platform matures and market penetration increases. Intensifying competition from major digital advertising platforms, particularly those integrating AI agents and chatbots into their ecosystems, could divert user engagement and advertiser spending away from PINS, potentially weighing on its growth and monetisation prospects.
Reliance on advertising revenue. PINS derives almost all of its revenue from third-party advertising, with a substantial portion concentrated in the retail and consumer packaged goods sectors. This near-total reliance on advertising makes the company’s financial performance highly sensitive to broad shifts in advertising budgets and intensified competition from rival social media platforms.
Outlook
Management guided 3Q26e revenue to a range of US$1.19bn to US$1.21bn, implying 13% to 15% year-on-year growth, with adjusted EBITDA expected between US$335mn and US$355mn. The expected moderation reflects a shift in Amazon Prime Day-related advertising spend from 3Q to 2Q and the non-repeat of World Cup-related advertising spend. Management raised its FY26e adjusted EBITDA margin guidance to approximately 30%, up from 29% previously. PINS expects to fully integrate tvScientific’s connected TV advertising capabilities into Performance+ by FY27e, creating a full-funnel performance advertising solution.
Recommendation and Target Price
We initiates coverage on Pinterest Inc. with a BUY recommendation and a DCF target price of US$30, based on a 6% WACC and 3.5% terminal growth rate. FY26e revenue is forecast to grow 16% year-on-year to US$4.9bn, with adjusted EBITDA of US$1.5bn. PINS currently trades at 30 times historical price-to-earnings, below the average of its peers.
Frequently Asked Questions
Q: Why does PSR see significant monetisation potential for Pinterest?
A: International markets contribute approximately 83% of MAUs but only 25% of revenue. In FY25, UCAN ARPU was US$30.84, while Europe and Rest of World ARPU were just US$5.12 and US$0.83, respectively. We believes this substantial gap presents a meaningful long-term growth opportunity as international monetisation gradually improves.
Q: What makes Pinterest's user base attractive to advertisers?
A: Users primarily visit the platform to seek inspiration and discover products, with 96% of top searches being unbranded. This means users are open to discovering new products and brands. Additionally, Pinterest reaches 40% of US households earning over US$150,000 annually, offering advertisers access to consumers with strong purchasing power.
Q: How did Pinterest perform in its most recent quarter?
A: In 2Q26, PINS reported revenue of US$1.18bn, up 18% year-on-year. Global MAUs reached a record 640 million, adjusted EBITDA grew 24% year-on-year to US$311mn, and free cash flow increased 37% year-on-year to US$270mn.
Q: What is the outlook for Pinterest's 3Q26?
A: Management guided 3Q26e revenue to US$1.19bn–US$1.21bn, implying 13%–15% year-on-year growth. The expected moderation reflects shifts in Amazon Prime Day advertising timing and the non-repeat of World Cup-related spend. Adjusted EBITDA is expected between US$335mn and US$355mn.
Q: What are the key risks for Pinterest?
A: The main risks include slower user growth as the platform matures, intensifying competition from major digital advertising platforms integrating AI agents and chatbots, and PINS' near-total reliance on advertising revenue concentrated in the retail and consumer packaged goods sectors.
Q: What is PSR's recommendation and target price?
A: We initiates coverage with a BUY recommendation and a DCF target price of US$30, based on a 6% WACC and 3.5% terminal growth rate.
Q: How does Pinterest return capital to shareholders?
A: PINS authorised a new US$3.5bn share repurchase programme in March 2026, replacing its previous US$2bn programme. As of 2Q26, US$1.95bn remained available under the new programme. The company also issued US$1bn in convertible senior notes to fund an accelerated share repurchase programme.
Q: What role does AI play in Pinterest's growth strategy?
A: PINS' AI-powered Performance+ tools automate campaign setup and optimisation, helping advertisers reach relevant audiences and improve campaign returns. The company is also investing in Pinterest Assistant and plans to integrate tvScientific's connected TV advertising capabilities into Performance+ by FY27e to create a full-funnel performance advertising solution.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
Disclaimer
Disclaimer These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products. Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance. Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries. The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries. Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned. This advertisement has not been reviewed by the Monetary Authority of Singapore.
