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Lacking the immense war chests of tech behemoths Alphabet (GOOG) and Meta Platforms (META), Pinterest (PINS) has always been the underdog as billions of dollars pour into new AI technologies in order to gain a strong foothold in the digital advertising space. After GOOG and META both reported strong Q4 results within their advertising businesses, PINS became somewhat of an afterthought as its Q4 earnings report approached on the assumption that its results wouldn't stack up. Case and point: shares of PINS were virtually flat since META's Q4 report on January 29, prior to today's earnings-induced launch higher.

To further hammer the point home, last year, PINS fell by nearly 20%, while META and GOOG soared by 70% and 36%, respectively. However, while its stock was languishing in 2024, PINS was busy making its own AI-powered improvements to its platform while launching new consequential products like Performance+. Those investments are now paying off in a major way, as illustrated by the company's Q4 results and bullish outlook.

• The clear blemish on PINS' Q4 results is the EPS miss, ending a streak of nine consecutive bottom-line beats. That shortfall, though, is mitigated by the fact that PINS' adjusted EBITDA jumped by 28% yr/yr to $470.9 mln with adjusted EBITDA margin expanding by 320 bps yr/yr to 41%. Better yet, the company is anticipating further margin expansion in 2025, although the gains may not be as sizable as they were in 2024.
• A combination of solid cost discipline and revenue growth fueled by MAU increases and rising ARPU is providing the boost to adjusted EBITDA. In Q4, total expenses were up 10% compared to revenue growth of nearly 18%, illustrating that PINS is seeing a strong return on its investments in R&D and headcount. Furthermore, its less-antagonizing platform is resonating with more users and advertisers, as reflected by the 11% growth in MAUs to 553.0 mln -- a new all-time high for the company.
• Compared to META and GOOG, PINS' capex investments pale in comparison. For instance, in Q4, META and GOOG both shelled out over $14.0 bln in capex, while PINS' invested about $3.8 bln in equipment, property and technology. PINS is making those dollars stretch, though, as its AI investments are becoming game-changers. PINS stated that its AI-powered whole page optimization is enabling it to flex up relevant ad loads to users during moments of high commercial intent, leading to stronger action and convert rates for advertisers. 
• Performance+, which bundles automation and AI features to simplify ad campaign creation, is also seeing healthy adoption thanks to the better efficiency it provides during the ad setup and creation process. Building upon this product is a key priority in 2025 as PINS doubles down on providing advertisers with more creative control through features like automated cropping, adjusting image brightness, and adding logo overlays.

PINS impressive Q4 performance and upside Q2 revenue guidance are catching investors' attention, showing that the company deserves to be in the conversation alongside META and GOOG when it comes to digital advertising companies that are capitalizing on new AI capabilities.