Julia Donnelly, Pinterest‘s CFO, has announced her resignation from the company effective October 30, which will bring a major change to the leadership of image-sharing and digital advertising platform Pinterest. Now Pinterest’s newest hire, Donnelly has announced that he will leave to make a move to a private early-stage business. The company has already initiated an external search for a successor to her and Vikram Naidu, Pinterest’s vice president of finance and business operations, will serve as the interim principal financial officer.
Donnelly’s resignation follows three-plus years of growth for Pinterest’s ad business and its efforts to make the company more profitable. While she was in the company, the company was reported to have a continuous period of good revenue growth and also made efforts to enhance the operating discipline and profitability of the company. Her departure does come at a critical time for Pinterest as it is facing a growing competition in the entire digital advertising landscape.
In a letter to employees, Pinterest’s CEO, Bill Ready, pointed to Donnelly as a leader who contributed to a period that saw the company grow double-digit revenue for 11 consecutive quarters, add operating discipline and improve margins by a significant amount, which ensured the ongoing health of the business. The fact that the statement is included shows Pinterest’s great value in the strides made financially as Donnelly served as CFO.
Prior to joining Pinterest, Donnelly spent three years at Wayfair, an online furniture company, as global head of finance. The transfer of experience from a global commerce business like a large tech firm to a site where the bottom line is increasingly tied to digital advertising, user engagement and the potential to monetize its massive audience in a profitable way.
During her tenure at Pinterest, they’ve seen some significant corporate changes. The company announced its acquisition of tvScientific, a connected-TV advertising platform. The acquisition brought Pinterest’s reach to TV ads and emulated a broader industry trend to marry traditional TV viewers with digital ad tech.
In addition, Pinterest made a major deal with Amazon Web Services’ cloud services. The contract, worth $4 billion, was a significant investment in the cloud infrastructure and technology. These partnerships can last a long time and change the way the platform works, especially when it comes to processing data, artificial intelligence, advertising technology and the platforms’ infrastructure that it needs to support its increasing user and commercial base.
The exit is coming at a less opportune time for Pinterest, however. The company had predicted in an earlier August forecast that revenue growth would be slower in the third quarter. The forecast indicated that pressure is set to build in the digital advertising industry in general as Pinterest fights against much larger platforms with established advertising ecosystems and big user bases.
Instagram is still one of the key players, though, in the Instagram realm.Among the other big players in the space, Instagram is one of them. The experience users have and the business models they follow are different, but both platforms use a lot of visual content and advertising. Pinterest has traditionally positioned itself as a discovery platform where users search for ideas, products, inspiration and planning resources. This lends it an especially shopping/customer intent connection with its advertising model. Meanwhile, advertisers have numerous choices as to where to invest and the market for advertising dollars is competitive.
The company will be closely monitored over the next few years as they make the transition in finance leadership, while still being able to grow revenues. A CFO is a key player in financial planning, reporting, capital allocation, investor relations and overall business strategy. A switch in that role can then draw the attention of investors, especially as it relates to a company that is trying to make a balance between investment in growth and higher margins.
But Pinterest has not said that Donnelly’s resignation is linked to any decline in the company’s financial results. Rather, she is moving away to seek a job on the young side of a private company. It’s not the first time that high-profile tech executives made such a transition as veteran leaders can be drawn to smaller businesses where they can first influence the strategy and financial systems they work with.
The immediate challenge for Pinterest will be continuity until it finds another long-lasting solution. The appointment of Vikram Naidu as interim principal financial officer gives the company an executive from within, who has prior experience of the financial and business operations of the company. While waiting for the external search to be completed, an internal search can be an effective transition to minimise disruption, especially in a competitive advertising market.
The external search indicates Pinterest is staying agile when considering how to win over financial managers for the next phase of growth. This eventual appointment would be significant given the growing scrutiny on tech businesses for their profitability, the effectiveness of their advertising, their investment in artificial intelligence, and the expense of keeping their high-tech infrastructure running on a large scale.
In recent years, Pinterest has been trying to move beyond its image collection and sharing origins to become more than that. It has been steadily moving its business focus towards shopping, advertising and assisting brands in connecting with consumers when they are actively searching for ideas and products. That approach provides the company with a clear niche in the social media and advertising world and will necessitate ongoing investment in ads and technology.
Its ties with advertisers will continue to play a significant role in its financials. Markets for digital advertising can be volatile, as the decisions about the spending side are driven by the performance of each platform, the competition, consumer behavior and the economy. Advertising growth may be slower than usual, not necessarily a bad thing in the long term, but investors might be more conscious of fluctuations in revenue growth or operating expenses.
Donnelly’s departure comes on the heels of Pinterest’s impressive quarterly revenue growth of 20% and 18% respectively, as noted by Ready. It will be harder to keep that momentum going as the company expands and will be held to greater account against past results. Meanwhile, the trend towards visual discovery and commercialization buys the platform the chance to compete for ad dollars in retail, fashion, home design, and food and lifestyle.
