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Shares of image-browsing platform Pinterest (NYSE: PINS) skyrocketed on Wednesday after the company reported financial results for the first quarter of 2024 that started to show off the company's potential. As of 10:30 a.m. ET, Pinterest stock was up 19% and within spitting distance of 52-week highs.

Pinterest's growth is taking off

Last time it reported financial results, Pinterest predicted it would generate Q1 revenue of $705 million at most. But in Q1, the company actually had revenue of $740 million, which was up 23% year over year and boosted by active user growth of 12%.

Pinterest's CEO Bill Ready said that Q1 represented its "Fastest user and revenue growth since 2021," which is certainly something worth celebrating.

Looking ahead to the second quarter, Pinterest expects 18% to 20% year-over-year revenue growth. That would be a small step back from its Q1 growth rate. But it would still represent its second-fastest quarterly growth in the last two years -- second only to Q1.

Pinterest's partnerships are paying off

In recent months, Pinterest has partnered with Amazon and Alphabet in certain markets, and management says that these partnerships were increasingly paying off in Q1. This is encouraging considering these partnerships are new and still have room to ramp up.

Moreover, Pinterest's management says it's capturing a larger percentage of advertising budgets as its customers realize how effective the platform is. For some of its larger customers, this represents around 5% of their budgets. That's still fairly small and could signal more gains as advertisers keep scaling up their spend.

If there's one knock against Pinterest, it's that it's operating at a net loss due to still-high stock-based compensation. That's something to watch in coming quarters. But the consolation is that it generates substantial positive cash flow, which management can use to mitigate the dilutive effect of its stock-based compensation.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jon Quast has positions in Pinterest. The Motley Fool has positions in and recommends Alphabet, Amazon, and Pinterest. The Motley Fool has a disclosure policy.

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