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Pinterest (PINS) Down 2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Pinterest (PINS - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pinterest due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Pinterest Tops Q2 Earnings Estimates on Solid Revenues
Pinterest reported impressive second-quarter 2023 results, with the bottom and the top line beating the respective Zacks Consensus Estimate.
The San Francisco-based Internet content provider reported higher revenues year over year, backed by a growing user base across all regions, AI integration and greater personalization of video content. Despite softness in the ad market, the introduction of various tools enhanced monetization on the platform and supported the advertisers.
Net Income
On a GAAP basis, the company registered a net loss of $34.9 million or a loss of 5 cents per share compared with a loss of $43.1 million or a loss of 7 cents per share in the year-ago quarter. Top-line improvement and higher interest income led to a narrower loss during the quarter.
Non-GAAP net income was $142.1 million or 21 cents per share compared with $77.4 million or 11 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents.
Revenues
During the second quarter, total revenues rose 6% year over year to $708 million and beat the Zacks Consensus Estimate of $698 million. Pinterest reported 8% year-over-year growth in monthly active users (MAUs) to 465 million. Mobile app MAUs increased 16% year over year.
The incorporation of advanced AI models is enhancing personalization on the platform and driving greater engagement. The company witnessed consistent engagement from Gen Z users. Emerging verticals like men’s fashion, auto, health and travel also witnessed solid momentum. The introduction of Premier Spotlight, Travel Catalogs and various measurement solutions are supported by advertisers to better measure the efficacy of their ad campaigns. The introduction of third-party ad partners like Amazon enhanced shoppability on the platform.
The United States and Canada contributed $565 million in revenues, up 4% year over year. Net sales fell short of our revenue estimate of $574.2 million.
Net sales from Europe aggregated $114 million, up 12% from the prior year’s tally of $102 million. The top line surpassed our estimate of $97.7 million.
Revenues from the Rest of World rose to $29 million from $22 million reported in the year-ago quarter, surpassing our revenue estimate of $25.6 million.
MAUs from the United States and Canada were 95 million, up 3% year over year. The quarterly figure matched our estimate. The Rest of World registered MAUs of 246 million, up 10% year over year. The second quarter tally surpassed our estimate of 233.7 million. MAUs from Europe rose to 124 million from 117 million in the prior year quarter and matched our estimate.
In the second quarter, the global average revenue per user (ARPU) stood at $1.53 compared with the year-ago quarter’s figure of $1.54. While ARPU in the United States and Canada rose 2% to $5.92, Europe reported growth of 6% to 91 cents. ARPU from the Rest of World improved 20% year over year to 12 cents.
Other Details
Adjusted EBITDA was $107 million in second-quarter 2023, up from $92 million a year ago. The improvement was driven by revenue growth and cost efficiency.
Total costs and expenses increased to $781.3 million from $700.4 million from the year-ago levels. On a GAAP basis, research and development expenditure increased to $269.4 million from $233.5 million. Administrative costs increased to $99.9 million from $90 million a year ago.
Cash Flow & Liquidity
As of Jun 30, 2023, Pinterest had cash and cash equivalents of $1,179.9 million, with $163 million of operating lease liabilities. The company generated $246.2 million of cash from operating activities in the first six months of 2023 compared with $333.5 million in the prior-year period.
Outlook
For the third quarter of 2023, Pinterest anticipates revenues to increase in the high single digit range year over year. Non-GAAP operating expenses are expected to increase in the low single digit range year over year.
For 2023, based on the anticipated revenue growth, the company expects to deliver around 400 basis point margin expansion for adjusted EBITDA. It is actively investing to increase user engagement and monetization while maintaining cost discipline to maximize revenue potential.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 7.89% due to these changes.
VGM Scores
At this time, Pinterest has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Pinterest has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Pinterest (PINS) Down 2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Pinterest (PINS - Free Report) . Shares have lost about 2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Pinterest due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Pinterest Tops Q2 Earnings Estimates on Solid Revenues
Pinterest reported impressive second-quarter 2023 results, with the bottom and the top line beating the respective Zacks Consensus Estimate.
The San Francisco-based Internet content provider reported higher revenues year over year, backed by a growing user base across all regions, AI integration and greater personalization of video content. Despite softness in the ad market, the introduction of various tools enhanced monetization on the platform and supported the advertisers.
Net Income
On a GAAP basis, the company registered a net loss of $34.9 million or a loss of 5 cents per share compared with a loss of $43.1 million or a loss of 7 cents per share in the year-ago quarter. Top-line improvement and higher interest income led to a narrower loss during the quarter.
Non-GAAP net income was $142.1 million or 21 cents per share compared with $77.4 million or 11 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 9 cents.
Revenues
During the second quarter, total revenues rose 6% year over year to $708 million and beat the Zacks Consensus Estimate of $698 million. Pinterest reported 8% year-over-year growth in monthly active users (MAUs) to 465 million. Mobile app MAUs increased 16% year over year.
The incorporation of advanced AI models is enhancing personalization on the platform and driving greater engagement. The company witnessed consistent engagement from Gen Z users. Emerging verticals like men’s fashion, auto, health and travel also witnessed solid momentum.
The introduction of Premier Spotlight, Travel Catalogs and various measurement solutions are supported by advertisers to better measure the efficacy of their ad campaigns. The introduction of third-party ad partners like Amazon enhanced shoppability on the platform.
The United States and Canada contributed $565 million in revenues, up 4% year over year. Net sales fell short of our revenue estimate of $574.2 million.
Net sales from Europe aggregated $114 million, up 12% from the prior year’s tally of $102 million. The top line surpassed our estimate of $97.7 million.
Revenues from the Rest of World rose to $29 million from $22 million reported in the year-ago quarter, surpassing our revenue estimate of $25.6 million.
MAUs from the United States and Canada were 95 million, up 3% year over year. The quarterly figure matched our estimate. The Rest of World registered MAUs of 246 million, up 10% year over year. The second quarter tally surpassed our estimate of 233.7 million. MAUs from Europe rose to 124 million from 117 million in the prior year quarter and matched our estimate.
In the second quarter, the global average revenue per user (ARPU) stood at $1.53 compared with the year-ago quarter’s figure of $1.54. While ARPU in the United States and Canada rose 2% to $5.92, Europe reported growth of 6% to 91 cents. ARPU from the Rest of World improved 20% year over year to 12 cents.
Other Details
Adjusted EBITDA was $107 million in second-quarter 2023, up from $92 million a year ago. The improvement was driven by revenue growth and cost efficiency.
Total costs and expenses increased to $781.3 million from $700.4 million from the year-ago levels. On a GAAP basis, research and development expenditure increased to $269.4 million from $233.5 million. Administrative costs increased to $99.9 million from $90 million a year ago.
Cash Flow & Liquidity
As of Jun 30, 2023, Pinterest had cash and cash equivalents of $1,179.9 million, with $163 million of operating lease liabilities. The company generated $246.2 million of cash from operating activities in the first six months of 2023 compared with $333.5 million in the prior-year period.
Outlook
For the third quarter of 2023, Pinterest anticipates revenues to increase in the high single digit range year over year. Non-GAAP operating expenses are expected to increase in the low single digit range year over year.
For 2023, based on the anticipated revenue growth, the company expects to deliver around 400 basis point margin expansion for adjusted EBITDA. It is actively investing to increase user engagement and monetization while maintaining cost discipline to maximize revenue potential.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 7.89% due to these changes.
VGM Scores
At this time, Pinterest has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Pinterest has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.