Yahoo Finance Pinterest (NYSE:PINS) Reports Q2 In Line With Expectations But Stock Drops 14.1%
Social commerce platform Pinterest (NYSE: PINS) reported results in line with analysts' expectations in Q2 CY2024, with revenue up 20.6% year on year to $853.7 million. On the other hand, next quarter's revenue guidance of $892.5 million was less impressive, coming in 1.9% below analysts' estimates. It made a non-GAAP profit of $0.29 per share, improving from its loss of $0.05 per share in the same quarter last year.
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Pinterest (PINS) Q2 CY2024 Highlights:
Revenue: $853.7 million vs analyst estimates of $848.1 million (small beat)
Adj. EBITDA: $179.9 million vs analyst estimates of $177.1 million (1.6% beat)
EPS (non-GAAP): $0.29 vs analyst estimates of $0.28 (4.2% beat)
Revenue Guidance for Q3 CY2024 is $892.5 million at the midpoint, below analyst estimates of $909.5 million
Gross Margin (GAAP): 78.3%, up from 76.2% in the same quarter last year
Free Cash Flow of $101.6 million, down 70.5% from the previous quarter
Monthly Active Users: 522 million, up 57 million year on year
Market Capitalization: $25.52 billion
“We had another impressive quarter, reporting a 21% increase in revenue and 12% growth in monthly active users globally,” said Bill Ready, CEO of Pinterest.
Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.
Social Networking
Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.
Sales Growth
Pinterest's revenue growth over the last three years has been mediocre, averaging 15% annually. This quarter, Pinterest reported decent 20.6% year-on-year revenue growth, in line with analysts' expectations.
Guidance for the next quarter indicates Pinterest is expecting revenue to grow 16.9% year on year to $892.5 million, improving from the 11.5% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 18% over the next 12 months.
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Usage Growth
As a social network, Pinterest generates revenue growth by increasing its user base and charging advertisers more for the ads each user is shown.
Over the last two years, Pinterest's monthly active users, a key performance metric for the company, grew 7.7% annually to 522 million. This is decent growth for a consumer internet company.
In Q2, Pinterest added 57 million monthly active users, translating into 12.3% year-on-year growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Pinterest because it measures how much the company earns from the ads shown to its users. ARPU can also be a proxy for how valuable advertisers find Pinterest's audience and its ad-targeting capabilities.
Pinterest's ARPU growth has been mediocre over the last two years, averaging 4.2%. However, the company's ability to continue increasing prices while growing its monthly active users shows they still find value in its platform. This quarter, ARPU grew 7.2% year on year to $1.64 per user.
Key Takeaways from Pinterest's Q2 Results
It was great to see Pinterest increase its number of users this quarter, leading to small revenue and adjusted EBITDA beats. On the other hand, its revenue guidance for next quarter missed analysts' expectations. Overall, this was a mixed quarter for Pinterest, with the guidance likely dragging down shares. The stock traded down 14.1% to $32.09 immediately after reporting
Pinterest may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
