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Pinterest (PINS) to Report Q3 Earnings: What's in Store?

Zacks Equity Research

Pinterest PINS is set to report third-quarter 2019 results on Oct 31.

The Zacks Consensus Estimate for third-quarter loss has been steady at 5 cents over the past 30 days. The consensus mark for revenues is pegged at $270.9 million.

Pinterest reported second-quarter 2019 non-GAAP loss of 6 cents per share that was much narrower than the year-ago quarter loss of 27 cents.

Notably, revenues surged 62.1% year over year to $261.2 million in second-quarter 2019. International revenues soared 200% year over year to $24 million.

Monthly Average Users (MAUs) Global increased 30% to 300 million. While United States MAUs increased 13% to 85 million, International MAUs soared 38% to 215 million.

Pinterest, Inc. Price and EPS Surprise

Pinterest, Inc. Price and EPS Surprise

Pinterest, Inc. price-eps-surprise | Pinterest, Inc. Quote

Factors to Consider

Pinterest’s initiative to improve user engagement by infusing visual search technology even in offline mode to its platform is expected to have accelerated conversion of searches into product purchases.

Additionally, in the to-be reported quarter, the company also introduced features to boost shopping experience for users such as personalized shopping hubs at the top of home feed and an updated shopping section below Pins to aid catalog browsing of brands like Target, Birdies Slippers, Joybird, The Tie Bar, and Parachute.

Also, the company’s initiatives toward healthcare during the third quarter like bringing authoritative vaccine results to Pinterest search, and introducing a collection of emotional well-being activities for distressed users is likely to have aided user growth and engagement levels.

Notably, the company added new features on Pinterest mobile platform during the quarter such as Shop the Look ads and Pinterest Ads-On-The-Go to improve services to businesses and retailers.

New business profile features with video and shop tabs, and expanding Catalogues and Shopping Ads features in France, Germany, Spain and Italy is expected to have increased advertisers on the platform, thus driving average revenue per user (ARPU) for the to-be reported quarter.

Moreover, internalizing ads business, simplifying ad systems for smaller businesses and improving advertisers’ ability to measure the effectiveness of their ad spend are expected to have been driven advertiser growth in the third quarter.

Pinterest’s top-line is expected to have benefited from expansion of its international user base in new markets such as Denmark, Finland, Norway, Portugal, Sweden and Switzerland.

However, Pinterest generates revenues primarily from one source – advertising. Increasing competition for ad dollars from the likes of Facebook, Amazon, Google and Twitter is a major headwind for the company.

Moreover, rapid growth in international user base is expected to have hurt ARPU in the to-be-reported quarter as monetization rate is low in international markets.

What Our Model Says

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of a positive earnings surprise.

Zynga has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.

Advanced Energy Industries AEIS has an Earnings ESP of +4.17% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Lumentum Holdings LITE has an Earnings ESP of +0.93% and a Zacks Rank #3.

Apple Inc. AAPL has an Earnings ESP of +0.04% and a Zacks Rank #3.

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