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Pinterest's (PINS) Q2 Earnings Beat, Revenues Surge Y/Y

·5 min read
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Pinterest PINS reported second-quarter 2021 non-GAAP earnings of 25 cents per share, which beat the Zacks Consensus Estimate by 92.3%. The company had reported non-GAAP loss of 7 cents per share in the year-ago period.

Revenues skyrocketed 125.4% year over year to $613 million and beat the Zacks Consensus Estimate by 9.3%.

Revenues from the United States increased 106.9% year over year to $480 million. Meanwhile, international revenues soared 224.4% year over year to $133 million.

User Base & Advertising Business Details

Monthly active users (MAUs) increased 9% from the prior-year quarter to 454 million globally. Growth was slower than anticipated growth in mid-teens in the second quarter primarily due to the widespread easing of pandemic restrictions.

While United States MAUs decreased 5% to 91 million, International MAUs grew 13% from the year-ago quarter to 363 million.

Global average revenue per user (ARPU) increased 89% from a year ago to $1.32 driven by an increase in advertising demand on the platform.

While ARPU in the United States increased 103% year over year to $5.08, International ARPU surged 163% to 36 cents.

In the second quarter, Pinterest launched Automatic Bidding for Awareness to help advertisers focused on driving impressions do so with greater ease. This was the final objective launched for Automatic Bidding, and, at the end of the quarter, nearly three-quarters of Pinterest revenue leveraged Automatic Bidding.

Key Q2 Developments

Gen Z Pinners continued to be highly engaged in second-quarter 2021. US MAUs under 25 grew in double digits year over year and showed particularly strong engagement with the company’s new native content format, Idea Pins.

Moreover, the company witnessed continued momentum in its ongoing efforts to make Pinterest more shoppable. Catalog uploads grew 50% quarter over quarter driven by the expansion of Shopify SHOP integration to international merchants as well as the launch of multi-feed catalog tool.

Pinterest plans to begin testing its integration with Automattic’s WooCommerce in the third quarter. In the first quarter, to further help merchants, the company partnered with Automattic’s WooCommerce to automate the deployment of its conversion tag and upload a merchant’s catalog to Pinterest.

In the second quarter, the company launched Shopping List (which saves products Pins in one place for easy shopping) as well as notifications when the price drops on a saved product Pin. The early observations indicated that Pinners are more than 7x more likely to purchase products they have saved.

Moreover, Pinterest expanded its shopping features to users in Australia, Canada, France and Germany, which boosted user reach and growth.

The company also introduced Idea Pins to creators in 22 markets. This new access empowers business accounts in these markets to create on Pinterest and build more engaged communities directly on Pinterest. The number of Idea Pins created daily has grown more than 7x since the beginning of the year and daily impressions from Idea Pins have grown more than 10x in the same period.

Operating Details

Pinterest’s second-quarter 2021 total expenses increased 43.8% year over year to $542 million, which includes $101 million of share-based compensation following its April 2019 IPO.

For the reported quarter, research and development expenses increased 33% from the prior-year period to $182 million. Sales and marketing expenses surged 90% year over year to $164 million due to higher headcount growth and barnd marketing campaign launched during the quarter.

General and administrative expenses increased 49% year over year to $68 million.

Adjusted EBITDA (29% of total revenues) was $178 million for second-quarter 2021 versus adjusted EBITDA loss of $34 million in the year-ago quarter.

Total non-GAAP costs and expenses grew 40% year over year on higher headcount and brand marketing expense.

Non-GAAP income from operations was $172 million against loss of $42 million for the same period in 2020.

Balance Sheet

The company ended Jun 30, 2021 with cash, cash equivalents and marketable securities of $2.14 billion compared with $2.03 billion in the previous quarter.

Net cash provided by operating activities for the six months ended Jun 30, 2021 was $375.3 million, reflecting an improvement from $20.7 million in the year-ago period.

Guidance

Given uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro economic conditions, the company did not provide its guidance for 2021 revenues and adjusted EBITDA.

For the second quarter, Pinterest expects revenues to grow in low 40% year over year.

The company expects third-quarter operating expenses to grow modestly quarter over quarter as it continues to ramp investments in long-term strategic priorities, with plans to resume brand marketing campaign in the early fourth quarter.

Engagement headwinds on Pinterest continued in July. As of Jul 27, U.S. MAUs have declined nearly 7% while global MAUs have grown around 5% year over year.

Zacks Rank & Stocks to Consider

Pinterest currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include Veeco Instruments Inc. VECO and Trimble Inc. TRMB, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Veeco Instruments and Trimble are scheduled to report quarterly earnings on Aug 3 and 4, respectively.

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Trimble Inc. (TRMB) : Free Stock Analysis Report

Veeco Instruments Inc. (VECO) : Free Stock Analysis Report

Shopify Inc. (SHOP) : Free Stock Analysis Report

Pinterest, Inc. (PINS) : Free Stock Analysis Report

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