Pinterest (PINS 1.81%) is slated to report its fourth-quarter and full-year 2019 results after the market closes on Thursday, Feb. 6.
Investors will likely be approaching the report with caution. Last quarter, the image-sharing platform operator missed Wall Street's consensus revenue estimate and issued lighter full-year revenue guidance than analysts had been projecting. The company did, however, beat the bottom-line expectation by turning in a surprise adjusted profit.
The market sent shares plunging 17% the following day. The market focused more on the revenue miss and outlook than the earnings beat largely because the company just went public last April. Ramping up revenue growth quickly is ultraimportant for such companies, particularly in the tech realm.
At that time, I opined that the "market may have overreacted a bit, as one quarter doesn't make a trend and it's likely the company lowballed its revenue guidance to be on the safe side." Many investors have apparently recently come to agree with at least the first part of that take. In 2020, Pinterest stock is up 23.4% through Friday, Jan. 17, compared with the S&P 500's 3.1%. (Monday, Jan. 20, was a market holiday.) Since its IPO, the stock has gained 21.1%.
Here's what to look for when Pinterest reports.
Image source: Pinterest.
Key quarterly numbers
Since Pinterest just held its initial public offering (IPO) last April, it didn't publicly release earnings a year ago. So the following chart shows its results for the prior quarter, Q3, rather than the more typical year-ago period. These numbers and Wall Street's estimates can be used as benchmarks.
| Metric | Q3 2019 Result | Wall Street's Q4 2019 Consensus Estimate | Wall Street's Projected Sequential Change |
|---|---|---|---|
|
Revenue |
$279.7 million |
$371.5 million |
32.9% |
|
Adjusted earnings per share (EPS) |
$0.01 |
$0.08 |
700% |
Data sources: Pinterest and Yahoo! Finance.
For additional context, in Q3, Pinterest's revenue jumped 47% year over year to $279.7 million, falling short of the $280.6 million Wall Street was expecting. No, it wasn't a big miss, but investors were probably expecting revenue to not just meet the consensus but exceed it, just as it had in the prior quarter. In Q2, revenue soared 62% year over year to $261.2 million, easily beating the $235.5 million Wall Street was expecting. In Q1, revenue grew 54% year over year, so revenue growth accelerated from Q1 to Q2, but then decelerated from Q2 to Q3.
Key user stats
User-related metrics will naturally be important. Last quarter, monthly active users (MAUs) worldwide jumped 28% year over year to 322 million, with average revenue per user (ARPU) rising 14% to $0.90. In Q2, MAUs rose 30% and ARPU increased 29%.
So ARPU growth decelerated last quarter. Many investors will want to see a better showing this quarter. For context, social media powerhouse Facebook's ARPU was $7.26 in the third quarter.
Last week, a report from eMarketer said that Pinterest leapfrogged over Snap's (SNAP 2.63%) Snapchat to become the No. 3 biggest social media platform in the U.S. in 2019, and that the "gap between the two platforms' user bases will continue to grow" through at least 2023. It estimated that Pinterest had 82.4 million MAUs in the U.S. last year, compared with Snapchat's 80.2 million.
Guidance
Management will likely issue revenue guidance for 2020. If it doesn't issue a full-year outlook, investors can at least expect one for the first quarter. Guidance relative to expectations will probably be the biggest driver of the market's reaction.
So you should know Wall Street's outlook:
- Q1 2020: Revenue of $276.9 million, representing growth of 37.1% year over year.
- Full-year 2020: Revenue of $1.51 billion. (We don't know what percentage growth this represents since we don't yet know the 2019 revenue result.)
Again, Pinterest is scheduled to report its Q4 results after the market closes on Thursday, Feb. 6, and the report will be followed by a conference call with analysts at 5:30 p.m. EST.
