Pinterest (PINS 1.02%) is slated to report its second-quarter 2021 results after the market close on Thursday, July 29. A conference call with analysts is scheduled for the same day at 4:30 p.m. EDT.
Many investors will probably be feeling cautiously optimistic -- with emphasis on the "cautiously" -- about the image-discovery platform operator's report. On the positive side, the company has easily beat Wall Street's consensus earnings estimates in at least the most recent four quarters.
On the other hand, Pinterest will have to work harder in 2021 than it had to in 2020 to keep users engaged and to add new users. With the pandemic subsiding in parts of the United States and many other developed countries, many folks have more options than they did last year for how to spend their free time.
Despite pulling back about 20% since reaching its all-time high in mid-February, Pinterest stock (which began trading in April 2019) is still up 174% over the one-year period through July 20. The S&P 500 returned 35% over this period.
Here's what to watch in Pinterest's upcoming Q2 report.
Image source: Getty Images.
Pinterest's key numbers
Below are the company's results from Q2 2020, its Q2 2021 guidance, and Wall Street's consensus estimates to use as benchmarks.
| Metric | Q2 2020 Result | Pinterest's Q2 2021 Guidance | Wall Street's Q2 2021 Consensus Estimate | Wall Street's Projected Change (YOY) |
|---|---|---|---|---|
| Revenue | $272.5 million | Growth of about 105% | $561.9 million | 106% |
| Adjusted earnings per share (EPS) | ($0.07) | N/A | $0.13 | N/A. Result expected to flip to positive from negative. |
Data sources: Pinterest and Yahoo! Finance. YOY = year over year. Note: Pinterest didn't issue earnings guidance.
For context, in the first quarter, Pinterest's revenue surged 78% year over year to $485.2 million. That result breezed by the analyst consensus estimate of $472.7 million as well as the company's guidance of growth in the low-70% range. Adjusted net income was $78.5 million, or $0.11 per share, up from an adjusted loss of $59.9 million, or $0.10 per share, in the year-ago period. That result also easily beat the Street's expectation, which was $0.07 per share.
Key user stats
Pinterest has an advertising-based business model, as is typical of social media companies. Two key metrics determine its revenue: the number of global monthly active users (MAUs) and global average revenue per user (ARPU).
Last quarter, the company's global MAUs rose 30% year over year to 478 million, and its global ARPU jumped 34% to $1.04.
For Q2, management said it expects "global MAUs to grow in the mid-teens and U.S. MAUs to be around flat on a year-over-year percentage basis." Given the company guided for robust revenue growth of about 105% year over year, we can deduce that management anticipates the bulk of its Q2 revenue growth will come from a big increase in ARPU.
Data by YCharts.
Third-quarter guidance
The stock market is a forward-looking machine, so its reaction to Pinterest's upcoming earnings release will probably hinge more on the company's third-quarter outlook than its Q2 results, relative to Wall Street's expectations.
For the third quarter, analysts are modeling for Pinterest's revenue to increase 43% year over year to $630.6 million and its adjusted EPS to rise 38% to $0.18.
Keep the longer term in mind
Investors should try to keep the long-term picture in mind and not overreact to slowing user growth in the U.S. It's to be expected in 2021 after the pandemic-driven surge last year.
