Pinterest (PINS 4.04%) is scheduled to announce fiscal 2022 second-quarter earnings after the markets close on Monday, Aug. 1. The image-based social media company is struggling to retain the attention of its users as the economic reopening has gained momentum.
Pinterest thrived at the pandemic's onset after hundreds of millions of people flocked to its website for inspiration and entertainment. Its platform is abundant with listings that show folks creative cooking recipes, organizing hacks, and gardening tips, all of which were in high demand when people were staying home most of the time.
But the economic reopening has taken people's attention away from Pinterest. The company has shed users from the U.S. and Canada for four consecutive quarters.
Monthly active user figures are a critical metric
Pinterest disaggregates monthly active user data among three geographies: U.S and Canada, Europe, and the rest of the world. The U.S. and Canada is by far its most lucrative segment. Pinterest's site is free to join and use. It makes money by selling advertisements to people scrolling through its website and platform. Of course, marketers are willing to pay more for the potential to influence people with greater purchasing power.
The average revenue per user (ARPU) in the U.S. and Canada was $4.98 in its most recent quarter, which ended on March 31. That's significantly higher than the $0.72 ARPU from European users and $0.08 from the rest of the world. For that reason, Pinterest's four-quarter streak of shedding users from its most lucrative segment is devastating.
Monthly active users peaked in the U.S. and Canada in Q1 2021 at 109 million. It has since fallen to 94 million as of the quarter ended in March. Not coincidentally, Pinterest's stock price is down 77% off its highs reached in 2021. Fortunately, Pinterest's ARPU is rising by double digits in the U.S., Canada, and Europe, and by a whopping 152% in the rest of the world. The rise in ARPU has helped sustain revenue growth despite the user losses from the U.S. and Canada. Management is forecasting revenue growth of 11% for the second quarter.
PINS Revenue (Quarterly YoY Growth) data by YCharts.
What this could mean for Pinterest investors
Analysts on Wall Street expect Pinterest to report revenue of $674.77 million and earnings per share (EPS) of $0.18. If the company meets those projections, it will represent an increase of 10% and a decrease of 28%, respectively, from the same period the year before.
PINS Price to Free Cash Flow data by YCharts.
Interestingly, analysts expect revenue growth of 11% fo Q2, roughly in line with management's estimates. That said, the factor that is more likely to influence Pinterest's share price following the earnings announcement is the monthly active user trends in the U.S. and Canada. If the company can reverse those losses, it could be the catalyst that boosts Pinterest's share price higher.
