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Pinterest (PINS) to Report Q2 Earnings: What's in Store?

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Pinterest (PINS - Free Report) is set to report second-quarter 2020 results on Jul 31.

The Zacks Consensus Estimate for the second quarter currently stands at a loss of 15 cents per share over the past 30 days.

The consensus mark for revenues is pegged at $255.8 million, indicating a decline of 2.07% from the year-ago quarter.

Notably, the company’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, the average surprise being 49.9%.

Let’s see how things have shaped up prior to this announcement.

Factors to Consider

Pinterest’s initiative to improve user engagement by launching Shop tab on Lens visual search results during the quarter is expected to have accelerated conversion of searches into product purchases in the soon-to-be-reported quarter. Users can click on the camera in the search bar, snap or upload a photo, and see a Shop tab with a feed of shoppable Pins based on in-stock products identified in that image.

Additionally, Pinterest Lite, introduced in the first quarter, especially in countries such as Peru, Argentina, Colombia, Chile and Mexico among others is expected to have boosted product purchases and user engagement internationally, thus driving the top line in the to-be reported quarter.

Pinterest, Inc. Price and EPS Surprise

Moreover, the company’s expansion in countries including the UK, Canada, Australia, Singapore, India and New Zealand amid coronavirus lockdown is expected to have contributed to international user base growth in the second quarter.

In the first quarter, MAUs Global increased 26% to 367 million. While United States MAUs increased 6% to 90 million, International MAUs soared 34% to 277 million.

Notably, Pinterest added Adobe Spark, Over, PicMonkey and Canva to the Pinterest Partners program to help make it easier for creators and small and medium businesses to identify trusted creative specialty partners.

Additionally, New Verified Merchant Program, launched in the first quarter, with retailers like Quay Australia, Ruggable, Filson, Coyuchi and Lotuff Leather among others displays a special blue checkmark on their profiles, and provides eligibility for increased distribution within high-intent shopping experiences and metrics like conversion reporting. This is expected to have increased advertisers on the platform, thus driving average revenue per user (ARPU) in the to-be reported quarter.

Moreover, the launch of a new app with Shopify (SHOP - Free Report) that gives Pinterest’s more than one million merchants a quick way to upload catalogs to Pinterest and turn their products into shoppable Product Pins in just a few clicks are expected to have improved advertiser engagement and experience of the platform.

However, Pinterest generates revenues primarily from one source — advertising. Drop in advertising demand due to coronavirus-led business lockdown across the globe and increasing competition for ad dollars from the likes of Facebook, Amazon, Google and Twitter are expected to have been major headwinds for the company in the soon to-be reported quarter.

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

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

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

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

NXP Semiconductors N.V. (NXPI - Free Report) has an Earnings ESP of +5.28% and holds a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Take-Two Interactive Software, Inc. (TTWO - Free Report) has an Earnings ESP of +8.26% and a Zacks Rank #2.

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