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Pinterest (PINS - Free Report) reported third-quarter 2020 non-GAAP earnings of 13 cents per share, ahead of the Zacks Consensus Estimate and the year-ago quarter’s earnings of a penny.
Revenues surged 58.2% year over year to $442.6 million and beat the Zacks Consensus Estimate by 10.9%.
Revenues from the United States increased 49% year over year to $374 million. Meanwhile, international revenues soared 146.4% year over year to $69 million.
Monthly active users (MAUs) Global increased 37% to 442 million. Users who began engaging in Pinterest during COVID-19 continued to have high levels of engagement even after shelter-in-place restrictions were eased in the reported quarter.
While United States MAUs increased 13% to 98 million, International MAUs increased 46% to 343 million.
In the United States, user growth was driven by strength from users under age 25 who grew twice as fast as users 25 years old and above.
Average revenue per user (ARPU) Global increased 15% to $1.03 driven by an increase in advertising demand on the platform partially offset by an increase in MAUs.
While ARPU United States increased 31% year over year to $3.85, ARPU International jumped 66% on a year-over-year basis to 21 cents.
Key Q3 Developments
Global search volume and other third quarter engagement metrics moderated from second quarter highs but remained well above pre-COVID-19 levels.
Unique video uploads grew 7X year over year driven by creator-first features launched during the quarter including Story Pins in beta, a new creator profile, and analytics tools to track performance. These new publishing and measurement tools gave creators ways to easily publish immersive and expansive stories directly on Pinterest.
During the third quarter, revenues from both conversion optimization (oCPM) and shopping ads continued to grow faster than overall revenues. The rapid progress in delivering conversions was driven by improved conversion capture (accelerated Pinterest Tag adoption and tag health) as well as consumer behavior (adoption of new shopping surfaces and increased online transactions due to shelter-in-place).
In September, Pinterest launched ads alongside visual search results, as well as more places to shop. With new conversion insights, advertisers can easily see the impact of both their paid and organic Pinterest content. In addition, it expanded shopping tools for Pinners in the UK, bringing shopping inspiration to a new market.
Notably, the number of Pinners engaging with shopping surfaces has grown over 85% in the six months ended Sep 30.
Operating Details
Pinterest’s third-quarter 2020 total expenses increased 30.5% year over year to $539.6 million, which includes $92 million of share-based compensation (SBC) following its April 2019 IPO.
In the reported quarter, research and development expenses declined 4.5% to $160.1 million while sales and marketing expenses increased 7% year over year to $118.5 million driven by higher headcount including performance-based expenses.
General and administrative expenses jumped 187.7% year over year to $148 million due to a one-time payment of $90 million for the termination of a future lease contract.
Adjusted EBITDA was $93 million in third-quarter 2020. The company had reported adjusted EBITDA of $4 million in the year-ago quarter.
Non-GAAP costs and expenses grew 19.1% year over year to $336.1 million, attributable to headcount growth.
Loss from operations was $97 million compared with loss of $133.7 million in the year-ago quarter.
Balance Sheet
The company ended Sep 30, 2020 with cash, cash equivalents, and marketable securities of $1.65 billion compared with $1.7 billion in the previous quarter
Guidance
Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macroeconomic conditions, the company did not provide guidance for 2020 revenues and adjusted EBITDA.
For the fourth quarter, Pinterest expects revenue growth of over 60% year over year.
Q2 Holdings, Square and Covetrus are set to report quarterly results on Nov 4, Nov 5 and Nov 10, respectively.
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Image: Bigstock
Pinterest's (PINS) Q3 Earnings Beat, Revenues Increase Y/Y
Pinterest (PINS - Free Report) reported third-quarter 2020 non-GAAP earnings of 13 cents per share, ahead of the Zacks Consensus Estimate and the year-ago quarter’s earnings of a penny.
Revenues surged 58.2% year over year to $442.6 million and beat the Zacks Consensus Estimate by 10.9%.
Revenues from the United States increased 49% year over year to $374 million. Meanwhile, international revenues soared 146.4% year over year to $69 million.
Pinterest, Inc. Price, Consensus and EPS Surprise
Pinterest, Inc. price-consensus-eps-surprise-chart | Pinterest, Inc. Quote
User Base & Advertising Business Details
Monthly active users (MAUs) Global increased 37% to 442 million. Users who began engaging in Pinterest during COVID-19 continued to have high levels of engagement even after shelter-in-place restrictions were eased in the reported quarter.
While United States MAUs increased 13% to 98 million, International MAUs increased 46% to 343 million.
In the United States, user growth was driven by strength from users under age 25 who grew twice as fast as users 25 years old and above.
Average revenue per user (ARPU) Global increased 15% to $1.03 driven by an increase in advertising demand on the platform partially offset by an increase in MAUs.
While ARPU United States increased 31% year over year to $3.85, ARPU International jumped 66% on a year-over-year basis to 21 cents.
Key Q3 Developments
Global search volume and other third quarter engagement metrics moderated from second quarter highs but remained well above pre-COVID-19 levels.
Unique video uploads grew 7X year over year driven by creator-first features launched during the quarter including Story Pins in beta, a new creator profile, and analytics tools to track performance. These new publishing and measurement tools gave creators ways to easily publish immersive and expansive stories directly on Pinterest.
During the third quarter, revenues from both conversion optimization (oCPM) and shopping ads continued to grow faster than overall revenues. The rapid progress in delivering conversions was driven by improved conversion capture (accelerated Pinterest Tag adoption and tag health) as well as consumer behavior (adoption of new shopping surfaces and increased online transactions due to shelter-in-place).
In September, Pinterest launched ads alongside visual search results, as well as more places to shop. With new conversion insights, advertisers can easily see the impact of both their paid and organic Pinterest content. In addition, it expanded shopping tools for Pinners in the UK, bringing shopping inspiration to a new market.
Notably, the number of Pinners engaging with shopping surfaces has grown over 85% in the six months ended Sep 30.
Operating Details
Pinterest’s third-quarter 2020 total expenses increased 30.5% year over year to $539.6 million, which includes $92 million of share-based compensation (SBC) following its April 2019 IPO.
In the reported quarter, research and development expenses declined 4.5% to $160.1 million while sales and marketing expenses increased 7% year over year to $118.5 million driven by higher headcount including performance-based expenses.
General and administrative expenses jumped 187.7% year over year to $148 million due to a one-time payment of $90 million for the termination of a future lease contract.
Adjusted EBITDA was $93 million in third-quarter 2020. The company had reported adjusted EBITDA of $4 million in the year-ago quarter.
Non-GAAP costs and expenses grew 19.1% year over year to $336.1 million, attributable to headcount growth.
Loss from operations was $97 million compared with loss of $133.7 million in the year-ago quarter.
Balance Sheet
The company ended Sep 30, 2020 with cash, cash equivalents, and marketable securities of $1.65 billion compared with $1.7 billion in the previous quarter
Guidance
Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macroeconomic conditions, the company did not provide guidance for 2020 revenues and adjusted EBITDA.
For the fourth quarter, Pinterest expects revenue growth of over 60% 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 Q2 Holdings, Inc. (QTWO - Free Report) , Square, Inc. (SQ - Free Report) and Covetrus, Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Q2 Holdings, Square and Covetrus are set to report quarterly results on Nov 4, Nov 5 and Nov 10, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>