Back to top

Image: Bigstock

Pinterest's (PINS) Q4 Earnings Beat, Revenues Increase Y/Y

Read MoreHide Full Article

Pinterest (PINS - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 43 cents per share, which beat the Zacks Consensus Estimate for earnings by 34.4% and soared 258.3% year over year.

Revenues surged 76.5% year over year to $706 million and beat the Zacks Consensus Estimate by 9.3%.

Revenues from the United States increased 66.3% year over year to $582 million. Meanwhile, international revenues soared 146% year over year to $123 million.

Pinterest, Inc. Price, Consensus and EPS Surprise

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 459 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.

Prior trends around higher growth in international users and higher growth from users under 25 years old continued in the quarter.

While United States MAUs increased 11% to 98 million, International MAUs increased 46% to 361 million.

Average revenue per user (ARPU) Global increased 28.7% to $1.57 driven by an increase in advertising demand on the platform, partially offset by an increase in MAUs.

While ARPU United States increased 49% year over year to $5.94, ARPU International jumped 67% on a year-over-year basis to 35 cents.

Key Q4 Developments

In fourth-quarter 2020, the number of boards created globally increased 50% year over year. Pinterest witnessed growth in boards created in core Pinterest categories, including a 49% increase in beauty, a 103% increase in women’s fashion and a 37% increase in home decor.

Throughout the fourth quarter and continuing into 2021, Pinners are increasingly able to discover Story Pins throughout the Pinterest experience. In addition to trending Story Pins featured in the Today Tab, the company introduced a spot at the top of the home feed where Pinners can find the latest Story Pins from creators they follow.

Additionally, Pinterest introduced features for boards that make it easier to plan and convert the inspiration on Pinterest into real life action. Pinners can now add private notes directly on Pins.

Moreover, the company developed another new way for Pinners to virtually try-on new products with the development of eye-shadow try on.

These efforts have led to strong growth in product-only searches, which have grown 20X since the beginning of 2020.

Moreover, the company has been testing product tagging capabilities for merchants and advertisers. Pinterest’s research suggests that Pinners are 70% more likely to engage with products tagged in scene images than on standalone product Pins.

Operating Details

Pinterest’s fourth-quarter 2020 total expenses increased 13% year over year to $500.4 million, which include $86 million of share-based compensation (SBC) following its April 2019 IPO.

In the reported quarter, research and development expenses declined 0.8% to $163.7 million. Sales and marketing expenses decreased 5.3% year over year to $120.7 million due to lower marketing expense, partially offset by headcount growth.

General and administrative expenses jumped 60.3% year over year to $86.9 million due to a one-time payment of $22.5 million and an increase in outside advisor and legal-related expenses.

Adjusted EBITDA (42% of total revenues) was $299 million in fourth-quarter 2020, compared with $77 million reported the year-ago quarter.

Non-GAAP costs and expenses grew 25.3% year over year to $414 million, attributable to headcount growth.

Income from operations was $207.8 million compared against loss of $35.1 million in the year-ago quarter.

Balance Sheet

The company ended Dec 31, 2020 with cash, cash equivalents, and marketable securities of $1.76 billion compared with $1.65 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 2021 revenues and adjusted EBITDA.

For the first quarter, Pinterest expects revenue growth of more than 70% 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 are Perion Network (PERI - Free Report) , Vishay Intertechnology (VSH - Free Report) and Cohu (COHU - Free Report) . All three stocks carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Perion and Vishay are scheduled to report their quarterly earnings on Feb 9, while Cohu will report on Feb 11.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Published in