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Pinterest (PINS) Q4 Earnings Beat Estimates on Higher Revenues
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Pinterest, Inc. (PINS - Free Report) reported mixed fourth-quarter 2023 results, with the bottom line surpassing the Zacks Consensus Estimate but the top line missing the same. The San Francisco-based Internet content provider reported revenue growth year over year, driven by strong momentum in all regions.
Management’s focus on improving shoppability and monetization potential across the platform and the incorporation of advanced AI-integrated tools to support advertisers and retailers led to top-line growth. However, constrained spending in the food and beverage category partially impeded revenues during the quarter.
Net Income
On a GAAP basis, net income was $201.2 million or 29 cents per share compared with an income of $17.5 million or 3 cents per share in the prior-year quarter. Top-line growth and lower operating expenses led to an improvement in net income.
Non-GAAP net income was $366.2 million or 53 cents per share, up from $203.1 million or 29 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 2 cents.
In 2023, the company reported a GAAP net loss of $35.6 million or a loss of 5 cents per share compared with a loss of $96 million or a loss of 14 cents per share in 2022. For 2023, non-GAAP net income was $759.4 million or $1.09 per share compared to $426 million or 62 cents per share in 2022.
During the quarter, net sales aggregated at $981.3 million, up from $877.2 million in the prior-year quarter. The top line missed the Zacks Consensus Estimate of $989 million. Pinterest witnessed 11% year-over-year growth in global monthly active users (MAUs) to 498 million, an all-time record.
For 2023, the company reported revenues of $3.05 billion, up from $2.8 billion in 2022.
Pinterest has introduced various product updates across the funnel. Specifically, investments in lower funnel solutions like mobile deep linking, shopping ads, and API for conversions are providing sustained ROI to advertisers. The introduction of AI native auto organization features is making it easier for users to shift from inspiration to action. The Direct Link product that takes users to an advertiser’s page with a single click is gaining strong popularity among advertisers. Through the Direct Link enabled campaign, retailers witnessed a significant increase in outbound clicks and a substantial decrease in cost per click. Direct Link accounts for around 80% of the company’s lower funnel revenues.
The company is also expanding its third-party partner ecosystem, which it sees as a vital component for the international expansion of the platform. It announced its latest third-party ad integration with Google. The collaboration aims to introduce monetization opportunities in several unmonetized international markets of Pinterest through Google Ad Manager.
The United States and Canada generated $779 million in revenues, up 8% year over year. Net sales fell short of our revenue estimate of $791.1 million. Solid momentum in emerging verticals, including financial services, supported the net sales.
Revenues from Europe totaled $162 million, up 32% from $123 million in the year-ago quarter. The top line surpassed our estimate of $152.3 million. Healthy traction in retail and CPG (Consumer Packaged Goods) boosted the top line.
Net sales from the Rest of World rose to $41 million from $32 million recorded in the prior-year quarter, exceeding our revenue estimate of $39.7 million.
MAUs from the United States and Canada were 97 million, up 2% year over year. The quarterly figure surpassed our estimate of 95.3 million. The Rest of World registered MAUs of 266 million, up 15% from 231 million in the year-earlier quarter and beating our estimate of 248 million. MAUs from Europe increased to 135 million from 124 million in the year-ago quarter and beat our estimate of 126.7 million.
In the December quarter, the global average revenues per user (ARPU) stood at $2 compared with the year-ago quarter’s figure of $1.96. ARPU in Europe improved 23% year over year to $1.23, while the United States and Canada rose 6% to $8.07. ARPU from the Rest of World increased 11% year over year to 15 cents.
Other Details
Adjusted EBITDA was $364.8 million in fourth-quarter 2023, up from the prior-year quarter’s tally of $195.8 million. Disciplined expense management and operational efficiency led to a 37% year-over-year improvement.
Total costs and expenses were $785 million, down from $871.3 million in the year-ago quarter. On a GAAP basis, research and development expenses rose to $268 million from $265.2 million. Administrative costs decreased to $98.1 million from $103.8 million a year ago.
Cash Flow & Liquidity
In 2023, the company generated $613 million of cash from operating activities compared with $469.2 million in 2022. As of Dec 31, 2023, Pinterest had cash and cash equivalents of $1.36 billion, with $160.6 million of operating lease liabilities with respective figures of $1.61 billion or $178.7 million in the previous year.
Outlook
For the first quarter of 2024, Pinterest expects revenue in the range of $690-705 million, indicating 15-17% year-over-year growth. Non-GAAP operating expenses are projected in the range of $450-465 million, suggesting 9-13% growth year over year.
Zacks Rank & Other Stocks to Consider
Pinterest currently sports a Zacks Rank #1 (Strong Buy).
Here are some other top-ranked stocks that investors may consider:
NVIDIA Corporation (NVDA - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 170.71%. In the last reported quarter, it delivered an earnings surprise of 78.99%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.
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Pinterest (PINS) Q4 Earnings Beat Estimates on Higher Revenues
Pinterest, Inc. (PINS - Free Report) reported mixed fourth-quarter 2023 results, with the bottom line surpassing the Zacks Consensus Estimate but the top line missing the same. The San Francisco-based Internet content provider reported revenue growth year over year, driven by strong momentum in all regions.
Management’s focus on improving shoppability and monetization potential across the platform and the incorporation of advanced AI-integrated tools to support advertisers and retailers led to top-line growth. However, constrained spending in the food and beverage category partially impeded revenues during the quarter.
Net Income
On a GAAP basis, net income was $201.2 million or 29 cents per share compared with an income of $17.5 million or 3 cents per share in the prior-year quarter. Top-line growth and lower operating expenses led to an improvement in net income.
Non-GAAP net income was $366.2 million or 53 cents per share, up from $203.1 million or 29 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 2 cents.
In 2023, the company reported a GAAP net loss of $35.6 million or a loss of 5 cents per share compared with a loss of $96 million or a loss of 14 cents per share in 2022. For 2023, non-GAAP net income was $759.4 million or $1.09 per share compared to $426 million or 62 cents per share in 2022.
Pinterest, Inc. Price, Consensus and EPS Surprise
Pinterest, Inc. price-consensus-eps-surprise-chart | Pinterest, Inc. Quote
Revenues
During the quarter, net sales aggregated at $981.3 million, up from $877.2 million in the prior-year quarter. The top line missed the Zacks Consensus Estimate of $989 million. Pinterest witnessed 11% year-over-year growth in global monthly active users (MAUs) to 498 million, an all-time record.
For 2023, the company reported revenues of $3.05 billion, up from $2.8 billion in 2022.
Pinterest has introduced various product updates across the funnel. Specifically, investments in lower funnel solutions like mobile deep linking, shopping ads, and API for conversions are providing sustained ROI to advertisers. The introduction of AI native auto organization features is making it easier for users to shift from inspiration to action. The Direct Link product that takes users to an advertiser’s page with a single click is gaining strong popularity among advertisers. Through the Direct Link enabled campaign, retailers witnessed a significant increase in outbound clicks and a substantial decrease in cost per click. Direct Link accounts for around 80% of the company’s lower funnel revenues.
The company is also expanding its third-party partner ecosystem, which it sees as a vital component for the international expansion of the platform. It announced its latest third-party ad integration with Google. The collaboration aims to introduce monetization opportunities in several unmonetized international markets of Pinterest through Google Ad Manager.
The United States and Canada generated $779 million in revenues, up 8% year over year. Net sales fell short of our revenue estimate of $791.1 million. Solid momentum in emerging verticals, including financial services, supported the net sales.
Revenues from Europe totaled $162 million, up 32% from $123 million in the year-ago quarter. The top line surpassed our estimate of $152.3 million. Healthy traction in retail and CPG (Consumer Packaged Goods) boosted the top line.
Net sales from the Rest of World rose to $41 million from $32 million recorded in the prior-year quarter, exceeding our revenue estimate of $39.7 million.
MAUs from the United States and Canada were 97 million, up 2% year over year. The quarterly figure surpassed our estimate of 95.3 million. The Rest of World registered MAUs of 266 million, up 15% from 231 million in the year-earlier quarter and beating our estimate of 248 million. MAUs from Europe increased to 135 million from 124 million in the year-ago quarter and beat our estimate of 126.7 million.
In the December quarter, the global average revenues per user (ARPU) stood at $2 compared with the year-ago quarter’s figure of $1.96. ARPU in Europe improved 23% year over year to $1.23, while the United States and Canada rose 6% to $8.07. ARPU from the Rest of World increased 11% year over year to 15 cents.
Other Details
Adjusted EBITDA was $364.8 million in fourth-quarter 2023, up from the prior-year quarter’s tally of $195.8 million. Disciplined expense management and operational efficiency led to a 37% year-over-year improvement.
Total costs and expenses were $785 million, down from $871.3 million in the year-ago quarter. On a GAAP basis, research and development expenses rose to $268 million from $265.2 million. Administrative costs decreased to $98.1 million from $103.8 million a year ago.
Cash Flow & Liquidity
In 2023, the company generated $613 million of cash from operating activities compared with $469.2 million in 2022. As of Dec 31, 2023, Pinterest had cash and cash equivalents of $1.36 billion, with $160.6 million of operating lease liabilities with respective figures of $1.61 billion or $178.7 million in the previous year.
Outlook
For the first quarter of 2024, Pinterest expects revenue in the range of $690-705 million, indicating 15-17% year-over-year growth. Non-GAAP operating expenses are projected in the range of $450-465 million, suggesting 9-13% growth year over year.
Zacks Rank & Other Stocks to Consider
Pinterest currently sports a Zacks Rank #1 (Strong Buy).
Here are some other top-ranked stocks that investors may consider:
NVIDIA Corporation (NVDA - Free Report) , currently carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 18.99%. In the last reported quarter, it delivered an earnings surprise of 19.64%. You can see the complete list of today’s Zacks #1 Rank stocks here.
NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. Over the years, the company’s focus evolved from PC graphics to AI-based solutions that support high-performance computing, gaming and virtual reality platforms.
InterDigital, Inc. (IDCC - Free Report) , carrying a Zacks Rank #2 at present, delivered a trailing four-quarter average earnings surprise of 170.71%. In the last reported quarter, it delivered an earnings surprise of 78.99%.
IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
Arista Networks, Inc. (ANET - Free Report) , sporting a Zacks Rank #1 at present, is likely to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. Arista has delivered an earnings surprise of 12%, on average, in the trailing four quarters.
The company holds a leadership position in 100-gigabit Ethernet switching share in port for the high-speed data center segment. It is increasingly gaining market traction in 200 and 400-gig high-performance switching products and remains well-positioned for healthy growth in the data-driven cloud networking business with proactive platforms and predictive operations.