Pinterest (NYSE:PINS) Misses Q2 Sales Targets, But Stock Soars 16.7%

Radek Strnad /
2022/08/01 4:14 pm EDT

Social commerce platform Pinterest (NYSE: PINS) missed analyst expectations in Q2 FY2022 quarter, with revenue up 8.59% year on year to $665.9 million. Pinterest made a GAAP loss of $43 million, down on its profit of $69.4 million, in the same quarter last year.

Is now the time to buy Pinterest? Access our full analysis of the earnings results here, it's free.

Pinterest (PINS) Q2 FY2022 Highlights:

  • Revenue: $665.9 million vs analyst estimates of $666.5 million (small miss)
  • EPS (non-GAAP): $0.11 vs analyst expectations of $0.18 (37.7% miss)
  • Free cash flow of $107 million, down 48.1% from previous quarter
  • Gross Margin (GAAP): 75.2%, down from 79.1% same quarter last year
  • Global Monthly Active Users: 433 million, down 21 million year on year

“Pinterest achieved 9% revenue growth year over year in Q2, or 10% revenue growth on a constant currency basis, despite the uncertainty facing our advertisers,” said Bill Ready, CEO, Pinterest.

Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.

Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.

Sales Growth

Pinterest's revenue growth over the last three years has been impressive, averaging 46.7% annually. The initial impact of the pandemic was positive for Pinterest's revenue, but growth rates subsequently normalized.

Pinterest Total Revenue

This quarter, Pinterest reported an mediocre 8.59% year on year revenue growth, and this result fell short of what analysts were expecting.

Ahead of the earnings results the analysts covering the company were estimating sales to grow 15.4% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Usage Growth

As a social network, Pinterest can generate revenue growth by increasing user numbers, and by charging more for the ads each user is exposed to.

Over the last two years the number of Pinterest's monthly active users, a key usage metric for the company, grew 11.7% annually to 433 million users. This is decent growth for a consumer internet company.

Pinterest Global Monthly Active Users

Unfortunately, in Q2 the number of monthly active users decreased by 21 million, a 4.62% drop year on year.

Key Takeaways from Pinterest's Q2 Results

Sporting a market capitalization of $12.9 billion, more than $2.65 billion in cash and with positive free cash flow over the last twelve months, we're confident that Pinterest has the resources it needs to pursue a high growth business strategy.

It was good to see the increase in ARPU. On the other hand, there was a decline in number of users and the revenue growth was quite weak. Overall, this quarter's results were not the best we've seen from Pinterest. But it seems that the market's expectations were even lower and the company is up 16.7% on the results and currently trades at $23.21 per share.

Pinterest may have had a tough quarter, but does that actually create an opportunity to invest right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.