Pinterest (NYSE:PINS) Posts Better-Than-Expected Sales In Q3, Stock Jumps 15.3%

Petr Huřťák /
2022/10/27 4:18 pm EDT

Social commerce platform Pinterest (NYSE: PINS) reported Q3 FY2022 results topping analyst expectations, with revenue up 8.15% year on year to $684.5 million. Pinterest made a GAAP loss of $65.1 million, down on its profit of $93.9 million, in the same quarter last year.

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Pinterest (PINS) Q3 FY2022 Highlights:

  • Revenue: $684.5 million vs analyst estimates of $666.6 million (2.68% beat)
  • EPS (non-GAAP): $0.11 vs analyst estimates of $0.06 ($0.05 beat)
  • Free cash flow of $275.9 million, up 157% from previous quarter
  • Gross Margin (GAAP): 73.3%, down from 79.9% same quarter last year
  • Global Monthly Active Users: 445 million, up 1 million year on year

“I’m proud of the solid results our team delivered in Q3, growing revenue 8% year over year, 10% on a constant currency basis, and returning to user growth,” 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 43.4% annually. The initial impact of the pandemic was positive for Pinterest's revenue, but growth rates subsequently normalized.

Pinterest Total Revenue

This quarter, Pinterest beat analyst estimates but reported an mediocre 8.15% year on year revenue growth.

Ahead of the earnings results the analysts covering the company were estimating sales to grow 10% over the next twelve months.

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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 7.11% annually to 445 million users. This is an ok growth for a consumer internet company.

Pinterest Global Monthly Active Users

In Q3 the company added 1 million monthly active users, translating to a 0.22% growth year on year.

Key Takeaways from Pinterest's Q3 Results

With a market capitalization of $14.8 billion, more than $2.66 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.

It was good to see Pinterest outperform Wall St’s revenue expectations this quarter. That feature of these results really stood out as a positive. And it was good to see both ARPU and number of users grow. Overall, this quarter's results were quite optimistic. The company is up 15.3% on the results and currently trades at $25.24 per share.

Should you invest in Pinterest 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.