Pinterest (NYSE:PINS) Posts Better-Than-Expected Sales In Q4, Stock Jumps 16.5%

Jabin Bastian /
2022/02/03 4:21 pm EST
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Social commerce platform Pinterest (NYSE: PINS) beat analyst expectations in Q4 FY2021 quarter, with revenue up 19.9% year on year to $846.6 million. Pinterest made a GAAP profit of $174.6 million, down on its profit of $207.8 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) Q4 FY2021 Highlights:

  • Revenue: $846.6 million vs analyst estimates of $827.2 million (2.34% beat)
  • EPS (non-GAAP): $0.49 vs analyst estimates of $0.46 (7.27% beat)
  • Free cash flow of $208 million, up 27% from previous quarter
  • Gross Margin (GAAP): 83.3%, up from 81.7% same quarter last year
  • Global Monthly Active Users: 431 million, down 28 million year on year

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. According to eMarketer, worldwide digital ad spending is expected to increase from $335bn in FY19 to $645bn in FY24e, with a CAGR of 11.5%. We expect this trend of increased digital ad spending to provide tailwinds for the social networks moving forward.

Sales Growth

Pinterest's revenue growth over the last three years has been exceptional, averaging 54.1% annually. While Pinterest's revenue growth was negatively impacted when the pandemic first hit, it has re-accelerated since then.

Pinterest Total Revenue

This quarter, Pinterest beat analyst estimates but reported a moderate 19.9% year on year revenue growth.

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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 21.5% annually to 431 million users. This is a strong growth for a consumer internet company.

Pinterest Global Monthly Active Users

Unfortunately, Q4 the company lost 28 million monthly active users, a 6.11% decrease year on year.

Key Takeaways from Pinterest's Q4 Results

Sporting a market capitalization of $17.8 billion, more than $2.48 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 Pinterest outperform Wall St’s revenue expectations this quarter. That feature of these results really stood out as a positive. On the other hand, there was a decline in number of users. Overall, this quarter's results were not bad, especially considering Meta's yesterday results. The company is up 16.5% on the results and currently trades at $28.51 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.