Pinterest (NYSE:PINS) Q1: Beats On Revenue But Stock Drops

Petr Huřťák /
2023/04/27 4:13 pm EDT
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Social commerce platform Pinterest (NYSE: PINS) reported results ahead of analyst expectations in the Q1 FY2023 quarter, with revenue up 4.82% year on year to $602.6 million. Pinterest made a GAAP loss of $208.6 million, down on its loss of $5.28 million, in the same quarter last year.

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Pinterest (PINS) Q1 FY2023 Highlights:

  • Revenue: $602.6 million vs analyst estimates of $592.6 million (1.68% beat)
  • EPS (non-GAAP): $0.08 vs analyst estimates of $0.02 ($0.06 beat)
  • Free cash flow of $181.5 million, up from $57.2 million in previous quarter
  • Gross Margin (GAAP): 71.6%, down from 74.6% same quarter last year
  • Global Monthly Active Users: 463 million, up 30 million year on year
  • Pinterest expacts that Q2 revenue will grow roughly in-line with the growth they saw in Q4 2022 and Q1 2023. They expect Q2 non-GAAP operating expenses to grow low teens on a percentage basis quarter-over-quarter.

“I’m proud of how our team is continuing to execute,” said Bill Ready, CEO of 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 very strong, averaging 37.4% annually. This quarter, Pinterest reported a rather lacklustre 4.82% year on year revenue growth, in line with analysts' expectations.

Pinterest Total Revenue

Ahead of the earnings results the analysts covering the company were estimating sales to grow 10.1% 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, stayed almost flat and grew only 0.13% annually to 463 million. This is slow growth for a company in the consumer internet sector.

Pinterest Global Monthly Active Users

In Q1 the company added 30 million monthly active users, translating to a 6.93% growth year on year.

Key Takeaways from Pinterest's Q1 Results

Sporting a market capitalization of $18.2 billion, more than $2.73 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.

Pinterest topped analysts’ revenue expectations this quarter, even if just narrowly. That feature of these results really stood out as a positive. On the other hand, it was less good to see that the growth was quite weak. Overall, this quarter's results were mixed. The company is down 8.36% on the results and currently trades at $24.98 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.