Pinterest (NYSE:PINS) Reports Sales Below Analyst Estimates In Q4 Earnings, Stock Drops 10.6%

Radek Strnad /
2023/02/06 4:14 pm EST
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Social commerce platform Pinterest (NYSE: PINS) fell short of analyst expectations in Q4 FY2022 quarter, with revenue up 3.6% year on year to $877.2 million. Pinterest made a GAAP profit of $17.4 million, down on its profit of $174.6 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 FY2022 Highlights:

  • Revenue: $877.2 million vs analyst estimates of $886.7 million (1.07% miss)
  • EPS (non-GAAP): $0.29 vs analyst estimates of $0.28 (4.34% beat)
  • Free cash flow of $57.2 million, down 17.5% from previous quarter
  • Gross Margin (GAAP): 78.9%, down from 83.3% same quarter last year
  • Global Monthly Active Users: 450 million, up 19 million year on year

“2022 was a solid year as we returned to MAU growth, deepened engagement and saw our personalization and relevance investments start to pay off,” said Bill Ready, Pinterest CEO.

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 39.9% 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 a rather lacklustre 3.6% year on year revenue growth, falling short of Wall St expectations.

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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 3.04% annually to 450 million users. This is a bit slower growth than what we see in some of the hottest consumer apps.

Pinterest Global Monthly Active Users

In Q4 the company added 19 million monthly active users, translating to a 4.4% growth year on year.

Key Takeaways from Pinterest's Q4 Results

Sporting a market capitalization of $18.6 billion, more than $2.69 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.

We struggled to find many strong positives in these results. On the other hand, it was unfortunate to see that Pinterest missed analysts' revenue expectations and the user growth was quite weak. Overall, this quarter's results were not the best we've seen from Pinterest. The company is down 10.6% on the results and currently trades at $24.95 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.