Yahoo Finance Pinterest (PINS) Surpasses Q1 Earnings & Revenue Estimates
Pinterest, Inc. PINS reported healthy first-quarter 2023 results, with the bottom and the top line beating the respective Zacks Consensus Estimate. The company actively invested in improving the overall Pinterest experience through better and personalized video contents, increasing user engagement, improving privacy and safety measures in the platform and introducing new tools to support advertisers. This helped the San Francisco-based Internet content provider record higher revenues year over year despite a challenging environment.
Net Income
On a GAAP basis, the company reported a net loss of $208.6 million or a loss of 31 cents per share compared with a net loss of $5.3 million or a loss of a penny per share in the year-ago quarter. The loss was due to significantly higher general and administrative costs and higher expenses in research & development and sales and marketing.
Non-GAAP net income stood at $57.7 million or 8 cents per share compared with $69 million or 10 cents per share in the year-ago quarter. The bottom line comprehensively beat the Zacks Consensus Estimate of a break-even earnings.
Pinterest, Inc. Price, Consensus and EPS Surprise
Pinterest, Inc. price-consensus-eps-surprise-chart | Pinterest, Inc. Quote
Revenues
Revenues in the first quarter of 2023 were $602.6 million, up 5% year over year from $574.9 million. The top line beat the Zacks Consensus Estimate of $593 million. Net sales from the United States and Canada aggregated $486 million, up 3% year over year. Revenues from Europe rose to $93 million from $87 million reported in the year-ago quarter. Net sales from Rest of World rose 38% year over year to $24 million.
Pinterest witnessed a 7% year-over-year growth in monthly active users (MAUS) to 463 million. Mobile app MAUs increased 16% year over year. Shopping ad revenues increased 40% year over year propelled by mobile deep linking product.
The upside can be attributed to the company’s various initiatives to improve monetization and engagement per user. Incorporation of advanced AI models also improved the relevancy and personalization for users. The platform is gaining fast popularity among Gen Z users. Emerging verticals such as travel and autos also witnessed strong growth.
In the first quarter, the global average revenue per user (ARPU) declined marginally to $1.32 from the year-ago quarter’s figure of $1.33. While ARPU in the United States and Canada increased 3% to $5.11, Europe witnessed growth of 2% to 74 cents. ARPU from Rest of the World grew 27% year over year.
Other Details
In the March quarter, total costs and expenses increased to $846.3 million from $578.6 million from the year-ago levels. On a GAAP basis, administrative costs surged to $207.9 million from $63 million reported in previous year’s period. Research and development expenses rose to $266.3 million from $195.5 million in the year-ago quarter. The company’s continuous investment in improving content relevance, shopability and the expansion of the ads business led to higher expenses in the quarter.
Adjusted EBITDA was $27 million in first-quarter 2023 down from $77 million a year ago.
Cash Flow & Liquidity
As of Mar 31, 2023, Pinterest had cash and cash equivalents of $1,651.2 million, with $159.5 million of operating lease liabilities. The company generated $183.5 million of cash from operating activities during the quarter.
Outlook
Pinterest expects second-quarter 2023 revenue growth to be in line with the trajectory witnessed in the last two quarters. Management expects foreign exchange headwinds will have a small impact on second-quarter performance. The company will continue to make investment in enhancing product experience to increase engagement and improve monetization. Despite some stabilization in the first quarter, the ads market continues to be uncertain due to macroeconomic challenges.
Zacks Rank & Other Stocks to Consider
Pinterest currently has a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks, Inc. ANET, carrying a Zacks Rank #2, delivered an earnings surprise of 14.17%, on average, in the trailing four quarters. Earnings estimates for ANET for the current year stand at $5.78 per share. Arista provides cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
It continues to benefit from strong momentum and diversification across its top verticals and product lines. The company has a software-driven, data-centric approach to help customers build their cloud architecture and enhance their cloud experience. It is well-poised for growth in data-driven cloud networking business with proactive platforms and predictive operations. Arista has introduced network observability software, DANZ Monitoring Fabric (DMF), on its switching platforms for enterprise-wide traffic visibility and contextual insights.
Juniper Networks, Inc. JNPR, carrying a Zacks Rank #2, delivered an earnings surprise of 5.24%, on average, in the trailing four quarters. It is witnessing strong momentum across its core industry verticals and is confident of its long-term prospects. Investments in customer solutions and sales organizations have enabled the company to capitalize on the solid demand across end markets.
Juniper is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build a network infrastructure for services and applications based on a single Internet protocol network. It caters to the networking needs of enterprises, public sector organizations and service providers across the globe.
Splunk Inc. SPLK, sporting a Zacks Rank #1, delivered an earnings surprise of 131.1%, on average, in the trailing four quarters. In the last reported quarter, it delivered an earnings surprise of 83.78%. Splunk provides software solutions that enable enterprises to gain real-time operational intelligence by harnessing the value of their data. The company's offerings enable users to investigate, monitor, analyze and act on machine data and big data, irrespective of format or source and help in operational decision-making.
Its software has a broad range of applications, including security analytics, business analytics and IT operations. Splunk is benefiting from healthy customer engagement, evident from the consistently high net retention and competitive win rates alongside solid momentum with large orders overall.
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