Pinterest Q3 Earnings Increases, Monthly User Base Declines
Pinterest reported higher Q3 earnings and revenue, but monthly active users fell for the second consecutive quarter.
Why It Matters?
The search-and-discovery platform reported sales increased 43% in line with the estimates due to increased demand from large retail advertisers, shopping, and growth in its international business. Meanwhile, Pinterest’s monthly active users (MAU) fell 2% from the 454 million the company reported in July.
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By The Numbers
Adjusted earnings per share: 28 cents vs. 23 cents expected by Refinitiv
Revenue: $633 million vs. $630.9 million expected by Refinitiv
Monthly active users: 444 million vs. 460 million expected by StreetAccount
Average revenue per user: $1.41 vs. $1.38 forecast by StreetAccount
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Pinterest Takeaways
-A high revenue per user generated strong revenue and profit numbers for the company. The average revenue per user for Pinterest has increased 37% since last year.
-However, lower demand in advertising for consumer packaged goods due to supply chain disruptions and pandemic-related issues caused revenue to slip a few percentage points.
-Unlike other social media giants, Pinterest said that Apple Inc.’s changes to ad tracking didn’t have a material impact on its business in the third quarter. This is due primarily to the fact that the service uses a lot of its own data to target ads.
-Pinterest initially benefited from global lockdowns driven by the Covid-19 pandemic as people stayed at home looking for activities around the house, like decorating, gardening and cooking. In the first quarter of 2019, Pinterest’s global user base reached 483 million users — up almost 43% over the last five quarters. However, Pinterest’s monthly active users (MAU) grew just 1 percent to 444 million this quarter. This represents a drop of 10 million users compared to the prior three-month period.
-The smaller user base is the result of the pandemic unwind as people are now venturing out and returning to school or work. This means fewer people are using the app to explore ideas on topics such as home decor or gardening. Chief Financial Officer Todd Morgenfeld said,
“We believe the slowdown was due to the pandemic unwind.”
-Pinterest predicts that user engagement, growth, and retention rates will continue to decline as pandemic restrictions wane.
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Q4 Outlook
The company provided a Q4 revenue growth estimate that will be in the “high-teens” percentage range on a Y-o-Y basis. This is far short of the analysts’ estimate of 26% sales growth. It will continue to focus on Pinner product, ad product, and measurement investments.
“Our key strategic priorities for 2021 remain anchored in content, Pinner experience, advertiser success, and shopping. We plan to continue investing in these this year.”
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