Pinterest, Inc. (PINS), an international visual search and discovery platform provider, reported solid first-quarter financial results on May 1, 2024. The company reported a record quarterly revenue of $739.98 million, indicating growth of 22.8% from the prior-year quarter. The company’s global monthly active users increased 12% year-over-year to 518 million.
The company’s revenue from US and Canada rose 21.8% year-over-year to $592 million and revenue from Europe grew 26.9% year-over-year to $118 million. Its non-GAAP net income was $139.50 million, up 141.8% from the prior year’s quarter.
During the quarter, PINS partnered with Integral Ad Science (IAS), a leading global media measurement and optimization platform, to provide global advertisers higher transparency into campaigns across PINS’ in-app feed through IAS’ AI-driven Total Media Quality (TMQ) Brand Safety and Suitability product.
Bill Ready, CEO of Pinterest commented, “Q1 was a milestone quarter for Pinterest as we reached new highs: surpassing half a billion monthly active users and reporting 23% revenue growth – our fastest user and revenue growth since 2021.”
He added, “Thanks to our investments in AI and shoppability, we’re driving even greater returns for advertisers and gaining access to performance budgets. We’re executing with tremendous clarity and focus, shipping new products and experiences that users want, and in doing so, we’re finding our best product market fit in years.”
According to the company’s guidance for second quarter 2024, PINS expect its revenue to be in the range of $835 million to $850 million, reflecting 18% to 20% growth year-over-year.
Shares of PINS have surged 10.9% over the past six months and 41.9% over the past year to close its last trading session at $40.80.
Let’s look at factors that could influence PINS’ performance in the upcoming months.
Positive Recent Developments
On June 13, PINS and Integral Ad Science (IAS), a leading global media measurement and optimization platform, entered into a partnership to offer global advertisers with greater transparency into campaigns across PINS’ in-app feed through IAS’ AI-driven Total Media Quality (TMQ) Brand Safety and Suitability product.
The new launch includes features like trusted campaign insights, frame-by-frame analysis, campaign level measurement, and global coverage. The new TMQ for PINS provides advertisers safeguards across a total of 39 countries in 40 languages. The partnership will expand PINS operations and offer brand safety and greater confidence to confidence via best-in-class technology.
Robust Financials
For the first quarter that ended March 31, 2024, PINS’ revenue increased 22.8% year-over-year to $739.98 million, of which its revenue from US and Canada rose 21.8% year-over-year to $592 million. The company’s adjusted EBITDA grew 318.7% from the year-ago value to $112.92 million.
In addition, the company’s non-GAAP net income came in at $139.50 million and $0.20, indicating increases of 141.8% and 150% from the prior year’s quarter. The company’s cash and cash equivalents stood at $1.63 billion as of March 31, 2024, compared to $1.36 billion as of December 31, 2023.
Solid Historical Growth
PINS’ revenue and EBITDA have grown at respective CAGRs of 18.8% and 27.3% over the past three years. The company’s EBIT has increased at a CAGR of 39.5% over the same timeframe, while its normalized net income has improved at CAGR of 55.2%.
Also, the company’s tangible book value and total assets have increase at CAGRs of 9.4% and 10.8% over the past three years, respectively. And its levered free cash flow grew 44.8% over the same timeframe.
Favorable Analyst Estimates
Analysts expect PINS’ revenue for the second quarter (ended June 2024) to increase 19.8% year-over-year to $848.31 million. The consensus EPS estimate of $0.28 for the same quarter indicates a 32.5% year-over-year improvement. Moreover, PINS has an impressive earnings surprise history, having topped consensus EPS estimates in each of the trailing four quarters.
For the fiscal year ending December 2024, the company’s revenue and EPS are expected to grow 19.9% and 33.4% year-over-year to $3.66 billion and $1.45, respectively. Additionally, Street expects its revenue and EPS for the fiscal year 2025 to increase 17.3% and 23.5% year-over-year to $4.30 billion and $1.80, respectively.
High Profitability
PINS’ trailing-12-month gross profit margin of 78.11% is 56.4% higher than the industry average of 49.95%. Its trailing-12-month net income margin of 4.64% is 52.2% higher than the industry average of 3.05%. Similarly, its trailing-12-month levered FCF margin of 23.10% is considerably higher than the industry average of 8.50%.
Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 4.78%, 3.65%, and 4.04% favorably compared to the industry averages of 3.48%, 3.58%, and 1.25%, respectively.
POWR Ratings Reflect Promise
PINS’ solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. PINS has an A grade for Growth, in sync with its impressive historical growth and solid financial performance in the last reported quarter.
In addition, the stock has a B grade for Quality, consistent with its higher-than-industry profitability.
PINS is ranked #20 in the 53-stock B-rated Internet industry.
Beyond what I have stated above, we have also given PINS grades for Sentiment, Value, Momentum, and Stability. Get access to all the PINS Ratings here.
Bottom Line
PINS reported better-than-expected earnings for the first quarter of fiscal 2024. The company’s strong industry footing, strategic partnerships, and solid financial performance position it for bright long-term prospects.
Given PINS’ solid financials, accelerating profitability, historical growth, and promising growth outlook, this stock could be an ideal buy now.
How Does Pinterest, Inc. (PINS) Stack Up Against Its Peers?
While PINS has an overall POWR Rating of B, investors could also check out these other stocks within the B-rated Internet industry with A (Strong Buy) or B (Buy) ratings: Yelp Inc. (YELP), Travelzoo (TZOO), and Dingdong (Cayman) Ltd (DDL).
For exploring more A and B-rated internet stocks, click here.
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PINS shares were trading at $40.51 per share on Tuesday afternoon, down $0.85 (-2.06%). Year-to-date, PINS has gained 9.37%, versus a 19.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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