Pinterest (NYSE:PINS) is set to report first-quarter earnings on Tuesday, April 27. The social media company is coming off a strong 2020 where it benefitted from pandemic-related lockdown efforts that kept millions of people (and potential new users) cooped up in their homes and looking for social outlets.
As 2021 progresses, some portion of the world's populace is getting back to some level of normalcy as vaccination efforts are going well allowing select regions to ease business restrictions and allow safe social interactions more often. But in select countries (India and Brazil for example) vaccination efforts are not proceeding as rapidly, and rising coronavirus case counts continue to disrupt. No matter which scenario is in effect, Pinterest's user base and will likely be affected and this could be reflected in its upcoming report.
Let's look at three things current and potential Pinterest investors will want to know when the company reports Q1 earnings next week.
Pinterest will update on user counts and new efforts to attract advertisers
First, investors will want to look at the total monthly active users. The figure increased by 17 million in the most recent quarter to reach 469 million. Remarkably, the company added 124 million users in 2020. The vast majority of that growth came from its international segment, which now makes up 79% of the overall total. While some U.S. states have been easing restrictions on social gatherings and businesses, residents in other countries across Europe and elsewhere are still facing lockdowns and limited outdoor social activities. This dynamic that fueled so much growth in 2020 could continue to keep international growth elevated. Of course, the average revenue per user (ARPU) Pinterest generates is much higher domestically, so it's still unclear whether the faster growth internationally will have a significant impact on the bottom line.
Second, you will want to know the overall revenue growth rate. Pinterest guided investors to look for growth of at least 70% in the current quarter while cautioning about uncertainties caused by the pandemic. In the fourth quarter, retail advertisers helped drive sales at Pinterest as they needed to inform their customers they were open for business again. This quarter, new segments of the economy like travel are gaining steam, and they could join in vying for consumers' attention.
Third, you will want to hear from management on its progress in monetizing the business. Pinterest is in the beginning stages of monetizing its international user base and mentioned it would expand its presence in those markets and enter into a new market (Latin America) in the first half of 2021. International ARPU was $0.35 in the most recent quarter compared to $5.94 ARPU domestically, so elevating the former to better equal the latter can go a long way in increasing shareholder wealth.
What this could mean for investors
Analysts on Wall Street expect Pinterest to report revenue of $472.67 million and earnings per share of $0.08. If it hits expectations, revenue would be 72.8% higher than at the same point last year, and EPS would turn positive after a negative $0.01 reported last year.
Pinterest is on a rapid growth trajectory, and the pandemic accelerated that trend. Investors looking for a stock with the potential for high returns and willing to take on the extra risk that comes along can add Pinterest to their list.