Written by Norman Isaac Mwambazi

Pinterest posts strong Q4 earnings, EPS; adds 100 million users

If you have been following us, which is a great thing, by the way, you would know that this week …

If you have been following us, which is a great thing, by the way, you would know that this week hs been filled with companies reporting their quarterly earnings, as well as the U.S. Labour department releasing the January 2021 jobs report.

Yesterday, Thursday, February 4, 2021, image sharing and social media service Pinterest released its Q4 FY2020 earnings report in a conference video call between Pinterest top executives Doug Clark, the Head of Investor Relations; Ben Silbermann, Pinterest’s President and Chief Executive Officer; Todd Morgenfeld, the company’s Chief Financial Officer and Head of Business Operations; and analysts from different financial institutions like Barclays, UBS, J.P. Morgan among many others.

In the fourth quarter of Pinterest’s financial year that ended on December 31, 2020, the company reported that it earned revenues amounting to $706 million, far exceeding the estimated revenue of $645.9 million. That is a rise of 76% from the same time in 2019.

Monthly active users on the site were up 459 million, a total that is up 37% year over year. This also beats the estimated number of users by a few millions, which was 448 million.

Adjusted Earnings Per Share (EPS) of the company’s stock swung to a profit in Q4 to $0.43, higher than the expected $0.33.

Additionally, adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) came in at $299 million, versus the estimated $223 million. And their margin, EBITDA margin, 42% versus 19% year over year.

Speaking at the release of the report, Pinterest President and Chief Executive Officer (CEO) Ben Silbermann said that although 2020 was a trying year for everyone because of the COVID-19 pandemic that disrupted everything, he feels good about the company’s performance in 2020.

“I’ll start by saying that I feel good about our progress in 2020. It was obviously a trying year for everyone because of the pandemic as well as some of the social and political unrest, and our company had to adapt quickly,” Silbermann said.

He added, “In Q4, monthly active users grew 37% year over year to $459 million. Revenue in the quarter grew 76% year over year to $706 million, and we were profitable on a non-GAAP basis for 2020.

“We are proud of this progress, and we are focused on continuing to deliver on our mission. Now as I have told you before, our mission is to bring everyone the inspiration to create a life they love. And it’s never felt more important than it is now. We hear this from folks all the time.”

Pinterest’s Chief Financial Officer (CFO) and Head of Business Operations Todd Morgenfeld highlighted auto-bid as a big contributor to the company’s strong revenues in the fourth quarter, as well as the move to expand their sales internationally, specifically in Western Europe.   

“We also expanded our sales team in Western Europe to monetize our engagement there. Drilling down, auto-bid was once again a meaningful contributor to our strength in Q4 and was especially so for small and medium-sized businesses,” Morgenfeld said, adding that the company’s international business grew 145% year over year on the back of strong advertising demand. International markets now represent 17% of Pinterest’s total revenue.

The execs provided some guidance on the company’s future expected earnings. In Q1 FY2021, revenue is projected to grow in the low 70% range, year over year, driven by increases in average revenue per user expansion. Pinterest also end the quarter with about $1.76 billion in cash, cash equivalents, and marketable securities, so a nice cash position there.

“Given this momentum, we plan to continue to invest to best serve Pinners, merchants and advertisers against the key priorities,” Silbermann promised.

The company also attributed its success to the strong holiday season that drove advertising demands higher. Pinterest stock is now up 10% after the release of their Q4 FY earnings, going for $81.44 per share.

PS: Stock prices quoted in this article can change anytime.