Pinterest (PINS) to Report Q4 Earnings: What's in Store?

Pinterest PINS is set to report fourth-quarter 2019 results on Feb 6.

The Zacks Consensus Estimate for fourth-quarter earnings has been steady at 7 cents over the past 30 days. The consensus mark for revenues is pegged at $373.2 million.

Pinterest reported third-quarter 2019 non-GAAP earnings of 1 cent per share. Revenues surged 47.1% year over year to $279.7 million. International revenues soared 211.1% year over year to $28 million.

Let’s see how things have shaped up prior to this announcement.

Pinterest, Inc. Price and EPS Surprise

Pinterest, Inc. Price and EPS Surprise

Pinterest, Inc. price-eps-surprise | Pinterest, Inc. Quote

Factors to Consider

Pinterest’s initiative to improve user engagement by infusing visual search technology even in offline mode on its platform is expected to have accelerated conversion of searches into product purchases in the fourth quarter.

Additionally, the company’s expansion in new markets such as Denmark, Finland, Norway, Portugal, Sweden and Switzerland is expected to have contributed to international user base growth in the to-be-reported quarter thus boosted the top line.

Moreover, the company’s healthcare initiatives during the fourth quarter are likely to have aided user growth and engagement levels.

In the third quarter, Monthly Average Users (MAUs) Global increased 28% to 322 million. While United States MAUs increased 8% to 87 million, International MAUs soared 38% to 235 million.

Pinterest introduced a collection of emotional well-being activities for distressed users in the United States. Additionally, for World Mental Health Day, the World Health Organization saved new Pins meant to reduce the stigma of suicide and extended support to those who need it.

Moreover, Pinterest also collaborated with American Academy of Pediatrics to bring their resources for parents to its platform.

New business profile features with video and shop tabs and expanded Catalogues and Shopping Ads features in France, Germany, Spain and Italy are expected to have increased advertisers on the platform, thus driving average revenue per user (ARPU) in the to-be reported quarter.

Further, internalizing ads business, simplifying ad systems for smaller businesses and improving advertisers’ ability to measure the effectiveness of their ad spend are expected to have driven advertiser growth in the fourth quarter.

However, Pinterest generates revenues primarily from one source — advertising. Increasing competition for ad dollars from the likes of Facebook, Amazon, Google and Twitter continues to be a major headwind for the company.

Moreover, rapid growth in international user base is expected to have hurt ARPU in the to-be-reported quarter as monetization rate is low in international markets.

Key Developments in Q4

Pinterest updated its platform with navigation changes and features additions such as new home feed tuner and Pin-level controls to enhance user experience ahead of the holiday season.

During the fourth quarter, the company introduced Pinterest Trends tool that shows the top U.S. search terms in the past 12 months to help brands get deeper insights into planning behaviors on the platform, find a list of keywords to include or avoid and to allow them to allocate budgets to campaigns during various planning stages.

The company also introduced Pinterest Shop during the fourth quarter to boost shopping experience for users ahead of the holiday season as the profile can be used to discover hundreds of shoppable Product Pins from 17 different small businesses such as Stasher, The Citizenry and FOUNT among others.

What Our Model Says

According to the Zacks model, the combination of two key ingredients — a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — increases the odds of a positive earnings surprise.

Pinterest has an Earnings ESP of 0.00% and a Zacks Rank #3, which makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in their upcoming release.

Perion Network Ltd. PERI has an Earnings ESP of +22.58% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Microchip Technology MCHP has an Earnings ESP of +1.33% and a Zacks Rank of 1.

Bruker Corporation BRKR has an Earnings ESP of +0.86% and a Zacks Rank #2.

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