Categories Analysis, Technology

Earnings preview: All you need to know ahead of Pinterest’s Q2 results

After its closely followed Wall Street debut in April, social media platform Pinterest (NYSE: PINS) will be publishing second-quarter results Thursday after the market’s close. The company’s steady expansion, since it was launched nearly a decade ago, gathered momentum after going public.

Read: Live Updates of Pinterest Q2 2019 Earnings Results

Wall Street analysts will be looking for revenues of $235.53 million for the to-be-reported quarter. Meanwhile, the company is expected to report a loss of $0.08 per share.

Pinterest Monthly Active Users rise to 291 million

The visual search engine has been steadily expanding its user base across all markets, which is expected to have translated into revenues in the second quarter. However, the rapid user addition will trim the Average Revenue Per User due to the low monetization rate in the foreign markets.

Pros & Cons

Advertising income, currently the company’s sole revenue source, could come under pressure from competition from Facebook-owned Instagram (FB) and microblogging platform Twitter (TWTR). Nevertheless, the ongoing efforts to ramp up the site by incorporating advanced technologies like artificial intelligence might enhance user engagement, offsetting the negative factors. It will also increase merchandise sales on the platform, supported by new features that allow retailers to present the full catalog of their products.

Also see: Pinterest Q1 2019 Earnings Conference Call Transcript

In the long term, the steps taken by the management to foray into traditional advertising areas like television and print media are expected to contribute to the company’s expansion into a global entity.

Looking Back

Pinterest’s stock lost sharply in May after it reported weaker than expected revenues of $202 million for the first quarter, despite a 54% year-over-year increase. Adjusted loss for the quarter was $0.32 per share. At 291 million, the number of active users at the end of the quarter was up 22%.

Pinterest Earnings and Revenue performance

Competition

Rival social media platform Snapchat, operated by Snap, Inc. (SNAP), added about 13 million users in the second quarter of 2019. Consequently, Snap’s revenues surged 48% to $388 million and loss narrowed to $0.06 per share from $0.14 per share last year.

Related: Snap adds 13 million users in Q2

The performance of Pinterest at the stock market has been positive since the Wall street debut and the shares are currently trading above the IPO price. The stock, which hit an all-time high of around $34 days after the IPO, gained 14% since the beginning of the year.

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