Pinterest (PINS 1.77%) stock was down 3.9% on Tuesday as of 12:02 p.m. ET, following the release of the image-based social media company's fourth-quarter 2022 report Monday afternoon.
The market's slightly negative reaction was attributable to Q4 revenue missing Wall Street's consensus estimate and management's first-quarter 2023 revenue guidance coming in lower than analysts had been expecting. On the positive side, its fourth-quarter adjusted earnings exceeded the consensus estimate. That said, they were still down considerably from the prior-year period.
In addition, the company announced that CFO Todd Morgenfeld will be leaving in July. His replacement has not yet been named.
Pinterest's key numbers
| Metric | Q4 2021 | Q4 2022 | Change |
|---|---|---|---|
| Revenue | $846.7 million | $877.2 million | 3.6% |
| GAAP net income | $174.7 million | $17.5 million | (90%) |
| Adjusted net income | $339.4 million | $203.1 million | (40%) |
| GAAP earnings per share (EPS) | $0.25 | $0.03 | (88%) |
| Adjusted EPS | $0.49 | $0.29 | (41%) |
Data source: Pinterest. GAAP = generally accepted accounting principles.
Wall Street was looking for adjusted EPS of $0.27 on revenue of $886.3 million. So Pinterest surpassed the profit expectation but missed the top-line estimate. Revenue was just a bit lower than the company's guidance for growth in the mid-single digits on a year-over-year percentage basis. The company didn't provide earnings guidance.
For context, in the third quarter, revenue grew 8.2% year over year to $684.6 million. Adjusted EPS fell 61% to $0.11.
In 2022, Pinterest generated $469.2 million in cash from operations. This result was down 38% from 2021. But it was still solid -- the company turned nearly 17% of its $2.8 billion in annual revenue into cash from operations. It ended the year with $1.6 billion in cash and cash equivalents on the books, up from $1.4 billion at the end of 2021. It has no long-term debt.
Key user and operational stats
| Metric | Q4 2022 | Change (YOY) |
|---|---|---|
| Monthly active users (MAUs): global | 450 million | 4% |
| MAUs: U.S. and Canada | 95 million | Flat |
| MAUs: Europe | 124 million | 2% |
| MAUs: rest of world | 231 million | 8% |
| Average revenue per user (ARPU): global | $1.96 | 1% |
| ARPU: U.S. and Canada | $7.60 | 6% |
| ARPU: Europe | $1.01 | (9%) |
| ARPU: rest of world | $0.14 | 21% |
Data source: Pinterest. YOY = year over year.
The company's global count of monthly active users also rose slightly on a sequential basis -- up 1% from 445 million at the end of the third quarter. In that quarter, global MAUs were flat year over year.
What the CEO had to say
Here's CEO Bill Ready's statement from the earnings release:
2022 was a solid year as we returned to MAU growth, deepened engagement and saw our personalization and relevance investments start to pay off. We're building upon this foundation by staying focused on growing monetization per user, integrating shopping throughout the core user experience, and increasingly driving operational rigor. While the industry as a whole is facing headwinds, we are adapting quickly to a changing macro environment and are committed to creating a more positive online experience for our users and advertisers.
When Ready mentions industry "headwinds," he's largely referring to the fact that many companies have been cutting back on their advertising spending due to the uncertain macroeconomic environment. In addition, the social media industry has been struggling to grow users ever since the end of the early stage of the pandemic. User counts surged during the first year or so of the crisis because many people were at home so much more than usual.
First-quarter sales expected to grow about 1% to 3%
For Q1 2023, management is forecasting that revenue will grow by a low-single-digit percentage on a year-over-year basis. This guidance was lighter than the 7.3% growth Wall Street had been expecting.
In short, Pinterest turned in a decent quarter given the tough macro environment. The light Q1 revenue guidance was disappointing, but given the uncertainty about the macro environment, it makes sense for management to be conservative.
