What goes up must come down and Pinterest is facing a declining user base as consumers are reengaging with the real world, driving its Monthly Active Users down about 5 percent from the 478 million it posted just three months ago.
Despite coming in ahead of analyst forecasts in many key metrics, that declining user base took Pinterest shares down by almost 20 percent in after-hours trading Thursday evening (July 29).
On the upside, earnings came in ahead of predictions at 25 cents a share instead of the 13-cent average forecast. Revenue was also better than expected at $613 million instead of $562.1 million as predicted. The average revenue per user also came in ahead of the $1.17 called for pre-release at $1.32.
All but one metric that the Street was looking at was inline or better than expected, save for Monthly Active Users (MAUs), which came in about 6 percent light, at 454 million versus a 482 million forecast. Pinterest didn’t just miss analyst forecasts; its MAUs dropped 5 percent from the 478 million the company reported just three months ago. And the declines were worse in the U.S., where the company said that, as of July 27, MAUs have declined by approximately 7 percent.
But Pinterest CEO Ben Silbermann noted that the decline in U.S. users was certainly not favorable news, but not an unexpected development. In the last year, he noted, they saw users flood to Pinterest for inspiration to reinvent their lives during such a difficult time.
“Now, as the world opens up, we’re seeing the similar effect in the opposite direction that impacted our growth, particularly because some of the core use cases we see on our platform are less common in 2021, and they were a year ago,” Silbermann told investors.
And in fact, Pinterest wasn’t the only social media player struggling with its user base, as Facebook and Twitter both logged slower than expected user growth in the second quarter of 2021. And like its counterparts in social media in Q2, Pinterest’s focus was on its expanding commerce ecosystem and shifting role in its customers’ lives. It is still a place to hang out and look at boards, but increasingly as a place where they can shop what they see.
Pinterest’s plan, Silbermann told analysts on the call, is to continue investing in helping pinners “shop for products they want at a price point they want,” and in helping merchants get discovered and connected to potential customers on the platform.
“While we’re still early in the journey to fully monetize our shopping engagement, we believe that we have the right sales coverage model, and we’re delivering conversions to advertisers, advertisers who are seeking sales on the platform,” Silbermann noted. Pinterest also noted its growth remains active outside the U.S. market — growing 5 percent internationally.
As for what comes next, Pinterest declined to provide Q3 estimates for its monthly active users — stating the impact of COVID-19 in its resurgent Delta form provides too much uncertainty. It did provide some Q3 guidance on revenue growth “in the low-40s” on a year-to-year basis and estimated in line with analyst predictions.
And though Pinterest was enthused by its continued evolution into a social commerce platform, the market was not. The firm’s stock was trading down 19 percent in after-hours trading.
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What goes up should come down and Pinterest is going through a declining person base as shoppers are reengaging with the actual world, driving its Month-to-month Energetic Customers down about 5 % from the 478 million it posted simply three months in the past.
Regardless of coming in forward of analyst forecasts in lots of key metrics, that declining person base took Pinterest shares down by nearly 20 % in after-hours buying and selling Thursday night (July 29).
On the upside, earnings got here in forward of predictions at 25 cents a share as a substitute of the 13-cent common forecast. Income was additionally higher than anticipated at $613 million as a substitute of $562.1 million as predicted. The typical income per person additionally got here in forward of the $1.17 known as for pre-release at $1.32.
All however one metric that the Road was taking a look at was inline or higher than anticipated, save for Month-to-month Energetic Customers (MAUs), which got here in about 6 % mild, at 454 million versus a 482 million forecast. Pinterest didn’t simply miss analyst forecasts; its MAUs dropped 5 % from the 478 million the corporate reported simply three months in the past. And the declines had been worse within the U.S., the place the corporate stated that, as of July 27, MAUs have declined by roughly 7 %.
However Pinterest CEO Ben Silbermann famous that the decline in U.S. customers was actually not favorable information, however not an sudden growth. Within the final 12 months, he famous, they noticed customers flood to Pinterest for inspiration to reinvent their lives throughout such a tough time.
“Now, because the world opens up, we’re seeing the same impact in the other way that impacted our development, significantly as a result of a few of the core use circumstances we see on our platform are much less frequent in 2021, they usually had been a 12 months in the past,” Silbermann advised buyers.
And actually, Pinterest wasn’t the one social media participant battling its person base, as Fb and Twitter each logged slower than anticipated person development within the second quarter of 2021. And like its counterparts in social media in Q2, Pinterest’s focus was on its increasing commerce ecosystem and shifting position in its clients’ lives. It’s nonetheless a spot to hang around and have a look at boards, however more and more as a spot the place they’ll store what they see.
Pinterest’s plan, Silbermann advised analysts on the decision, is to proceed investing in serving to pinners “store for merchandise they need at a value level they need,” and in serving to retailers get found and linked to potential clients on the platform.
“Whereas we’re nonetheless early within the journey to completely monetize our purchasing engagement, we imagine that we’ve the precise gross sales protection mannequin, and we’re delivering conversions to advertisers, advertisers who’re looking for gross sales on the platform,” Silbermann famous. Pinterest additionally famous its development stays lively outdoors the U.S. market — rising 5 % internationally.
As for what comes subsequent, Pinterest declined to offer Q3 estimates for its month-to-month lively customers — stating the affect of COVID-19 in its resurgent Delta kind offers an excessive amount of uncertainty. It did present some Q3 steering on income development “within the low-40s” on a year-to-year foundation and estimated in keeping with analyst predictions.
And although Pinterest was enthused by its continued evolution right into a social commerce platform, the market was not. The agency’s inventory was buying and selling down 19 % in after-hours buying and selling.
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