Snapchat Reported Accelerating Growth. Here’s What to Expect From Pinterest.
April 26, 2021
Pinterest reports on Tuesday, April 27 after market close. The stock recently dropped as much as 10.8% in one day due to reports that the company had a soft ending to Q1.
We wanted to take this opportunity to present the app data for Pinterest and provide an in-depth preview of the upcoming earnings report, which shows approximately 4% sequential growth and 21% growth year-over-year for DAUs. Interestingly enough, this is approximately the same YoY growth level that Snap reported for DAUs in its most recent earnings report, which we cover below.
A glimpse at the App Data
Please note, we use app data to spot trends—we do not use app data to make earnings calls on what a company will report. We use Apptopia data, a provider of app intelligence and competitor tracking service.
Pinterest user engagement remained strong in Q1 2021 despite loosening of Covid restrictions, based on app data from Apptopia. Similar to Snapchat, which reported earnings April 22 and grew DAUs 22% YoY, Q1 user trends for Pinterest were mostly positive.
In Q1, daily active users were up 4.12% QoQ versus 5.09% the previous quarter, and up 21.16% YoY.
Source: Apptopia with graphs by David Marlin
In Q1, monthly active users were up 4.09% QoQ versus 5.15% the previous quarter, and up 21.64% YoY.
Downloads were down 5.80% QoQ versus up .28% the previous quarter, and up 18.69% YoY.
Sessions were up 1.99% QoQ versus 5.11% the previous quarter, and up 20.07% YoY.
Pinterest reports Tuesday, April 22 after close and is guiding for Q1 2021 revenue growth in the low 70% range YoY with non-GAAP operating expenses at a similar level compared to last quarter. The consensus estimate is $475.11 million, up 74.71% YoY, according to Seeking Alpha.
Pinterest executives have warned that reopening could reduce engagement. Like other adtech stocks, Pinterest saw record high engagement but reduced advertiser demand in Q1 and Q2 2020, as advertisers slowed or paused their spend. Advertisers during these early-Covid quarters shifted away from awareness campaigns and towards high performance ads. Later, revenue growth accelerated in Q3 and Q4 as advertiser demand returned.
According to last week’s ad-tech analysis, we anticipate a small deceleration YoY in user engagement due to tougher comps—engagement reached record levels last March, according to the Q1 2020 earnings report—with strong international growth. Despite usage trends being mixed, if we see an ad rebound revenue can still climb higher.
Pinterest fell as much as 10.8% on April 16, after a cautious report from independent research firm Cleveland Research that was summarized by Seeking Alpha.
Pinterest ended Q1 had a softer end to Q1 "than mid-quarter expectations would indicate and some agencies/partners are noting a deceleration from Q4 levels," according to Seeking Alpha’s synopsis of the report, which added that "some omni-channel retailers are seeing Pinterest spending decelerating."
Below, we look at Q1 2021 results from Snapchat for clues about the potential adtech rebound and compare this to Apptopia data, a provider of app intelligence and competitor tracking service.
What to look for in the upcoming report
Going into Covid, Pinterest had less exposure to highly impacted verticals such as travel, according to the Q1 earnings report. When asked in Q1 what is holding Pinterest back from capturing more travel-related advertising dollars, CEO Ben Silbermann said the company is optimizing for core shopping verticals such as home décor and apparel.
“I will say that when we look at our plans for increasing kind of purchasing activity on Pinterest, travel is not the first place that we’re optimizing for,” Silbermann said. “We think there’s a really big opportunity in a lot of our core shopping verticals, which is why shopping and conversion-driven events continues to be a focus.”
Ad dollars follow planning activity, which is why ad spending moved away from categories such as wedding planning and travel events, according to the Q1 earnings report. As normal events and activities return, we expect ad dollars to follow at some point this year.
For the full year, Pinterest executives are expecting positive trends due to investments in new tools like shopping and automation; international expansion; and monetization into Latin America during the first half of the year, according to the last earnings report. Latin America is forecast to see 10.2% YoY growth in digital ad spending this year, after an 18.4% drop last year, according to a report from Dentsu.
Snapchat Doubles Active Advertisers
Global digital ad spending is projected to grow 10.1% YoY, with 18% growth in social media, according to the Dentsu report, which we discussed recently in our earnings coverage of Pinterest, Snapchat, Twitter, and Facebook.
To read our adtech earnings preview, click here.
Snapchat reported earnings April 22, achieving the highest year-over-year revenue and daily active user growth rates in over three years, according to the earnings report. Snapchat grew revenue to $770 million, up 66% year-over-year, and grew DAUs 22% year-over-year to 280 million. The company also approximately doubled its active advertiser base YoY, and offered strong guidance of 80% to 85% YoY revenue growth.
Traditionally strong categories for Snapchat, such as theatrical films, have started to return, and the company is seeking to increase categories where it is well positioned but has had less exposure, including travel and leisure.
The approach could pay off, according to the report from Dentsu. Sectors that restricted advertising the most due last year are set for the biggest recovery, with ad spend in travel and transport forecast to grow nearly 30%.
Despite mixed reports about Pinterest’s upcoming earnings report, we are seeing similar year-over-year growth in DAUs as Snapchat reported, which is 21.16% and 22% respectively. We are hopeful that with an ad-rebound in many sectors that Pinterest will also have a healthy earnings report, where low ad revenue last year will offset tough comps in usage.
Disclaimer: I/O Fund currently owns shares of Snap and Pinterest. In addition, the author, Jessica Ablamsky, owns shares of Pinterest, has owned options on Pinterest, and may own options on Pinterest again in the future. Jessica Ablamsky has owned options on Snapchat in the past and may purchase shares or own options again in the future. The content in this article is intended to be used for informational purposes only. The author has not received any compensation from any third party or company discussed in this article. The content is the expressed opinions of the author and is intended for educational and research purposes. Any thesis presented is not a guarantee of any particular stock’s future prices, so please factor this risk into your own analysis. It is very important that you do your own analysis before making any investments based on your personal circumstances. The author is not a licensed professional advisor. Please seek counsel form a licensed professional before acting on any analysis expressed in this article, to see if it is appropriate for your personal situation.
Gains of up to 1150% from our FREE stock tips newsletter.
Here are sample stock gains from the I/O Fund’s newsletter --- produced weekly and all for free!
+1150% on Roku
+560% on Nvidia
+162% on Zoom
+340% on Bitcoin
Our newsletter provides an edge in the world’s most valuable industry – technology. Due to the enormous gains from this particular industry, we think it’s essential that every stock investor have a credible source who specializes in tech. Subscribe for Free Weekly Analysis on the Best Tech Stocks.
If you are a more serious investor, we have a premium service that offers lower entries and real-time trade alerts. Sample returns on the premium site include 324% on Zoom, 601% on Nvidia, 445% on Bitcoin, and 4-digits on an alt-coin. The I/O Fund is audited annually to prove it’s one of the best performing Funds on the market with returns that beat Wall Street funds.
More To Explore
Pinterest and Snap Show V-Shaped Recovery; Cloudflare Guns for Zero-Trust
2020 earnings from ad-tech stocks have shown us that digital advertising has rebounded sharply from the pandemic recession lows.
I/O Fund’s Preview of 7 Semiconductor Stocks Ahead of Q3 Earnings
This quarter we chose Nvidia, Lam Research, Ambarella, Advanced Micro Devices, Broadcom, Marvell Technology, and Qorvo for an earnings preview.
I/O Fund’s Semiconductor Q3 2021 Earnings Preview
Taiwan Semiconductor officially opened the sector’s earnings with a bang as it beat consensus estimates and also guided strong revenue in the fourth quarter. Specifically, the company’s Q3 YoY sales g
Upcoming Correction But Still a Bull Market
Inflation has continued to concern investors into the month of August, causing many growth stocks to give back any footing they gained in the prior month. Since the February top in tech growth, only s
FuboTV Delivers Record Numbers; Fantasy and Sports Betting on Deck
According to Fubo’s recent earnings call, a free-to-play app is scheduled to launch in Q3 and a sports betting app is scheduled to launch in Q4.
Q1 Earnings Analysis for Etsy, Square, and Palantir
As earnings season winds down, we review earnings reports for popular growth tech stocks Etsy, Square, and Palantir.
Social Media Projected to Lead Global Ad Spend in 2021
Global digital ad spending is projected to grow 10.1% YoY, powered by 18% growth in social media, according to a report from Dentsu, an advertising and public relations company based in Japan.
Why We’re Skipping Coinbase and Prefer Voyager Digital: Overview of Crypto Trading
Voyager Digital is a smaller cap that gives investors exposure to the Bitcoin and crypto trading trend at a reasonable valuation.
Podcast with Motley Fool: I’m Bullish on These Trends for 2021
Recently I joined Tim Beyers and Brian Feroldi on The Motley Fool podcast. In the hour-long interview we discussed cloud stock valuations, trends I’m bullish on, why I thinkZoom VideoandShopifyare the
Why It's Too Late for Google Cloud to Overtake Microsoft Azure
In our latest Forbes report, we discuss why Google (Alphabet) may have missed a critical window this year for the infrastructure piece. We also analyze how Microsoft d...