PINS Q4 2021 Earnings

{ "callDetails": { "callTitle": "Pinterest, Inc. Q4 2021 Earnings Call", "dateTime": "February 3, 2022 at 9:30 PM UTC", "managementTeam": [ { "name": "Neil Doshi", "title": "Head of Investor Relations" }, { "name": "Ben Silbermann", "title": "Chief Executive Officer" }, { "name": "Todd Morgenfeld", "title": "Chief Financial Officer and Head of Business Operations" } ] }, "callSummary": { "sections": [ { "title": "Financial Performance", "importance": "major", "bullets": [ "Revenue in Q4 grew 20% year over year to $847M on a reported basis.", "Pinterest surpassed $2B in revenue for full year 2021, growing 52% year over year.", "Adjusted EBITDA margin for Q4 was 41% as reported in the prepared remarks.", "Pinterest reported its first full year of GAAP profitability for 2021.", "Global monthly active users decreased 6% year over year to 431M in Q4 as stated on the call.", "U.S. monthly active users declined 12% year over year to 86M in Q4 as stated during the call.", "Non-GAAP operating expenses in Q4 grew 27% year over year." ] }, { "title": "Guidance", "importance": "major", "bullets": [ "Pinterest expects Q1 2022 revenue to grow in the high teens year over year.", "Pinterest expects Q1 non-GAAP operating expenses to grow around 10% sequentially quarter over quarter.", "Pinterest expects full year 2022 non-GAAP operating expenses to grow around 40% year over year.", "The Q1 revenue guide explicitly factors in ongoing CPG advertiser headwinds due to supply chain issues.", "The Q1 revenue guide also assumes some impact from higher CPAs and that IdeaPins/native video will be a modest headwind.", "Pinterest estimated IdeaPins distribution had a mid-single-digit negative impact on Q4 year-over-year revenue growth, similar to Q3." ] }, { "title": "Capital Allocation", "importance": "minor", "bullets": [ "Pinterest is accelerating investments across product, content, shopping, and go-to-market rather than announcing buybacks or dividends.", "Headcount grew 27% year over year, and the company plans to increase R&D and sales and marketing hiring in 2022.", "Q1 and full-year non-GAAP operating expense growth guidance implies a materially higher investment cadence versus 2021.", "No share repurchase program, dividend policy, or specific capital return amounts were disclosed on the call.", "Pinterest emphasized sequencing of spend may change quarter to quarter but recommended using 2021 quarterly cadence as a template." ] }, { "title": "AI & Technology Initiatives", "importance": "major", "bullets": [ "Pinterest plans to apply larger models and more data across its machine learning stack to improve content recommendations, home feed personalization, and search.", "The company identified personalization and recommendation improvements as priority levers to increase session frequency and time spent.", "Pinterest is investing in native video and IdeaPins as part of a creator-led content ecosystem to drive engagement over several quarters.", "Pinterest reported that Google's November algorithm update materially reduced search-driven traffic beginning mid-November and that the impact appears more persistent than historical changes.", "Pinterest is piloting native checkout and expects to scale tests over the course of 2022, but the product is still in early phases.", "Pinterest highlighted advances in AR technology that have improved shopping experiences and product discovery." ] }, { "title": "Competitive Positioning", "importance": "minor", "bullets": [ "Pinterest positioned itself as an inspiration-to-realization platform differentiated from social networks and pure entertainment platforms.", "The company acknowledged competitive pressure for user attention from TikTok, Meta, and others and cited time spent on competing video apps as a contributor to MAU declines.", "Pinterest stated that short-form video investments are intended to drive frequency of visits and differentiate the product with actionable inspiration tied to shopping.", "Leadership argued that Pinterest's focus on positive, brand-safe content and commerce intent provides unique advertiser value versus entertainment-first competitors.", "The company described a multi-year pathway where creators, shopping, and personalization combine to deepen engagement and monetization." ] }, { "title": "International / Geographic Trends", "importance": "minor", "bullets": [ "Pinterest reported web desktop and mobile web U.S. MAUs declined around 30% year over year, while U.S. mobile app MAUs declined around 6% year over year.", "As of February 1, 2022, Pinterest reported U.S. MAUs of approximately 86.6M and global MAUs of approximately 436.8M.", "Revenue strength in Q4 was driven by large retailers, mid-sized and managed small advertisers, and international markets.", "Pinterest plans to expand monetization into Colombia, Chile, Argentina, and to begin monetization in Japan in 2022.", "International markets, particularly Western Europe and early Latin America launches, were cited as ongoing growth opportunities that take time to scale." ] } ] }, "notableQuotes": [ { "quote": "In Q4, we saw monthly active users decrease 6% year-over-year to 431 million.", "speakerName": "Ben Silbermann" }, { "quote": "Revenue in the fourth quarter grew 20% year over year to $847M with an adjusted EBITDA margin of 41%.", "speakerName": "Todd Morgenfeld" }, { "quote": "Our US monthly active users declined 12% year-over-year to 86 million.", "speakerName": "Todd Morgenfeld" }, { "quote": "As of Tuesday, February 1st, U.S. monthly active users were approximately 86.6 million, and global monthly active users were approximately 436.8 million.", "speakerName": "Todd Morgenfeld" }, { "quote": "We surpassed $2B in revenue for the year, growing 52% over the previous year.", "speakerName": "Ben Silbermann" }, { "quote": "We expect Q1 revenue to grow in the high teens on a percentage basis year over year.", "speakerName": "Todd Morgenfeld" }, { "quote": "Non-GAAP operating expenses in the fourth quarter grew 27% year over year.", "speakerName": "Todd Morgenfeld" }, { "quote": "For the full year, we expect non-GAAP operating expenses to grow around 40% year over year.", "speakerName": "Todd Morgenfeld" }, { "quote": "We believe that the demand for a positive place to plan your future will only continue to grow over the long term.", "speakerName": "Ben Silbermann" }, { "quote": "We estimate that the negative impact to our fourth quarter year-over-year revenue growth from IdeaPins distribution was in the mid-single digits, similar to the third quarter.", "speakerName": "Todd Morgenfeld" } ], "qaSummary": [ { "question": { "analystName": "Ross Sandler", "firm": "Barclays", "summary": "Asked about recent senior executive departures and the Watch tab's potential impact on engagement in 2022." }, "answers": [ { "executiveName": "Ben Silbermann", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Ben stated attrition is roughly in line with peers and cited 27% headcount growth over the last year as context for hires. He said the Watch tab engagement metrics are not broken out yet and characterized creator/watch efforts as early but promising without providing specific user or revenue figures." } ] }, { "question": { "analystName": "Eric Sheridan", "firm": "Goldman Sachs", "summary": "Asked for learnings from international expansion and expectations for monetization in new markets like Japan." }, "answers": [ { "executiveName": "Todd Morgenfeld", "executiveTitle": "Chief Financial Officer and Head of Business Operations", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Todd explained the international playbook requires building local teams, adjusting the user and advertiser experience, and replicating the U.S. ad tech stack. He said monetization takes time, cited Western Europe traction, and confirmed launches or expansion into Colombia, Chile, Argentina, and Japan in 2022 without giving country revenue forecasts." } ] }, { "question": { "analystName": "Mark Mahaney", "firm": "Evercore ISI", "summary": "Asked what will cause North American MAUs to stabilize and resume growth." }, "answers": [ { "executiveName": "Todd Morgenfeld", "executiveTitle": "Chief Financial Officer and Head of Business Operations", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Todd said investments in creator-led short-form video, personalization, and recommendation systems are the path to increase frequency and user growth. He quantified that if you strip search impact, direct mobile app users were up high-single digits year over year globally and U.S. mobile app users were down around 6% year over year, indicating resilience among core app users." }, { "executiveName": "Ben Silbermann", "executiveTitle": "Chief Executive Officer", "quality": "Partial", "newInfo": "No", "guidance": "No", "summary": "Ben reiterated the three investment areas—creators, shopping, and personalization—are intended to build a coherent inspiration-to-realization experience that will drive repeat usage over time, and said creators are the earliest of these investments." } ] }, { "question": { "analystName": "Brian Nowak", "firm": "Morgan Stanley", "summary": "Asked which advertising or monetization products Pinterest will invest in to drive revenue in 2022." }, "answers": [ { "executiveName": "Ben Silbermann", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Ben outlined four themes: automation of campaign management, relevance and optimization via ML and the case graph, international expansion, and shopping improvements. He said automation will focus on helping midsize and small advertisers, and shopping surfaces have the highest commercial intent and remain under-monetized." } ] }, { "question": { "analystName": "Rich Greenfield", "firm": "LightShed Partners", "summary": "Asked whether Pinterest is open to consolidation and how size/scale factors into competitive positioning." }, "answers": [ { "executiveName": "Ben Silbermann", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "No", "guidance": "No", "summary": "Ben said he keeps an open mind as CEO but emphasized Pinterest's unique position as an inspiration-driven, brand-safe commerce platform. He highlighted secular trends (commerce, creators, mobile video) and argued Pinterest is well positioned to pioneer verticalized media formats tied to shopping." } ] }, { "question": { "analystName": "Doug Anmuth", "firm": "J.P. Morgan", "summary": "Asked why Google algorithm changes are affecting Pinterest and for an update on native checkout timing." }, "answers": [ { "executiveName": "Todd Morgenfeld", "executiveTitle": "Chief Financial Officer and Head of Business Operations", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Todd confirmed the November Google algorithm change had a material impact on search-driven traffic and said Pinterest regularly sees algorithm changes and is working to adapt. On native checkout, he said pilots have started and scaling is expected over the course of 2022, but no commercialization timeline or revenue impact was provided." } ] }, { "question": { "analystName": "Colin Sebastian", "firm": "Baird", "summary": "Asked whether app usage trends are a better gauge of future platform engagement and about the hire of a chief content officer from YouTube." }, "answers": [ { "executiveName": "Todd Morgenfeld", "executiveTitle": "Chief Financial Officer and Head of Business Operations", "quality": "Direct", "newInfo": "No", "guidance": "No", "summary": "Todd emphasized mobile app usage drives the bulk of impressions, time spent, and revenue and noted the importance of search-driven traffic as a separate top-of-funnel and revisitation driver. He said both app and search need to be considered together for MAU trends." }, { "executiveName": "Ben Silbermann", "executiveTitle": "Chief Executive Officer", "quality": "Direct", "newInfo": "No", "guidance": "No", "summary": "Ben said the hire of Malik from YouTube reflects a focus on audience development and positive content, and that the team brings both analytics and content experience to build a content offering aligned to Pinterest's mission." } ] }, { "question": { "analystName": "Lloyd Walmsley", "firm": "UBS", "summary": "Asked about higher-frequency metrics like weekly active users and whether shopping usage increases frequency.", "}, "answers": [ { "executiveName": "Todd Morgenfeld", "executiveTitle": "Chief Financial Officer and Head of Business Operations", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Todd stated that the weekly active users as a percentage of MAU has been stable historically and pointed to public filings for that ratio. He reported shopping surface engagement was up 20% sequentially Q3 to Q4 and 20% year over year, reflecting improved product catalogs and APIs." } ] }, { "question": { "analystName": "Justin Post", "firm": "Bank of America", "summary": "Asked what the company learned about margin potential given strong 2021 margins and plans to invest in 2022." }, "answers": [ { "executiveName": "Todd Morgenfeld", "executiveTitle": "Chief Financial Officer and Head of Business Operations", "quality": "Direct", "newInfo": "No", "guidance": "Yes", "summary": "Todd said 2021 delivered high gross margins and strong operating leverage but the company will accelerate investments in 2022; he reiterated Q1 op expense growth of ~10% sequentially and full year non-GAAP op expense growth of ~40% year over year as the expense posture for 2022." } ] }, { "question": { "analystName": "Rohit Kulkarni", "firm": "Roth Capital", "summary": "Asked about engagement trends across use cases (travel/out-of-home vs in-home) and the pathway for advertisers from managed to automated campaigns.", }, "answers": [ { "executiveName": "Ben Silbermann", "executiveTitle": "Chief Executive Officer", "quality": "Partial", "newInfo": "No", "guidance": "No", "summary": "Ben said Pinterest historically has strength in lifestyle in-home verticals and hopes creator ecosystem expansion will broaden use cases; he characterized these as early-stage investments without disclosing category-specific metrics.", }, { "executiveName": "Todd Morgenfeld", "executiveTitle": "Chief Financial Officer and Head of Business Operations", "quality": "Direct", "newInfo": "Partial", "guidance": "No", "summary": "Todd said the company has seen success with a managed go-to-market sales model and is investing in automation to enable advertisers to self-serve over time, but said building an unmanaged long-tail advertiser base will take additional time and product work." } ] } ], "redFlagsWatchItems": [ "Global MAUs declined 6% year over year to 431M in Q4, indicating weakening top-of-funnel user reach versus prior year.", "U.S. MAUs declined 12% year over year to 86M in Q4, highlighting material regional weakness in the core advertiser market.", "A November Google algorithm update materially reduced search-driven traffic and more than half of the Q3-to-Q4 sequential U.S. MAU decline was attributable to this change, and Pinterest stated the impact appears more persistent than historically.", "IdeaPins and native video distribution were estimated to reduce Q4 year-over-year revenue growth by mid-single digits, representing a short-term monetization headwind while the product ecosystem scales.", "CPG advertiser demand remains muted due to supply chain issues and could persist for multiple quarters, posing a sector-specific revenue risk.", "Higher CPAs and potential constraints on monetizable supply if engagement declines continue could pressure ad efficiency and advertiser ROI.", "Non-GAAP operating expenses are planned to grow ~40% year over year for 2022, creating execution risk on delivering returns from accelerated investment.", "Company attrition and senior departures were discussed; while described as in line with peers, the combination of aggressive hiring (27% headcount growth) and turnover increases execution and cultural risks." ] }