Social commerce platform Pinterest (NYSE: PINS) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 17.7% year on year to $898.4 million. On the other hand, the company expects next quarter’s revenue to be around $1.14 billion, slightly below analysts’ estimates. Its non-GAAP profit of $0.40 per share was 16.1% above analysts’ consensus estimates.

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Pinterest (PINS) Q3 CY2024 Highlights:

• Revenue: $898.4 million vs analyst estimates of $896.4 million (in line)

• Adjusted EPS: $0.40 vs analyst estimates of $0.34 (16.1% beat)

• EBITDA: $242.1 million vs analyst estimates of $223.1 million (8.5% beat)

• Revenue Guidance for Q4 CY2024 is $1.14 billion at the midpoint, slightly below analyst estimates of $1.14 billion

• Gross Margin (GAAP): 79.1%, up from 77.6% in the same quarter last year

• Operating Margin: -0.7%, in line with the same quarter last year

• EBITDA Margin: 27%, up from 24.2% in the same quarter last year

• Free Cash Flow Margin: 27.2%, up from 11.9% in the previous quarter

• Monthly Active Users: 537 million, up 55 million year on year (beat)

• Market Capitalization: $23.17 billion

"We delivered another strong quarter with users reaching another all-time high of 537 million and revenue growth at 18%,” said Bill Ready, CEO of Pinterest.

Company Overview

Created with the idea of virtually replacing paper catalogues, Pinterest (NYSE: PINS) is an online image and social discovery platform.

Social Networking

Businesses must meet their customers where they are, which over the past decade has come to mean on social networks. In 2020, users spent over 2.5 hours a day on social networks, a figure that has increased every year since measurement began. As a result, businesses continue to shift their advertising and marketing dollars online.

Sales Growth

Reviewing a company’s long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Luckily, Pinterest’s sales grew at a decent 12.5% compounded annual growth rate over the last three years. This is a useful starting point for our analysis.

This quarter, Pinterest’s year-on-year revenue growth was 17.7%, and its $898.4 million of revenue was in line with Wall Street’s estimates. Management is currently guiding for a 15.7% year-on-year increase next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 16.1% over the next 12 months, an acceleration versus the last three years. This projection is commendable and illustrates the market thinks its newer products and services will catalyze higher growth rates.