PINS - A Growth Case

I have become more and more excited about PINS over the past couple of months and yet I do not see much on this board about it. Maybe because this stock isn’t specifically a recurring revenue model or maybe because they slowed in Q2 from advertisers pulling funds during the worst of COVID. Either way this is my case for company.

  • % change in quarterly revenue YoY: +58%, +4%, +35%, +46% for Q3 2020, Q2 2020, Q1 2020, and Q4 2019. Note Q2 2020 was rough for them in terms of advertising revenue.
  • If you look at their revenue QoQ it fluctuates a good bit because they seem to have a seasonal business with revenue increasing as you move from Q1 → Q4 but then decreasing from Q4 → Q1.
  • Monthly Active Users in USA has increased YoY +13%, +13%, +6%, and 7% while internationally they have increased YoY +46%, +49%, +34%, +34% for Q3 2020, Q2 2020, Q1 2020, and Q4 2019. USA seems pretty saturated but international still shows lots of growth.
  • Average Revenue Per User in the USA is $3.85, $2.50, $2.66, $4.00 while internationally it is $0.21, $0.14, $0.13, $0.21 for Q3 2020, Q2 2020, Q1 2020, and Q4 2019. This means that for this most recent quarter, international ARPU is only 5% of what it is in the USA and international ARPU has grown 62%, 27%, 63%, and 133% YoY for Q3 2020, Q2 2020, Q1 2020, and Q4 2019.
  • Gross margin of 75% in the most recent quarter.
  • The company has made a lot of investment internally to improve automated advertising and it seems to be paying off based on their most recent earnings call.

To summarize the growth story, international users make up 78% of the total global user base but only make up 15% of the total global revenue and international ARPU is only 5% of USA ARPU. MAU and ARPU are growing at a fast pace internationally all while ARPU is still growing in the USA. The large existing potential for monetization internationally combined with the more efficient use of advertising seems to create a good story for years to come. Not to mention the company has $1.6 billion in cash and marketable security and no debt. I also won’t get into the more subjective arguments like how this is a “positive” social media platform.

Validating and/or contrary viewpoints welcome.

  • Junomean2