Pinterest's investors are enjoying a postmarket relief rally, with the stock up 22.6% after hours (the stock's down 65% over the past year), following an earnings report where revenues were in line with expectations and the company forecast modest Q3 growth, and top investor Elliott Management expressed support for the company's new CEO.
Bill Ready took the top executive job over about a month ago, and on his first conference call (still ongoing), he said he joined the company because it "offers people a digital experience that is genuinely unique and positive, because we've only just begun to tap into the possibility that experience has to create value for users and advertisers."
E-commerce is in his background, and it's the key to his interest in Pinterest: "Having spent most of my career in commerce and payments, I recognize that there are many places to buy online, but there are very few online destinations where you can actually shop - that is, to browse and discover and get inspired before you buy. Pinterest is very unique and it has inspiration, discovery, and strong user intent, all in the same place."
Activist Elliott Management was quick to speak up after the results, confirming it was the company's top stakeholder and offering a vote of confidence in the CEO change from co-founder Ben Silbermann to ex-Googler Ready .
Ready said the call would be focused on results, rather than Elliott, but did offer up one comment in reaction.
"We've had a very collaborative and engaged dialogue with Elliott recently; they're aligned with our vision and what Pinterest can become; are supportive of our team and our efforts; and see the same tremendous potential for long-term value creation that I do," Ready said. "I look forward to continuing to engage with Elliott as they will with our other shareholders, and view their investment as a vote of confidence in Pinterest's future."
Revenues came in as expected, but the company noted it lost users in all regions year-over-year. The company said earlier this year that it wouldn't offer an outlook on user growth, but did offer some context on engagement for the second half.
"With a pandemic unwind largely behind us, we believe that global monthly active users will return to more typical seasonal engagement patterns in the second half of the year," said Todd Morgenfeld, chief financial officer and head of business operations.
"Those seasonal patterns typically show modest sequential growth as we move to Q3 and Q4. However, these trends may be a bit more muted than they have been historically. And for the U.S., Canada and Europe, specifically, we hope to stabilize our user base in the back half of the year," he said.
Morgenfeld also said that Ready is evaluating the company's capital position, and that Pinterest has accelerated many desired investments into 2022 - and they expect to see the benefits of those investments next year, so "as such we plan to return to meaningful margin expansion in 2023."
The company has about $2.7B in cash on the balance sheet, and it's discussing how to allocate that, including being "thoughtful and strategic" with respect to future M&A. (In Q2, the company acquired the Yes, a move to shore up commercial intent on the platform .)
For more detail, dig into Pinterest's ( NYSE: PINS ) earnings call presentation .
For further details see:
Pinterest earnings call: Looking to stabilize users, aligned with top investor