Q4 ’20 Earnings Preview $PINS $PTON

What I’ll be Looking For in Today’s Earnings Results

Peloton ($PTON) and Pinterest ($PINS) both announce earnings this afternoon. Peloton and Pinterest make up a decent chunk of my portfolio and I will be combing through their earnings results with a fine tooth comb.

Since it’s 5:45 AM and I need to go out for a run, here’s quickly what I’m going to be looking for from each company:

Peloton ($PTON)

Technically this is Peloton’s Q2 earnings call based on how they do their fiscal years. Anyway, what I’ll be looking for is to see how much revenue deceleration there is from Q1 to Q2 because they guided for only 115% YoY growth (vs. 228% last quarter) and they also do have a tough comparison coming up. Personally, I think they will do more like $1.15 B given the excess demand and their continued increase in digital subscriptions. Also, I think the big thing everyone will be looking for is what their revenue guidance is for Q2 and more important the rest of the year. Anything less than $4.1+ B in guidance is likely going to result in a sell-off since people will think this company may start slowing down after COVID and it already has a pretty high multiple.

I’ll also be looking for more information about how their digital subscription growth is doing. They’ve seen some huge acceleration in the past few quarters and it will be interesting to see if it’s sustained.

Churn is incredibly important for this business as well as the average monthly workouts. Since these are two metrics that will indicate how “SaaS” this business model is vs. is this a hardware company since both have an impact on revenue multiple potential.

In their earnings call, I’ll be very interested to see if they are still having supply chain issues that are resulting in shipping delays. I know this has been a huge problem for them which is resulting in their prospective customers going to competitors, so hopefully they have been able to resolve most of these issues soon.

Finally, operating cash flow and adjusted EBITDA improvement trend progress. They’ve seen some really strong growth and trends in these two numbers in recent months, so curious to see how those continue to trend out.

Pinterest ($PINS)

Pinterest has had a huge run prior to earnings and likely has lofty expectations given Alphabet’s blowout quarter. What I’ll be looking for is if they in fact have a revenue beat in Q4. They guided for 60% which is definitely the highest revenue growth they’ve had in 5+ quarters, so it was pretty impressive to hear when they announced it last quarter (likely why the stock spiked). I will also be curious what kind of guidance they’ll provide given for Q1 and the rest of FY 2021. I’d like to see revenue at least in the 35% range which I think they’ll handily beat but anything less could be troubling, especially given the EV/S multiple they currently have.

I’ll also be looking at their MAU growth since they are a social platform and this is one of those important metrics to determine the scale of their growth. They had 37% MAU growth last quarter, much of which was from International. Hopefully they can hit the 100+ MAU for the US and 350+ MAU for International which would amount to 450 M total and a 35% growth rate.

ARPU is another metric I’ll be looking at. Specifically, how much their US ARPU is growing given that’s where the largest chunk of their revenue is coming from. They’ve seen 30-40% growth for the past 2 years if you exclude COVID impacts, so if this can continue to trend that way, that would be very encouraging. International ARPU hopefully can hit $0.25+ since it’s growing so quickly and it would be nice to see it make up a bigger portion of Pinterest’s revenue.

Finally, I’m always curious how the company does operationally, so I’ll be monitoring their Adjusted EBITDA margin to see if it’s trending in the right direction. Last quarter was 21% and holiday is generally when their adjusted EBITDA margin jumps, so hopefully we’ll see 20%+.

If Pinterest can deliver, this stock is likely going to see additional multiple expansion and can potentially hit $100 in the coming weeks. Any weakness or uncertainty will likely will result in a material sell-off.

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