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Pinterest (PINS) Q1 Loss Narrows Y/Y, Revenues Increase

Zacks Equity Research

Pinterest PINS reported first-quarter 2019 non-GAAP loss of 32 cents per share that was narrower than the year-ago quarter loss of 38 cents.

Revenues surged 53.7% year over year to $201.9 million. While revenues from the United States jumped 50.8% to $187 million, International revenues soared 114.3% to $15 million.

Notably, this was Pinterest’s first quarterly earnings. The company went public on Apr 18.

The Zacks Consensus Estimate for the top and the bottom lines was pegged at $201 million and loss of 9 cents, respectively.

However, shares were down more than 15% in pre-market trading apparently due to weak guidance. Notably, Pinterest shares have rallied 26.4% since its IPO, outperforming the industry’s rally of 4.5%.



User Base Expands in Q1

MAUs Global increased 21.8% to 291 million. While the United States MAUs increased 6% to 85 million, International MAUs soared 29% to 206 million.

Management stated that there are now more than 200 billion ideas (called Pins) saved on Pinterest. Also, users (called Pinners) have created 4 billion named collections (called Pinboards).

Pinterest is focused on making the platform more relevant for users and it is using machine learning (ML) for this purpose. Improved ML models launched during the quarter increased clicking and saving behaviors (an important metric that suggests relevancy) in the home feed. The company also made the platform more shoppable during the quarter.

ARPU-Global surged 25.9% to 73 cents. ARPU United States and International jumped 41% and 59% on a year-over-year basis to $2.25 and 8 cents, respectively.

Growth in ARPU was primarily driven by an increase in number of advertisements. Further, the price of advertisements increased on a year-over-year basis. Also, unfavorable geographic mix hurt global ARPU growth, as the number of International users grew much faster than the number of U.S. users.

At the end of first-quarter 2019, Pinterest offered ads to users in 13 countries, up from seven at the end of fourth-quarter 2018. New markets added were Austria, Belgium, Germany, Italy, the Netherlands and Spain.

Moreover, the company enabled retailers to upload their full catalogs to Pinterest. The company also made video available for all advertising objectives. Notably, revenues from video grew three times on a year-over-year basis. 

Operating Details

Pinterest’s first-quarter 2019 total expenses surged 32.4% to $246.7 million driven by headcount growth and increased sales coverage in the U.S. and International markets.

Research and Development expenses (R&D) were $72.4 million, up 20.6% year over year. Sales and Marketing expenses (S&M) jumped 37% year over year to $76.4 million. General and Administrative expenses (G&A) increased 28.3% year over year to $24.2 million.

Adjusted EBITDA was negative $38.4 million compared with negative $45.6 million in the year-ago quarter.

Loss from operations was $44.8 million compared with loss of $55 million in the year-ago quarter.

Balance Sheet & Cash Flow

Pinterest exited first-quarter 2019 with cash, cash equivalents, and marketable securities of $642 million.

Cash from operations increased from $14 million in the year-ago quarter to $33 million in the reported quarter.


For 2019, Pinterest expects revenues between $1.055 billion and $1.080 billion, indicating growth in the range of 40-43% over 2018. The Zacks Consensus Estimate is currently pegged at $1.07 billion.

Adjusted EBITDA is expected between negative $45 million and negative $70 million.

Zacks Rank & Stocks to Consider

Pinterest currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the same industry include eGain Corporation EGAN, j2 Global JCOM and Alteryx AYX. While eGain and j2 Global sport a Zacks Rank #1 (Strong Buy), Alteryx carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for eGain, j2 Global and Alteryx is 30%, 8% and 13.7%, respectively.

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