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Pinterest shares slump as guidance disappoints

Digital scrapbooking company Pinterest (PINS) beat Wall Street’s sales expectations in its first quarterly report since going public, but a weaker-than-expected full-year outlook sent shares sharply lower during extended trading.

The company reported first-quarter sales of $201.9 million, topping estimates calling for $200.8 million. Excluding certain items, Pinterest’s loss came out to 32 cents per share, wider than the about 10-cent loss Wall Street had been expecting.

In the year-ago quarter, Pinterest posted revenue of $131.4 million and a 38-cent adjusted net loss per share.

For the full year, Pinterest said it expects to see revenue between $1.06 billion to $1.08 billion, lower than the $1.09 billion expected.

Shares extended declines and fell 11.31% to $27.37 as of 9:54 a.m. ET on Friday, the morning after earnings were announced.

Active Users

The San Francisco, California-based reported 291 million monthly active users for the first quarter, in line with guidance the company delivered in its prospectus earlier this year. Pinterest’s user base has been growing consistently on a quarterly basis since June, to a size that rivals some other social media peers. Pinterest exited 2018 with 265 million monthly active users.

Twitter posted 330 million monthly active users in the first quarter, while Snap posted daily active users of 190 million (and did not break out first-quarter monthly active users). However, Pinterest’s ecosystem is still dwarfed by Facebook’s, which posted first-quarter monthly active users north of 2 billion.

For the fiscal first quarter, closely watched average revenue per active user was $2.25 per U.S. user, and 8 cents per international user. As with many social media companies, Pinterest derives more revenue from each domestic user, on account of a more mature domestic digital ad market. International revenue accounted for less than 8% of Pinterest’s total quarterly sales.

On the earning conference call Thursday evening, advertising was a key theme. Management said that the video advertising in the first quarter grew three times from last year. Meanwhile, the company explained that it does not see material results from international ads until 2020.

"We're not disclosing how many advertisers we have...[but] our growth rate has accelerated in Q1,” CFO Todd Morgenfeld said on the call.

IPO wars

Heading into Thursday’s results, upbeat growth prospects helped Pinterest avoid the fate of some of the other consumer tech unicorns, or private companies valued above $1 billion. Uber and Lyft, the two hottest unicorn IPOs, have seen their stock prices slide as enthusiasm over their public offerings quickly fizzled.

Pinterest’s growth narrative took a hit, however, following its weaker-than-expected sales guidance for the year.

Pinterest’s stock jumped 28% in its first day of trading in April, closing at $24.40 after pricing its IPO at $19 each. In the weeks following, Pinterest’s shares have continued to climb, closing above $30 each on Thursday for a 62% gain since pricing its IPO.

Despite the early rally, some analysts remained trepidatious about Pinterest and had been waiting for the dust to settle further following its IPO.

“The only thing giving us pause is the current 12x 2020 revenue multiple and the track record of mobile advertising IPOs chopping around for a bit after the initial post IPO pop,” Barclays analyst Ross Sandler wrote in a note ahead of results.

Heidi Chung contributed to this report. This post has been updated with opening share prices Friday.

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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