Pinterest stock plunges after post-IPO earnings report

Pinterest Inc. shares dropped more than 15% in after-hours trading Thursday, following the company’s first earnings report since its initial public offering.


PINS, +7.79%

  went public in April at $19 a share, and has experienced volatility amid a solid rise since. Shares closed Thursday with a 7.8% gain at $30.86, and have now increased or declined more than 4% in half of Pinterest’s 20 trading sessions thus far.

Pinterest reported a net loss of $41.4 million, or 33 cents a share, on revenue of $201.9 million, up from $131 million a year ago that the company reported in filings for its IPO. Net losses can be very large in the first report after an IPO, as fellow social-media company Snap Inc.

SNAP, +7.13%

  proved in a memorable way; stripping out stock-based compensation from the results didn’t make much of a difference for Pinterest, though, as adjusted losses were 32 cents a share. Analysts on average expected adjusted losses of 11 cents a share on sales of $200.7 million, according to FactSet.

Pinterest explained that the lack of large stock compensation charges was because the quarter ended before the actual IPO took place — if the IPO had taken place in the quarter, it would have realized $975 million in those expenses, Pinterest said in a letter to shareholders, with another $925 million spread out over the next 3.7 years. Instead, it only claimed $1 million in stock-based compensation.

Pinterest also said in its letter that a jump in costs was related to adding employees.

“Our total costs and expenses grew 32% year-over-year and our non-GAAP costs and expenses grew 35% year-over-year, in each case, reflecting head count growth to improve our user experience and core technology while also increasing our sales coverage in the U.S. and internationally,” the letter states.

See also: Five things investors should know from Pinterest’s IPO filing

Pinterest reported monthly active users — an important metric for social-media companies that make their money from advertising — of 291 million, giving it average revenue per user of 73 cents. It had 239 million monthly active users last year at this time and ended 2018 with 265 million users accessing the service monthly, according to IPO filings. Analysts on average projected 288.7 million monthly active users, according to FactSet.

The vast majority of Pinterest’s revenue comes from the U.S., and increasing the amount of money it makes overseas is a key goal as the company seeks to continue growing sales. Pinterest reported domestic revenue per user of $2.25 and international revenue per user of just 8 cents, after recording U.S. sales per user of about $1.59 and foreign sales per user of about 5 cents last year.

At the end of Q1, we were serving ads to users in 13 countries, up from seven at the end of Q418,” Pinterest said in its letter. “International revenue as a percentage of total revenue was 7.4% in Q119 vs. 5.5% in the year-ago period.”

The company said it expects full-year revenue of $1.055 billion to $1.08 billion. Analysts on average expect $1.07 billion, according to FactSet.

Pinterest plans to hold a conference call to discuss its results at 5 p.m. Eastern time.

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