Pinterest, Inc. (NYSE: PINS) today announced financial results for the
quarter ended March 31, 2019.
“The IPO was a significant milestone, but our focus at Pinterest hasn’t
changed. We want to help people discover inspiring ideas for every
aspect of their lives, from fashion and home decor to travel and
fitness,” said Ben Silbermann, Co-Founder, President and CEO of
Pinterest. “Our success can be seen in our Q1 results, and we’re excited
to continue to grow our reach and impact in the years to come.”
“Pinterest executed well in Q1. Revenue grew 54% year-over-year to $202
million, surpassing $200 million for the second consecutive quarter,”
said Todd Morgenfeld, CFO. “We were particularly encouraged by the
strength we saw in U.S. revenue and international user growth. Our
strong revenue performance allowed us to expand net margin by 20
percentage points year-over-year, reflecting our continued
prioritization and disciplined execution across our strategic
priorities.”
Q1 2019 financial highlights
The following table summarizes our consolidated financial results (in
thousands, except percentages, unaudited):
| Three Months Ended March 31, | % Change | ||||||||||
| 2019 | 2018 | ||||||||||
| Revenue | $ | 201,911 | $ | 131,359 | 54 | % | |||||
| Net loss | $ | (41,420 | ) | $ | (52,709 | ) | 21 | % | |||
| Non-GAAP net loss* | $ | (40,383 | ) | $ | (47,787 | ) | 15 | % | |||
| Adjusted EBITDA* | $ | (38,436 | ) | $ | (45,361 | ) | 15 | % | |||
| Adjusted EBITDA margin* | (19 | )% | (35 | )% | |||||||
|
_______________ |
|||||||||||
* For more information on these non-GAAP financial measures, please see
“―About non-GAAP financial measures” and the tables under
“―Reconciliation of GAAP to non-GAAP financial results” included at the
end of this release.
Q1 2019 other highlights
The following table sets forth our revenue, monthly active users
(“MAUs”) and average revenue per user (“ARPU”) based on the geographic
location of our users (in millions, except ARPU and percentages,
unaudited):
| Three Months Ended March 31, | % Change | ||||||||
| 2019 | 2018 | ||||||||
| Revenue – Global | $ | 202 | $ | 131 | 54 | % | |||
| Revenue – United States | $ | 187 | $ | 124 | 51 | % | |||
| Revenue – International | $ | 15 | $ | 7 | 107 | % | |||
| MAUs – Global | 291 | 239 | 22 | % | |||||
| MAUs – United States | 85 | 80 | 6 | % | |||||
| MAUs – International | 206 | 160 | 29 | % | |||||
| ARPU – Global | $ | 0.73 | $ | 0.58 | 26 | % | |||
| ARPU – United States | $ | 2.25 | $ | 1.59 | 41 | % | |||
| ARPU – International | $ | 0.08 | $ | 0.05 | 59 | % | |||
Full year 2019 outlook
-
Total revenue is expected to be between $1,055 million and $1,080
million. -
Adjusted EBITDA is expected to be between $(70) million and $(45)
million.*
* For more information on this non-GAAP financial measure, please see
“―About non-GAAP financial measures.”
Webcast and conference call information
A live audio webcast of our first quarter 2019 earnings release call
will be available at investor.pinterestinc.com.
The call begins today at 2:00 PM (PT) / 5:00 PM (ET). We have also
posted to our investor relations website a letter to shareholders. This
press release, including the reconciliations of certain non-GAAP
measures to their nearest comparable GAAP measures, letter to
shareholders and slide presentation are also available. A recording of
the webcast will be available at investor.pinterestinc.com
for 90 days.
We have used, and intend to continue to use, our investor relations
website at investor.pinterestinc.com
as a means of disclosing material nonpublic information and for
complying with our disclosure obligations under Regulation FD.
Forward-looking statements
This press release may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act of 1934, as amended, about us and our
industry that involve substantial risks and uncertainties, including,
among other things, statements about our future operational and
financial performance. Words such as “believe,” “project,” “may,”
“will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan”
and similar expressions are intended to identify forward-looking
statements. These forward-looking statements are only predictions and
may differ materially from actual results due to a variety of factors
including: our ability to attract and retain users and engagement
levels; our ability to provide useful and relevant content; risks
associated with new products and changes to existing products as well as
other new business initiatives; our ability to maintain and enhance our
brand and reputation; compromises in security; our financial performance
and fluctuations in operating results; our dependency on internet search
engines’ methodologies and policies; discontinuation, disruptions or
outages in authentication by third-party login providers; changes by
third-party login providers that restrict our access; competition; our
ability to scale our business and revenue model; our reliance on
advertising revenue and our ability to attract and retain advertisers;
our ability to effectively manage growth and expand and monetize our
platform internationally; our lack of operating history and ability to
attain and sustain profitability; decisions that reduce short-term
revenue or profitability or do not produce expected long-term benefits;
risks associated with government actions, laws and regulations that
could restrict access to our products or impair our business; litigation
and government inquiries; privacy, data and other regulatory concerns;
real or perceived inaccuracies in metrics related to our business;
disruption, degradation or interference with our hosting services and
infrastructure; our ability to attract and retain personnel; and the
dual class structure of our common stock and its effect of concentrating
voting control with stockholders who held our capital stock prior to the
completion of our initial public offering. These and other potential
risks and uncertainties that could cause actual results to differ from
the results predicted are more fully detailed in our filings with
the Securities and Exchange Commission (SEC), including our prospectus
filed pursuant to Rule 424(b) under the Securities Act of 1933, as
amended, on April 18, 2019, which are available on our investor
relations website at investor.pinterestinc.com
and on the SEC website at www.sec.gov.
Additional information will be made available in our quarterly report on
Form 10-Q and other future reports that we may file with the SEC from
time to time, which could cause actual results to vary from
expectations. All information provided in this release and in the
attachments is as of May 16, 2019. Undue reliance should not be placed
on the forward-looking statements in this press release, which are based
on information available to us on the date hereof. We undertake no duty
to update this information unless required by law.
About non-GAAP financial measures
To supplement our condensed consolidated financial statements, which are
prepared and presented in accordance with generally accepted accounting
principles in the United States (“GAAP”), we use the following non-GAAP
financial measures: Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP
costs and expenses (including non-GAAP cost of revenue, research and
development, sales and marketing, and general and administrative),
non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss
per share. The presentation of these financial measures is not intended
to be considered in isolation, as a substitute for or superior to the
financial information prepared and presented in accordance with GAAP.
Investors are cautioned that there are material limitations associated
with the use of non-GAAP financial measures as an analytical tool. In
addition, these measures may be different from non-GAAP financial
measures used by other companies, limiting their usefulness for
comparative purposes. We compensate for these limitations by providing
specific information regarding GAAP amounts excluded from these non-GAAP
financial measures.
We define Adjusted EBITDA as net loss adjusted to exclude depreciation
and amortization expense, share-based compensation expense, interest
income, interest expense and other income (expense), net and provision
for income taxes. Adjusted EBITDA margin is calculated by dividing
Adjusted EBITDA by revenue. Non-GAAP costs and expenses (including
non-GAAP cost of revenue, research and development, sales and marketing,
and general and administrative) and non-GAAP net loss exclude
amortization of acquired intangible assets and share-based compensation
expense. Non-GAAP loss from operations is calculated by subtracting
non-GAAP costs and expenses from revenue. Non-GAAP net loss per share is
calculated by dividing non-GAAP net loss by weighted-average shares
outstanding. We use Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP
costs and expenses, non-GAAP loss from operations, non-GAAP net loss and
non-GAAP net loss per share to evaluate our operating results and for
financial and operational decision-making purposes. We believe Adjusted
EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses, non-GAAP
loss from operations, non-GAAP net loss and non-GAAP net loss per share
help identify underlying trends in our business that could otherwise be
masked by the effect of the income and expenses they exclude. We also
believe Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and
expenses, non-GAAP loss from operations, non-GAAP net loss and non-GAAP
net loss per share provide useful information about our operating
results, enhance the overall understanding of our past performance and
future prospects and allow for greater transparency with respect to key
metrics we use for financial and operational decision-making. We present
Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses,
non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss
per share to assist potential investors in seeing our operating results
through the eyes of management and because we believe these measures
provide an additional tool for investors to use in comparing our
operating results over multiple periods with other companies in our
industry. There are a number of limitations related to the use of
Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses,
non-GAAP loss from operations, non-GAAP net loss and non-GAAP net loss
per share rather than net loss, net margin, total costs and expenses,
loss from operations, net loss and net loss per share, respectively, the
nearest GAAP equivalents. For example, Adjusted EBITDA excludes certain
recurring, non-cash charges such as depreciation of fixed assets and
amortization of acquired intangible assets, although these assets may
have to be replaced in the future, and share-based compensation expense,
which has been, and will continue to be for the foreseeable future, a
significant recurring expense and an important part of our compensation
strategy.
With respect to projected 2019 Adjusted EBITDA, we are unable to prepare
a quantitative reconciliation without unreasonable efforts due to the
high variability, complexity and low visibility with respect to certain
items such as taxes and interest income that we are unable to quantify
and that would be required to reconcile projected Adjusted EBITDA to net
loss, the nearest GAAP equivalent. We expect the variability of these
items to have a potentially unpredictable and potentially significant
impact on future GAAP financial results, and, as such, we also believe
that any reconciliations provided would imply a degree of precision that
would be confusing or misleading to investors.
For a reconciliation of these non-GAAP financial measures to the most
directly comparable GAAP financial measures, please see the tables under
“―Reconciliation of GAAP to non-GAAP financial results” included at the
end of this release.
Limitation of key metrics and other data
The numbers for our key metrics, which include our MAUs and ARPU, are
calculated using internal company data based on the activity of user
accounts. We define a monthly active user as a logged-in Pinterest user
who visits our website or opens our mobile application at least once
during the 30-day period ending on the date of measurement. We present
MAUs based on the number of MAUs measured on the last day of the current
period. We measure monetization of our platform through our average
revenue per user metric. We define ARPU as our total revenue in a given
geography during a period divided by the average of the number of MAUs
in that geography during the period. We calculate average MAUs based on
the average between the number of MAUs measured on the last day of the
current period and the last day prior to the beginning of the current
period. We calculate ARPU by geography based on our estimate of the
geography in which revenue-generating activities occur. We use these
metrics to assess the growth and health of the overall business and
believe that MAUs and ARPU best reflect our ability to attract, retain,
engage and monetize our users, and thereby drive revenue. While these
numbers are based on what we believe to be reasonable estimates of our
user base for the applicable period of measurement, there are inherent
challenges in measuring usage of our products across large online and
mobile populations around the world. In addition, we are continually
seeking to improve our estimates of our user base, and such estimates
may change due to improvements or changes in our methodology.
|
PINTEREST, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except par value) (unaudited) |
||||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 134,648 | $ | 122,509 | ||||
| Marketable securities | 507,568 | 505,304 | ||||||
|
Accounts receivable net of allowances of $2,600 and $3,097 as of March 31, 2019 and December 31, 2018, respectively |
161,108 | 221,932 | ||||||
| Prepaid expenses and other current assets | 43,623 | 39,607 | ||||||
| Total current assets | 846,947 | 889,352 | ||||||
| Property and equipment, net | 83,031 | 81,512 | ||||||
| Operating lease right-of-use assets | 160,802 | 145,203 | ||||||
| Goodwill and intangible assets, net | 13,728 | 14,071 | ||||||
| Restricted cash | 25,724 | 11,724 | ||||||
| Other assets | 11,008 | 10,869 | ||||||
| Total assets | $ | 1,141,240 | $ | 1,152,731 | ||||
|
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) |
||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 30,320 | $ | 22,169 | ||||
| Accrued expenses and other current liabilities | 93,206 | 86,258 | ||||||
| Total current liabilities | 123,526 | 108,427 | ||||||
| Operating lease liabilities | 162,359 | 151,395 | ||||||
| Other liabilities | 23,945 | 22,073 | ||||||
| Total liabilities | 309,830 | 281,895 | ||||||
| Commitments and contingencies | ||||||||
|
Redeemable convertible preferred stock, $0.00001 par value, 928,676 shares authorized; 308,373 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively |
1,465,399 | 1,465,399 | ||||||
| Stockholders’ equity (deficit): | ||||||||
|
Common stock, $0.00001 par value, 1,932,500 shares authorized; 127,371 and 127,298 shares issued and outstanding as of March 31, 2019 and December 31, 2018, respectively |
1 | 1 | ||||||
| Additional paid-in capital | 253,016 | 252,212 | ||||||
| Accumulated other comprehensive loss | (231 | ) | (1,421 | ) | ||||
| Accumulated deficit | (886,775 | ) | (845,355 | ) | ||||
| Total stockholders’ equity (deficit) | (633,989 | ) | (594,563 | ) | ||||
|
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit) |
$ | 1,141,240 | $ | 1,152,731 | ||||
|
PINTEREST, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) |
||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenue | $ | 201,911 | $ | 131,359 | ||||
| Costs and expenses: | ||||||||
| Cost of revenue | 73,694 | 51,653 | ||||||
| Research and development | 72,444 | 60,047 | ||||||
| Sales and marketing | 76,394 | 55,774 | ||||||
| General and administrative | 24,205 | 18,867 | ||||||
| Total costs and expenses | 246,737 | 186,341 | ||||||
| Loss from operations | (44,826 | ) | (54,982 | ) | ||||
| Other income (expense), net: | ||||||||
| Interest income | 4,059 | 2,638 | ||||||
| Interest expense and other income (expense), net | (500 | ) | (242 | ) | ||||
| Loss before provision for income taxes | (41,267 | ) | (52,586 | ) | ||||
| Provision for income taxes | 153 | 123 | ||||||
| Net loss | $ | (41,420 | ) | $ | (52,709 | ) | ||
|
Net loss per share attributable to common stockholders, basic and diluted |
$ | (0.33 | ) | $ | (0.42 | ) | ||
|
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
127,346 | 126,857 | ||||||
|
PINTEREST, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) |
||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Operating activities | ||||||||
| Net loss | $ | (41,420 | ) | $ | (52,709 | ) | ||
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization | 5,696 | 4,787 | ||||||
| Share-based compensation | 694 | 4,834 | ||||||
| Other | (993 | ) | 654 | |||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 61,329 | 39,309 | ||||||
| Prepaid expenses and other assets | 510 | 7,102 | ||||||
| Operating lease right-of-use assets | 6,427 | 4,551 | ||||||
| Accounts payable | 7,481 | 4,484 | ||||||
| Accrued expenses and other liabilities | (2,024 | ) | 2,696 | |||||
| Operating lease liabilities | (4,578 | ) | (2,174 | ) | ||||
| Net cash provided by operating activities | 33,122 | 13,534 | ||||||
| Investing activities | ||||||||
| Purchases of property and equipment | (3,706 | ) | (8,240 | ) | ||||
| Purchases of marketable securities | (113,952 | ) | (83,569 | ) | ||||
| Sales of marketable securities | 28,953 | 36,408 | ||||||
| Maturities of marketable securities | 84,883 | 142,428 | ||||||
| Net cash provided by (used in) investing activities | (3,822 | ) | 87,027 | |||||
| Financing activities | ||||||||
| Proceeds from exercise of stock options, net | 110 | 435 | ||||||
| Other financing activities | (3,279 | ) | — | |||||
| Net cash provided by (used in) financing activities | (3,169 | ) | 435 | |||||
|
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
8 | 48 | ||||||
| Net increase in cash, cash equivalents, and restricted cash | 26,139 | 101,044 | ||||||
| Cash, cash equivalents, and restricted cash, beginning of period | 135,290 | 83,969 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 161,429 | $ | 185,013 | ||||
| Supplemental cash flow information | ||||||||
| Accrued property and equipment | $ | 4,484 | $ | 7,779 | ||||
|
Operating lease right-of-use assets obtained in exchange for operating lease liabilities |
$ | 22,862 | $ | 2,356 | ||||
|
Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets |
||||||||
| Cash and cash equivalents | $ | 134,648 | $ | 172,512 | ||||
| Restricted cash included in prepaid expenses and other current assets | 1,057 | 851 | ||||||
| Restricted cash | 25,724 | 11,650 | ||||||
| Total cash, cash equivalents, and restricted cash | $ | 161,429 | $ | 185,013 | ||||
|
Reconciliation of GAAP to non-GAAP financial results (in thousands, except per share amounts) (unaudited) |
||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Share-based compensation by function: | ||||||||
| Cost of revenue | $ | 15 | $ | 32 | ||||
| Research and development | 626 | 4,054 | ||||||
| Sales and marketing | 29 | 241 | ||||||
| General and administrative | 24 | 507 | ||||||
| Total share-based compensation | $ | 694 | $ | 4,834 | ||||
| Amortization of acquired intangible assets by function: | ||||||||
| Cost of revenue | $ | — | $ | 14 | ||||
| General and administrative | 343 | 74 | ||||||
| Total amortization of acquired intangible assets | $ | 343 | $ | 88 | ||||
|
Reconciliation of total costs and expenses to non-GAAP costs and expenses: |
||||||||
| Total costs and expenses | $ | 246,737 | $ | 186,341 | ||||
| Share-based compensation | (694 | ) | (4,834 | ) | ||||
| Amortization of acquired intangible assets | (343 | ) | (88 | ) | ||||
| Non-GAAP costs and expenses | $ | 245,700 | $ | 181,419 | ||||
| Reconciliation of net loss to non-GAAP net loss: | ||||||||
| Net loss | $ | (41,420 | ) | $ | (52,709 | ) | ||
| Share-based compensation | 694 | 4,834 | ||||||
| Amortization of acquired intangible assets | 343 | 88 | ||||||
| Non-GAAP net loss | $ | (40,383 | ) | $ | (47,787 | ) | ||
| Weighted-average shares outstanding | 127,346 | 126,857 | ||||||
| Net loss per share | $ | (0.33 | ) | $ | (0.42 | ) | ||
| Non-GAAP net loss per share | $ | (0.32 | ) | $ | (0.38 | ) | ||
The following table presents a reconciliation of net loss, the most
directly comparable financial measure calculated and presented in
accordance with GAAP, to Adjusted EBITDA, for each of the periods
indicated:
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Reconciliation of net loss to Adjusted EBITDA | ||||||||
| Net loss | $ | (41,420 | ) | $ | (52,709 | ) | ||
| Depreciation and amortization | 5,696 | 4,787 | ||||||
| Share-based compensation | 694 | 4,834 | ||||||
| Interest income | (4,059 | ) | (2,638 | ) | ||||
| Interest expense and other (income) expense, net | 500 | 242 | ||||||
| Provision for income taxes | 153 | 123 | ||||||
| Adjusted EBITDA | $ | (38,436 | ) | $ | (45,361 | ) | ||
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