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Shares of Pinterest Inc. fell by 16.7% in pre-market trading on Friday, after the company announced larger-than-expected losses in its first quarterly earnings report since its initial public offering.
Pinterest recorded a net loss of $ 41.4 million, or 33 cents per share, on a revenue of $ 201.9 million, up from $ 131 million a year ago. After adjusting for stock-based compensation and other effects, the company reported a loss of 32 cents per share. Analysts expect an average adjusted loss of 11 cents per share on sales of $ 200.7 million, according to FactSet.
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went public in April at $ 19 a share, and has experienced some volatility despite a sharp rise since then. Shares closed Thursday with a 7.8% gain to $ 30.86, and have now gone up or down more than 4% in half of Pinterest's 20 trading sessions so far.
Net losses can be very significant in the first report after an IPO, as a social media company, Snap Inc.
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proved in a memorable way, but it was not a problem for Pinterest because the quarter ended before the IPO. If the IPO had occurred during the quarter, it would have realized $ 975 million in expenses, said Pinterest in a letter to shareholders, with an additional $ 925 million spread over 3.7 years. Instead, he only claimed $ 1 million in stock-based compensation.
Pinterest also said in its letter that an increase in costs was mainly related to the addition of employees.
"Our total costs and expenses grew 32% year-over-year and our non-GAAP costs and expenses increased 35% from one year to the next, reflecting workforce growth to improve our user experience and core technology, increase our sales coverage in the United States and internationally, "the letter says.
See also: Five Things Investors Should Know About Filing the Pinterest IPO
Pinterest reported monthly active users – an important indicator for social media companies generating their money by advertising – of 291 million, an average revenue per user of 73 cents. Last year, it had 239 million active users per month and closed the year 2018 with 265 million users accessing the service monthly, according to IPO filings. Analysts expect an average of 288.7 million monthly active users, according to FactSet.
The vast majority of Pinterest's revenues come from the United States, and increasing revenue abroad is a key goal of the company, which wants to continue to grow sales. Pinterest reported a national revenue per user of $ 2.25 and an international revenue per user of just 8 cents, after having US sales per user of about $ 1.59 and sales in the US 5 cents last year.
International earnings per user "are so low that you have to think and ask yourself what will change that," said Beth Kindig, an independent technical analyst and investor, who bought a sale on Pinterest shares before the report on the results after extensive research. international issues of the company.
"It really needs your international ARPU to cost about $ 1 per person to run a business," she added. "In the end, the United States will not be able to support this growth."
On Thursday afternoon, CEO Ben Silbermann recalled in a letter that Pinterest had almost doubled the number of international markets it had been advertising on since the end of last year, going from seven to thirteen. However, he said he did not expect Pinterest's hiring and international expansion efforts to begin to bear fruit until next year.
"I would not expect significant financial results [from international efforts] for society to benefit by 2020, and in the course of the year, I hope it will accelerate, "he said.
The company said it expects annual revenue of 1.055 billion to 1.08 billion dollars. Analysts expect an average of $ 1.07 billion, according to FactSet.
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