Pinterest Announces Second Quarter 2023 Results

Pinterest, Inc. (NYSE: PINS) today announced financial results for the quarter ended June 30, 2023.

  • Q2 revenue grew 6% year over year to $708 million.
  • Global Monthly Active Users (MAUs) increased 8% year over year to 465 million.
  • GAAP net loss was $35 million for Q2. Adjusted EBITDA was $107 million for Q2.
  • Total costs and expenses were $781 million.
  • We completed our $500 million stock repurchase program.

“In Q2, we continued to build momentum with consumers and advertisers while further accelerating our pace of innovation,” said Bill Ready, CEO of Pinterest. “Over the past year, we’ve been laser-focused on our key differentiators and we’re seeing results. Users are coming back more often and engaging more deeply, Pinterest is increasingly shoppable and actionable, and we’re delivering better and more measurable performance for our advertisers. Furthermore, due to our focus on cost efficiencies we returned to adjusted EBITDA margin expansion in Q2. Our results demonstrate that our strategy is working and we’re making the right investments to create a durable company for the long term.”

Q2 2023 Financial Highlights

The following table summarizes our consolidated financial results (in thousands, except percentages, unaudited):

 

Three Months Ended June 30,

 

% Change

 

 

2023

 

 

 

2022

 

 

Revenue

$

708,025

 

 

$

665,930

 

 

6

%

 

 

 

 

 

 

Net loss

$

(34,942

)

 

$

(43,076

)

 

19

%

 

 

 

 

 

 

Non-GAAP net income*

$

142,089

 

 

$

77,365

 

 

84

%

 

 

 

 

 

 

Adjusted EBITDA*

$

107,019

 

 

$

92,043

 

 

16

%

Adjusted EBITDA margin*

 

15

%

 

 

14

%

 

 

__________________________

* 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.

Q2 2023 Other Highlights

The following table sets forth our revenue, MAUs and ARPU based on the geographic location of our users (in millions, except ARPU and percentages, unaudited):

 

Three Months Ended June 30,

 

 

% Change

 

 

2023

 

 

 

2022

 

 

Revenue - Global

$

708

 

 

$

666

 

 

6

%

Revenue - U.S. and Canada

$

565

 

 

$

542

 

 

4

%

Revenue - Europe

$

114

 

 

$

102

 

 

12

%

Revenue - Rest of World

$

29

 

 

$

22

 

 

32

%

 

 

 

 

 

 

 

 

MAUs - Global

 

465

 

 

 

433

 

 

8

%

MAUs - U.S. and Canada

 

95

 

 

 

92

 

 

3

%

MAUs - Europe

 

124

 

 

 

117

 

 

6

%

MAUs - Rest of World

 

246

 

 

 

223

 

 

10

%

 

 

 

 

 

 

 

 

ARPU - Global

$

1.53

 

 

$

1.54

 

 

(1

)%

ARPU - U.S. and Canada

$

5.92

 

 

$

5.82

 

 

2

%

ARPU - Europe

$

0.91

 

 

$

0.86

 

 

6

%

ARPU - Rest of World

$

0.12

 

 

$

0.10

 

 

20

%

Guidance

We currently expect Q3 revenue to grow in the high single digits range year over year. We expect our Q3 Non-GAAP operating expenses to grow in the low single digits range year over year.*

We intend to provide further details on our outlook during the conference call.

_____________

*We have not provided the forward-looking GAAP equivalents for certain forward-looking non-GAAP operating expenses or a GAAP reconciliation as a result of the uncertainty regarding, and the potential variability of, reconciling items such as share-based compensation expense, which is impacted by, among other things, employee retention and decisions around future equity grants to employees. Accordingly, a reconciliation of these non-GAAP guidance metrics to their corresponding GAAP equivalents is not available without unreasonable effort. However, it is important to note that material changes to reconciling items could have a significant effect on future GAAP results and, as such, we also believe that any reconciliations provided would imply a degree of precision that could be confusing or misleading to investors.

Webcast and conference call information

A live audio webcast of our second quarter 2023 earnings release call will be available at investor.pinterestinc.com. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures 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: general economic and political uncertainty in global markets and a worsening of global economic conditions or low levels of economic growth, including inflation, fear of recession, foreign exchange fluctuations and supply-chain issues; our ability to provide useful and relevant content; our ability to attract and retain creators that create relevant and engaging content on our platform; 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 online application stores' and 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 or ability to identify users; competition; our ability to scale our business and revenue model; our reliance on advertising revenue and our ability to attract and retain advertisers and effectively measure advertising campaigns; our ability to effectively manage growth and expand and monetize our platform internationally; our lack of operating history and ability to sustain profitability; decisions that reduce short-term revenue or profitability or do not produce expected long-term benefits; the impact of the COVID-19 pandemic, including its impact on our business as well as on global and regional economies and economic activity; 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 Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2023, which is available on our investor relations website at investor.pinterestinc.com and on the SEC website at www.sec.gov. All information provided in this release and in the earnings materials is as of August 1, 2023. 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 income from operations, non-GAAP net income, non-GAAP net income per share and constant currency revenue growth rates. 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 income (loss) adjusted to exclude depreciation and amortization expense, share-based compensation expense, interest income (expense), net, other income (expense), net, provision for (benefit from) income taxes and restructuring charges. 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 income exclude amortization of acquired intangible assets, share-based compensation expense and restructuring charges. Non-GAAP income from operations is calculated by subtracting non-GAAP costs and expenses from revenue. Non-GAAP net income per share is calculated by dividing non-GAAP net income by diluted weighted-average shares outstanding. We use Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses, non-GAAP income from operations, non-GAAP net income and non-GAAP net income per share to evaluate our operating results and for financial and operational decision-making purposes. We believe these non-GAAP financial measures 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 income from operations, non-GAAP net income and non-GAAP net income 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 income from operations, non-GAAP net income and non-GAAP net income 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 income from operations, non-GAAP net income and non-GAAP net income per share rather than net income (loss), net margin, total costs and expenses, income (loss) from operations, net income (loss) and net income (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.

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 an authenticated Pinterest user who visits our website, opens our mobile application or interacts with Pinterest through one of our browser or site extensions, such as the Save button, at least once during the 30-day period ending on the date of measurement. The number of MAUs do not include Shuffles users unless they would otherwise qualify as MAUs. Unless otherwise indicated, 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 of 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 technology or our methodology.

PINTEREST, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value)

(unaudited)

 

 

June 30,

 

December 31,

 

 

2023

 

 

 

2022

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

1,179,852

 

 

$

1,611,063

 

Marketable securities

 

1,115,556

 

 

 

1,087,164

 

Accounts receivable, net of allowances of $12,074 and $12,672 as of June 30, 2023 and December 31, 2022, respectively

 

544,055

 

 

 

681,532

 

Prepaid expenses and other current assets

 

101,680

 

 

 

74,918

 

Total current assets

 

2,941,143

 

 

 

3,454,677

 

Property and equipment, net

 

28,414

 

 

 

59,575

 

Operating lease right-of-use assets

 

93,580

 

 

 

206,253

 

Goodwill and intangible assets, net

 

121,142

 

 

 

124,822

 

Other assets

 

17,517

 

 

 

17,403

 

Total assets

$

3,201,796

 

 

$

3,862,730

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Accounts payable

$

64,080

 

 

$

87,920

 

Accrued expenses and other current liabilities

 

255,799

 

 

 

292,611

 

Total current liabilities

 

319,879

 

 

 

380,531

 

Operating lease liabilities

 

163,015

 

 

 

178,694

 

Other liabilities

 

25,820

 

 

 

21,851

 

Total liabilities

 

508,714

 

 

 

581,076

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Class A common stock, $0.00001 par value, 6,666,667 shares authorized, 581,002 and 593,918 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively; Class B common stock, $0.00001 par value, 1,333,333 shares authorized, 88,514 and 89,284 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

 

7

 

 

 

7

 

Additional paid-in capital

 

5,059,960

 

 

 

5,407,724

 

Accumulated other comprehensive loss

 

(8,706

)

 

 

(11,419

)

Accumulated deficit

 

(2,358,179

)

 

 

(2,114,658

)

Total stockholders’ equity

 

2,693,082

 

 

 

3,281,654

 

Total liabilities and stockholders’ equity

$

3,201,796

 

 

$

3,862,730

 

 

PINTEREST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

Three Months Ended June 30,

 

 

2023

 

 

 

2022

 

Revenue

$

708,025

 

 

$

665,930

 

Costs and expenses:

 

 

 

Cost of revenue

 

168,740

 

 

 

164,896

 

Research and development

 

269,391

 

 

 

233,508

 

Sales and marketing

 

243,239

 

 

 

212,037

 

General and administrative

 

99,898

 

 

 

89,994

 

Total costs and expenses

 

781,268

 

 

 

700,435

 

Loss from operations

 

(73,243

)

 

 

(34,505

)

Interest income (expense), net

 

24,888

 

 

 

3,365

 

Other income (expense), net

 

2,180

 

 

 

(9,252

)

Loss before provision for (benefit from) income taxes

 

(46,175

)

 

 

(40,392

)

Provision for (benefit from) income taxes

 

(11,233

)

 

 

2,684

 

Net loss

$

(34,942

)

 

$

(43,076

)

Net loss per share, basic and diluted

$

(0.05

)

 

$

(0.07

)

Weighted-average shares used in computing net loss per share, basic and diluted

 

674,280

 

 

 

662,242

 

 

PINTEREST, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

Six Months Ended June 30,

 

 

2023

 

 

 

2022

 

Operating activities

 

 

 

Net loss

$

(243,521

)

 

$

(48,357

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

11,283

 

 

 

16,355

 

Share-based compensation

 

312,752

 

 

 

190,653

 

Impairment and abandonment charges for leases and leasehold improvements

 

117,315

 

 

 

 

Other

 

(4,501

)

 

 

12,473

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

136,827

 

 

 

143,877

 

Prepaid expenses and other assets

 

(23,048

)

 

 

(31,057

)

Operating lease right-of-use assets

 

34,595

 

 

 

25,103

 

Accounts payable

 

(24,295

)

 

 

40,557

 

Accrued expenses and other liabilities

 

(31,663

)

 

 

10,605

 

Operating lease liabilities

 

(39,568

)

 

 

(26,752

)

Net cash provided by operating activities

 

246,176

 

 

 

333,457

 

Investing activities

 

 

 

Purchases of property and equipment and intangible assets

 

(2,800

)

 

 

(19,916

)

Purchases of marketable securities

 

(654,349

)

 

 

(367,806

)

Sales of marketable securities

 

29,271

 

 

 

4,168

 

Maturities of marketable securities

 

609,402

 

 

 

393,784

 

Acquisition of business, net of cash acquired

 

 

 

 

(86,059

)

Net cash used in investing activities

 

(18,476

)

 

 

(75,829

)

Financing activities

 

 

 

Proceeds from exercise of stock options, net

 

3,216

 

 

 

4,080

 

Repurchases of Class A common stock

 

(500,000

)

 

 

 

Shares repurchased for tax withholdings on release of restricted stock units and restricted stock awards

 

(163,203

)

 

 

(37,953

)

Net cash used in financing activities

 

(659,987

)

 

 

(33,873

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

1,075

 

 

 

(1,947

)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(431,212

)

 

 

221,808

 

Cash, cash equivalents and restricted cash, beginning of period

 

1,617,660

 

 

 

1,427,064

 

Cash, cash equivalents and restricted cash, end of period

$

1,186,448

 

 

$

1,648,872

 

Supplemental cash flow information

 

 

 

Operating lease right-of-use assets obtained in exchange for operating lease liabilities

$

13,809

 

 

$

15,899

 

Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets

Cash and cash equivalents

$

1,179,852

 

$

1,641,509

Restricted cash included in prepaid expenses and other current assets

 

2,243

 

 

1,834

Restricted cash included in other assets

 

4,353

 

 

5,529

Total cash, cash equivalents and restricted cash

$

1,186,448

 

$

1,648,872

 

PINTEREST, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands)

(unaudited)

 

 

Three Months Ended June 30,

 

 

2023

 

 

 

2022

 

Share-based compensation by function:

 

 

 

Cost of revenue

$

2,740

 

 

$

1,417

 

Research and development

 

108,580

 

 

 

81,436

 

Sales and marketing

 

26,398

 

 

 

18,501

 

General and administrative

 

31,912

 

 

 

16,059

 

Total share-based compensation

$

169,630

 

 

$

117,413

 

 

 

 

 

Amortization of acquired intangible assets by function:

 

 

 

Cost of revenue

$

1,508

 

 

$

938

 

Sales and marketing

 

135

 

 

 

1,893

 

General and administrative

 

197

 

 

 

197

 

Total amortization of acquired intangible assets

$

1,840

 

 

$

3,028

 

 

 

 

 

Restructuring charges by function:

 

 

 

Research and development

$

603

 

 

$

 

Sales and marketing

 

72

 

 

 

 

General and administrative

 

4,886

 

 

 

 

Total restructuring charges

$

5,561

 

 

$

 

 

 

 

 

Reconciliation of total costs and expenses to non-GAAP costs and expenses:

 

 

 

Total costs and expenses

$

781,268

 

 

$

700,435

 

Share-based compensation

 

(169,630

)

 

 

(117,413

)

Amortization of acquired intangible assets

 

(1,840

)

 

 

(3,028

)

Restructuring charges

 

(5,561

)

 

 

 

Total non-GAAP costs and expenses

$

604,237

 

 

$

579,994

 

 

 

 

 

Reconciliation of net loss to Adjusted EBITDA:

Net loss

$

(34,942

)

 

$

(43,076

)

Depreciation and amortization

 

5,071

 

 

 

9,135

 

Share-based compensation

 

169,630

 

 

 

117,413

 

Interest income (expense), net

 

(24,888

)

 

 

(3,365

)

Other income (expense), net

 

(2,180

)

 

 

9,252

 

Provision for (benefit from) income taxes

 

(11,233

)

 

 

2,684

 

Restructuring charges

 

5,561

 

 

 

 

Adjusted EBITDA

$

107,019

 

 

$

92,043

 

 

PINTEREST, INC.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS

(in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended June 30,

 

 

2023

 

 

 

2022

 

Reconciliation of net loss to non-GAAP net income:

Net loss

$

(34,942

)

 

$

(43,076

)

Share-based compensation

 

169,630

 

 

 

117,413

 

Amortization of acquired intangible assets

 

1,840

 

 

 

3,028

 

Restructuring charges

 

5,561

 

 

 

 

Non-GAAP net income

$

142,089

 

 

$

77,365

 

 

 

 

 

Basic weighted-average shares used in computing net loss per share

 

674,280

 

 

 

662,242

 

Weighted-average dilutive securities(1)

 

18,107

 

 

 

25,463

 

Diluted weighted-average shares used in computing non-GAAP net income per share

 

692,387

 

 

 

687,705

 

Non-GAAP net income per share

$

0.21

 

 

$

0.11

 

______________
(1)

Gives effect to potential common stock instruments such as stock options, unvested restricted stock units and unvested restricted stock awards.

 

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