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Aug. 2, 2019, 7:22 a.m. EDT

Pinterest shares surge 16% on big revenue jump

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By Jon Swartz


Bloomberg News
Most of Pinterest’s users are international, but a vast majority of its revenue comes from the U.S.

Pinterest Inc. is the latest internet company to find the path to profitability is paved with ads.

Shares of the photo-sharing network /zigman2/quotes/211319641/composite PINS -3.29% surged 16% in after-hours trading Thursday after it reported a sharp rise in revenue and improved average revenue per user in the U.S. and abroad during its second quarter. Revenue skyrocketed 62% to $261 million. The company did report a loss of $1.16 billion, or about $2.62 a share, largely from costs associated with its IPO in April. Still, the revenue eclipsed FactSet’s estimate of $236 million, sending shares soaring.

“We saw additional benefit from Easter during the second quarter” and more video-related ads, Pinterest CEO Ben Silbermann said in a conference call with analysts after the results were released. The company raised full-year revenue guidance between $1.095 billion and $1.115 billion, from $1.055 billion to $1.080 billion in its previous quarter.

The results and projection surpassed analysts’ estimates, maintaining the winning ways for ad-supported internet stocks during the quarter. Facebook Inc. /zigman2/quotes/205064656/composite FB -3.91% , Snap Inc. /zigman2/quotes/205087158/composite SNAP -3.98% , Alphabet Inc. /zigman2/quotes/202490156/composite GOOGL -0.25%   /zigman2/quotes/205453964/composite GOOG -0.27% and Twitter Inc. /zigman2/quotes/203180645/composite TWTR -3.19%  previously reported better-than-expected results.

Pinterest’s report Thursday marked a significant rebound from its first earnings release shortly after its initial public offering. But at least one number underscores again what could be a bedeviling quandary: About 72% of its 300 million monthly active users (MAUs) are international, but a vast majority of its revenue comes from the U.S., where average revenue per user (ARPU) was $2.80 in the second quarter. International ARPU was a piddling 11 cents.

By comparison, Snap reported overall ARPU of $1.91 in its most recent quarter. Twitter is expected to collect $9.33 ARPU for the full year, according to data from FactSet. It does not break out quarterly figures.

“The international audience is costing them money,” Beth Kindig, a technology analyst, told MarketWatch in a phone interview. “There’s not much of a profit there,” she added, pointing to the $15 million in revenue international contributed to Pinterest’s first quarter. (It reported $24 million in international revenue in Q2.)

By contrast, click-to-buy ads were a major reason for the $187 million Pinterest generated in the U.S. in the first quarter, Kindig said. (It registered $238 million in the U.S. in Q2.)

The results were a vast improvement from the March quarter, when Pinterest rang up sales of $201.9 million, with losses of 32 cents a share on a non-GAAP basis.

Pinterest’s sparkling June quarter may also have benefitted from heightened regulatory scrutiny over Google and Facebook, both of whom dominate the digital-ad market, D.A. Davidson analyst Tom Forte said in a note late Thursday. Some advertisers might consider shifting some of their dollars to the Pinterest platform, he said.

“If Pinterest can continue to build on its commerce-driven ad products and through consistent international monetization efforts,” it has significant upside revenue potential, Wedbush Securities analyst Ygal Arounian said in a recent note, in which he gave Pinterest shares an outperform rating and $33 price target.

The shares were up 15% in premarket trade Friday.

/zigman2/quotes/211319641/composite
US : U.S.: NYSE
$ 25.88
-0.88 -3.29%
Volume: 8.64M
Oct. 22, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$14.05 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205064656/composite
US : U.S.: Nasdaq
$ 182.34
-7.42 -3.91%
Volume: 19.85M
Oct. 22, 2019 4:00p
P/E Ratio
30.90
Dividend Yield
N/A
Market Cap
$520.21 billion
Rev. per Employee
$1.57M
loading...
/zigman2/quotes/205087158/composite
US : U.S.: NYSE
$ 14.00
-0.58 -3.98%
Volume: 84.61M
Oct. 22, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$19.31 billion
Rev. per Employee
$409,309
loading...
/zigman2/quotes/202490156/composite
US : U.S.: Nasdaq
$ 1,241.20
-3.08 -0.25%
Volume: 1.28M
Oct. 22, 2019 4:00p
P/E Ratio
25.06
Dividend Yield
N/A
Market Cap
$802.90 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/205453964/composite
US : U.S.: Nasdaq
$ 1,242.80
-3.35 -0.27%
Volume: 1.05M
Oct. 22, 2019 4:00p
P/E Ratio
25.09
Dividend Yield
N/A
Market Cap
$803.94 billion
Rev. per Employee
$1.39M
loading...
/zigman2/quotes/203180645/composite
US : U.S.: NYSE
$ 38.81
-1.28 -3.19%
Volume: 13.08M
Oct. 22, 2019 6:30p
P/E Ratio
12.86
Dividend Yield
N/A
Market Cap
$30.00 billion
Rev. per Employee
$776,112
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Jon Swartz is a senior reporter for MarketWatch in San Francisco, covering many of the biggest players in tech, including Netflix, Facebook and Google. Jon has covered technology for more than 20 years, and previously worked for Barron's and USA Today. Follow him on Twitter @jswartz.

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