Pinterest Announces Fourth Quarter and Full Year 2019 Results
SAN FRANCISCO, Calif. - February 6, 2020 - Pinterest, Inc. (NYSE: PINS) today announced financial results for the quarter and year ended December 31, 2019.
•Q4 revenue grew 46% year over year to $400 million. 2019 revenue grew 51% year over year to $1,143 million.
•Global Monthly Active Users (MAUs) grew 26% year over year to 335 million.
•GAAP
net loss was $36 million and $1,361 million for Q4 and 2019, respectively. Adjusted EBITDA was $77 million and $17 million for Q4 and 2019, respectively.
"A strong Q4 marked the end of a year where we improved the foundation of the Pinterest app with more inspiring recommendations, faster performance and improved shopping experiences," said Ben Silbermann, Pinterest CEO and Co-founder. "In 2020, we continue to pursue our goal of making Pinterest the Internet’s home for inspiration by focusing on delivering relevant content, ads and shopping experiences so Pinners can easily go from inspiration to action."
"We are pleased with the performance of our business in Q4 and the many milestones we achieved in 2019," said Todd Morgenfeld, Pinterest CFO. "We scaled the business to over $1 billion in annual revenue, grew to over 300M monthly active users and opened 21 new
international advertising markets. We look forward to the opportunities ahead of us as we continue to invest in the Pinner and advertiser experience."
Q4 and Full Year 2019 Financial Highlights
The following table summarizes our consolidated financial results (in thousands, except percentages, unaudited):
Three
Months Ended December 31,
% Change
Year Ended December 31,
% Change
2019
2018
2019
2018
Revenue
$
399,898
$
273,184
46
%
$
1,142,761
$
755,932
51
%
Net
income (loss)
$
(35,718)
$
47,016
(176)
%
$
(1,361,371)
$
(62,564)
(2,076)
%
Non-GAAP
net income (loss)*
$
76,866
$
49,498
55
%
$
17,905
$
(47,390)
138
%
Adjusted
EBITDA*
$
77,308
$
51,682
50
%
$
16,706
$
(39,003)
143
%
Adjusted
EBITDA margin*
19
%
19
%
1
%
(5)
%
*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.
1
Q4 and Full Year 2019 Other Highlights
The following table sets forth our revenue, 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 December 31,
% Change
Year Ended December 31,
% Change
2019
2018
2019
2018
Revenue
- Global
$
400
$
273
46
%
$
1,143
$
755
51
%
Revenue
- United States
$
350
$
257
36
%
$
1,026
$
715
43
%
Revenue
- International
$
50
$
17
202
%
$
117
$
41
187
%
MAUs
- Global
335
265
26
%
335
265
26
%
MAUs
- United States
88
82
8
%
88
82
8
%
MAUs
- International
247
184
35
%
247
184
35
%
ARPU
- Global
$
1.22
$
1.06
15
%
$
3.81
$
3.14
21
%
ARPU
- United States
$
4.00
$
3.16
26
%
$
12.07
$
9.04
34
%
ARPU
- International
$
0.21
$
0.09
122
%
$
0.54
$
0.25
115
%
2
Full
Year 2020 Outlook
•Total revenue is expected to be up to $1.52 billion.
•Adjusted EBITDA margin is expected to be flat to up slightly compared to 2019 Adjusted EBITDA margin of 1%.*
*With respect to projected 2020 Adjusted EBITDA margin, we are unable to prepare a quantitative reconciliation of the projected 2020 Adjusted EBITDA in the calculation of projected 2020 Adjusted EBITDA margin 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 income (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 could be confusing or misleading to investors. For more information on this non-GAAP financial measure, please see "―About non-GAAP financial measures."
3
Webcast and conference call information
A live audio webcast of our fourth quarter and full year 2019 earnings release call will be available at investor.pinterestinc.com. The call begins today at 2:30 PM (PT) / 5:30 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 Pinners 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 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 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; our ability to protect our intellectual property; real or perceived inaccuracies in metrics related to our business; disruption, degradation or interference with the hosting services we use 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 Annual Report on Form 10-K for the year ended December 31, 2019,
which is 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 Annual Report on Form 10-K 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 February 6, 2020. 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.
4
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 (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (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 income (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 income (loss) exclude amortization of acquired intangible assets and share-based compensation expense. Non-GAAP income (loss) from operations is calculated by subtracting non-GAAP costs and expenses from revenue. Non-GAAP net income (loss) attributable to common stockholders is calculated by subtracting any non-GAAP net income allocated to participating securities from non-GAAP net income (loss). Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) attributable to common stockholders by diluted weighted-average shares outstanding. We use Adjusted EBITDA, Adjusted EBITDA margin, non-GAAP costs and expenses, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP net income (loss) 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 these non-GAAP financial measures 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 these non-GAAP financial measures 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 (loss) from operations, non-GAAP net income
(loss) and non-GAAP net income (loss) 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.
With respect to projected 2020 Adjusted EBITDA margin, we are unable to prepare a quantitative reconciliation of the projected 2020 Adjusted EBITDA in the calculation of projected 2020 Adjusted EBITDA margin 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 income (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 could 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.
5
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. We present MAUs based on the number of MAUs measured on the last day of the current period. 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.
Accounts receivable, net of allowances of $2,851 and $3,097 as of December
31, 2019 and 2018, respectively
316,367
221,932
Prepaid expenses and other current assets
37,522
39,607
Total current assets
2,067,234
889,352
Property
and equipment, net
91,992
81,512
Operating lease right-of-use assets
188,251
145,203
Goodwill and intangible assets, net
14,576
14,071
Restricted
cash
25,339
11,724
Other assets
5,925
10,869
Total assets
$
2,393,317
$
1,152,731
LIABILITIES,
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable
$
34,334
$
22,169
Accrued expenses and other current liabilities
141,823
86,258
Total
current liabilities
176,157
108,427
Operating lease liabilities
173,392
151,395
Other liabilities
20,063
22,073
Total liabilities
369,612
281,895
Commitments
and contingencies
Redeemable convertible preferred stock, $0.00001 par value; no shares authorized, issued or outstanding as of December 31, 2019; 928,676 shares authorized, 308,373 shares issued and outstanding as of December 31, 2018; aggregate liquidation preference of $1,466,902 as of December 31, 2018
—
1,465,399
Stockholders’
equity (deficit):
Common stock, $0.00001 par value, no shares authorized, issued or outstanding as of December 31, 2019; 1,932,500 shares authorized, 127,298 shares issued and outstanding as of December 31, 2018
—
1
Class A common stock, $0.00001 par value, 6,666,667 shares authorized, 360,850 shares issued and outstanding as of December 31, 2019; Class B common stock, $0.00001 par value, 1,333,333
shares authorized, 209,054 shares issued and outstanding as of December 31, 2019; no shares authorized, issued or outstanding as of December 31, 2018 for either class
6
—
Additional paid-in capital
4,229,778
252,212
Accumulated other comprehensive income (loss)
647
(1,421)
Accumulated
deficit
(2,206,726)
(845,355)
Total stockholders’ equity (deficit)
2,023,705
(594,563)
Total liabilities, redeemable convertible preferred stock, and stockholders’ equity (deficit)
Amortization
of acquired intangible assets by function:
Cost of revenue
$
94
$
—
$
329
$
199
General
and administrative
290
304
1,166
526
Total amortization of acquired intangible assets
$
384
$
304
$
1,495
$
725
Reconciliation
of total costs and expenses to non-GAAP costs and expenses:
Total costs and expenses
$
443,085
$
229,124
$
2,531,627
$
830,653
Share-based
compensation
(112,200)
(2,178)
(1,377,781)
(14,859)
Amortization of acquired intangible assets
(384)
(304)
(1,495)
(725)
Non-GAAP
costs and expenses
$
330,501
$
226,642
$
1,152,351
$
815,069
Reconciliation
of net income (loss) to non-GAAP net income (loss):
Net income (loss)
$
(35,718)
$
47,016
$
(1,361,371)
$
(62,974)
Share-based
compensation
112,200
2,178
1,377,781
14,859
Amortization of acquired intangible assets
384
304
1,495
725
Non-GAAP
net income (loss)
$
76,866
$
49,498
$
17,905
$
(47,390)
Non-GAAP
net income (loss)
$
76,866
$
49,498
$
17,905
$
(47,390)
Less: Non-GAAP net income allocated to participating securities(1)
—
(49,498)
(17,905)
—
Non-GAAP
net income (loss) attributable to common stockholders
$
76,866
$
—
$
—
$
(47,390)
Weighted-average
shares outstanding for net loss per share, basic and diluted
562,396
127,273
420,473
127,091
Weighted-average dilutive securities(2)
77,165
—
—
—
Diluted
weighted-average shares outstanding for Non-GAAP net income (loss) per share
639,561
127,273
420,473
127,091
Net
loss per share
$
(0.06)
$
—
$
(3.24)
$
(0.50)
Non-GAAP net income (loss) per share
$
0.12
$
—
$
—
$
(0.37)
(1)Represents
assumed noncumulative dividends on undistributed earnings that, if declared, would have been distributed to holders of our redeemable convertible preferred stock.
(2)Gives effect to potential common stock instruments such as stock options and unvested restricted stock units.
10
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
