Pinterest's Q1 net loss widened to $209 million, and its stock price fell 8% after the market closed

It is learned that on April 27, the US social platform Pinterest released its first quarter financial report ending March 31, 2023. Although the first quarter performance exceeded expectations, the company predicted that revenue growth in the second quarter will be lower than Wall Street expectations due to a decline in advertising spending. After the financial report was released, Pinterest's stock price fell by about 8% in after-hours trading.

While Pinterest said the advertising market is stabilizing, it still warned of market uncertainty. Pinterest's peer Snap also said second-quarter results may fall short of expectations. Snap's stock price fell about 18% after the market closed due to weak first-quarter revenue.

Small digital advertising platforms such as Pinterest and Snap have seen their revenue deteriorate amid a weak economy as advertisers stick with large platforms such as Alphabet and Meta, the report said.

In order to strengthen its advertising business, Pinterest also announced the opening of the third-party advertising market, which will allow other parties to place advertisements on its platform. The company recently reached a cooperation with Amazon (AMZN.O) in order to attract more brands and users to the Pinterest website and stimulate revenue growth.

“Our new Pinterest CEO, Bill Ready, is looking for ways to better leverage its e-commerce platform to create more engaging shopping experiences for customers,” said Angelo Zino, senior equity analyst at CFRA Research.

In addition, Pinterest CEO Ready said they are using generative artificial intelligence to bring better recommendations, advertising and other content to the platform.

According to Refinitiv data, Pinterest's global monthly active users (MAU) grew 7% to 463 million in the first quarter of 2023, higher than the expected 454.03 million. The global average revenue per user (ARPU) was $1.32, down 1% from $1.33 in the same period last year.

In the first three months of the year, the company's revenue rose 5% to $602.58 million, compared with analysts' average estimate of $592.99 million.

Pinterest said revenue growth this quarter was nearly in line with revenue growth in the first and fourth quarters of 2022. In the fourth quarter of last year, the company's revenue grew 4%, below Wall Street's expectations of 6.15%.

In the quarter ended March 31, Pinterest reported a net loss of $209 million, or $0.31 per diluted share, compared with a net loss of $5.3 million, or $0.01 per diluted share, in the same period last year. Adjusted EBITDA in the first quarter was $27 million, compared with $76.8 million in the same period last year, a year-on-year decrease of 65%.

Pinterest said it expects year-over-year revenue growth in the second quarter of fiscal 2023 to be roughly in line with revenue growth in the fourth quarter of fiscal 2022 and the first quarter of fiscal 2023. The company also expects that the quarter-over-quarter increase in operating expenses in the second quarter of fiscal 2023, not calculated in accordance with US generally accepted accounting principles, will be at the lower end of the 10% to 19% range.

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