Pinterest, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; unaudited results compared with Q1 2023. Pinterest operates a visual search and discovery platform and generates substantially all revenue from advertising.
Key financial and operating metrics
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $740.0 million | $602.6 million | +23% |
| Operating loss | $54.4 million | $243.7 million | Improved |
| Net loss | $24.8 million | $208.6 million | Improved |
| Adjusted EBITDA | $112.9 million | $27.0 million | +319% |
| Operating cash flow | $356.1 million | $183.5 million | +$172.7 million |
Gross margin was approximately 75.5%, versus 71.6% a year earlier; operating margin was approximately -7.4%, versus -40.4%; net margin was approximately -3.4%, versus -34.6%. These percentages are calculated from reported figures. Adjusted EBITDA is a non-GAAP measure and excludes, among other items, share-based compensation.
Cash, cash equivalents and marketable securities totaled $2.776 billion at March 31, 2024. Cash and cash equivalents were $1.632 billion, marketable securities $1.144 billion, and current liabilities $339.9 million. The filing reports no outstanding borrowings under its $500 million revolving credit facility; all capacity was available, and the company said it was in compliance with covenants. Operating lease liabilities were $154.3 million.
Cash flows were $356.1 million provided by operations, $3.1 million used in investing, and $83.0 million used in financing. Financing outflows included $99.7 million for tax withholding on equity awards. No open-market share repurchases were reported in the quarter. The $1.0 billion repurchase authorization remained fully available.
Monthly active users were 518 million, up 12%. Global ARPU was $1.46, up 10%; U.S. and Canada ARPU was $6.05, Europe $0.86, and Rest of World $0.11. Advertising impressions served rose 38%, while ad prices fell 11% year over year.
Material changes versus Q1 2023
- Revenue growth reflected higher demand for conversion and consideration advertising objectives, alongside growth in users and ARPU.
- Costs and expenses declined to $794.4 million from $846.3 million. General and administrative expense fell 49%, primarily because Q1 2023 included $114.6 million of restructuring charges. The prior-year quarter included $121.3 million of total restructuring charges; Q1 2024 had none.
- Share-based compensation increased to $162.5 million from $143.1 million. It remained a significant recurring expense.
- Operating cash flow increased, partly due to lower net loss and the timing of vendor payments. Financing cash use was lower mainly because Q1 2023 included open-market stock repurchases.
Outlook, risks and unusual items
The filing provides no numerical revenue, earnings or other forward guidance. Management said existing cash, securities and available credit should cover working capital and capital expenditure needs for at least the next 12 months. It also noted that results are not necessarily indicative of full-year performance and cited macroeconomic conditions, foreign exchange, competition and other uncertainties affecting advertisers, user growth and engagement.
- Advertising dependence: substantially all revenue comes from ads. Advertiser demand, ad pricing, measurement effectiveness and concentration in certain advertiser verticals are risks.
- Platform execution: continued user engagement, relevant content, international monetization, competition and effective advertising tools are important uncertainties. AI use also presents product, legal, privacy, security and reputational risks.
- Third parties and regulation: Pinterest relies heavily on AWS and is exposed to changes in search engines, app stores, privacy rules and other platform policies. Its remaining AWS minimum-purchase commitment was $1.598 billion through April 2029; management expects to meet it.
- Legal matters: the company is involved in ordinary-course proceedings and does not believe their resolution is reasonably likely to have a material adverse effect, while noting litigation can still impose costs and divert management attention.
- Equity compensation: $991.6 million of unrecognized share-based compensation remained at quarter-end, expected to be recognized over a weighted-average 2.1 years. In April 2024, Pinterest granted 15.7 million RSUs with $527.6 million aggregate grant-date fair value, expected to be expensed over 2.8 years.
Important facts for investors to verify
- Whether user and ARPU growth, particularly international monetization, continues to translate into revenue and advertiser demand.
- Whether higher ad impressions can offset continued pricing pressure, and how advertiser measurement tools perform.
- How recurring share-based compensation and the April 2024 RSU grant affect future expenses and dilution.
- Cash generation, liquidity and compliance with the revolving credit facility, alongside the long-term AWS spending commitment.
- Developments in privacy, AI, content moderation, competition and litigation risks that could affect advertising or platform access.