Pinterest Shares Perk Up Following Higher Than Expected Q1 Preliminary Earnings

Pinterest Inc. (PINS) shares rose sharply on Tuesday in after hours trading as the company gave higher than expected Q1 earnings guidance.

What Happened
Pinterest released preliminary financial results for the quarter ended March 31 and withdrew guidance for full-year 2020 due to the coronavirus pandemic and the “growing uncertainty” over its impact on the economic environment, as well as advertiser demand.

The social photo-sharing network expects preliminary revenue for Q1 to be between $269 million to $272 million. Global monthly active users are expected to range between 365 million to 367 million, out of which 89 million to 90 million are US-based, with 276-277 million internationally active users.

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Pinterest ended Q1 with $1.7 billion balance in cash, cash equivalents, and marketable securities as of March 31.

There is no financial debt on the books, and Pinterest has an undrawn $500 million revolving credit facility.

Todd Morgenfeld, CFO of Pinterest, said regarding the withdrawal of guidance for the remainder of 2020, “The near-term financial impact of this pandemic is rapidly evolving and difficult to measure and quantify.” He said that the first-quarter revenue performance was consistent with their expectations through mid-March, at which point there was a sharp deacceleration.

Morgenfeld explained, “Fortunately, despite weakness across nearly the entire advertising market, our exposure to some of the most affected segments like travel, automotive, and restaurants has not been significant.”

Why It Matters
Pinterest shares rose 13.35% in after-hours trading as results beat estimates of $267 million made by Refinitiv, a provider of data and risk assessment tools. Separately, a FactSet survey of analysts pegged the revenue at $252 million, a number far below Pinterest’s preliminary earnings data, as cited by CNBC.

The EBITDA margin guidance issued on February 6 by the company stands withdrawn due to the pandemic. Pinterest has admitted that COVID-19 has impacted advertising revenue globally.

More details regarding Q1 2020 results would be given out at the earnings call on May 5th by the company. Preliminary data is subject to change.

Françoise Brougher, Pinterest’s Chief Operating Officer, is leaving the company. Morgenfeld will assume her responsibilities.

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Price Action
Pinterest shares traded 13.35% higher at $17.07 in the after-hours session on Tuesday. The shares had closed the regular session 0.92% lower at $15.06.

Read more from Shivdeep Dhaliwal at Benzinga.com

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