Pinterest Sales Fall Short on Less-Lucrative Overseas Growth

(Bloomberg) -- Pinterest Inc.'s third-quarter revenue fell short of analysts' projections, held back as the digital search-and-scrapbooking company added users primarily in less-lucrative international markets. Shares dropped as much as 21% in extended trading.

Revenue was $279.7 million, below the $282.1 million average analyst estimate compiled by Bloomberg. The San Francisco-based company added 22 million users in the third quarter, and now has 322 million users overall, it said Thursday in a statement. That surpassed the 310.9 million monthly average users expected, according to a Bloomberg MODL consensus estimate, but 73% of the total is now outside the U.S.

The company said the user gains were driven by “double-digit growth in nearly all international countries,” though Pinterest's overseas users generate less revenue than those in the U.S. -- on average, domestic users brought in $2.93 each in the recent period, while each international user accounted for just 13 cents. Just 2 million of Pinterest's 22 million new users in the quarter were in the U.S.

Pinterest said sales growth came mostly from new advertisers. The company added advertising in nine countries in the quarter, bringing the total to 28. Pinterest sold ads in just seven markets at the end of 2018. The company also said it's expanding shopping ads and working with more commerce platforms, such as Shopify Inc., to help merchants sell on its site.

Pinterest also said its third-quarter loss widened to $124.7 million, or 23 cents a share, from $18.9 million, or 15 cents, a year earlier. Excluding certain items, including expenses related to stock-based compensation, it posted a profit of 1 cent a share.

The stock tumbled as low as $19.75 in extended trading following the report, after closing at $25.14 in regular New York trading. At the close, the shares were up about 32% from the $19 per-share price in an April initial public offering.

Pinterest shares had steadied prior to Thursday's report after a volatile period following its IPO. The stock immediately soared, climbing more than 64% in the first two weeks, then crashed on weak guidance during the company's first earnings report in May. Shares rebounded in August with the company's better-than-expected second quarter, climbing as high $36.56.

To contact the reporter on this story: Kurt Wagner in San Francisco at kwagner71@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack

©2019 Bloomberg L.P.