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If you do the math, it looks like Pinterest just predicted a profit.
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Don't put a pin in it -- it turns out Pinterest (PINS +0.01%) stock isn't done surprising investors just yet.
Shares of the image-focused social media stock jumped 4.5% through 10:15 a.m. ET Thursday, after the company reported sales and earnings beats for its first quarter of 2022. Analysts had forecast Pinterest would earn only $0.04 per share in last night's report, on sales of less than $573 million. Instead, Pinterest reported a $0.10 per share profit (albeit pro forma), and sales of nearly $575 million.
Image source: Getty Images.
Granted, from the point of view of earnings calculated according to generally accepted accounting principles (GAAP), Pinterest remains unprofitable. The company reported an official GAAP loss of $0.01 per share -- but at least that was better than the $0.03 per share, GAAP, lost one year ago. And sales were most definitely improved in Q1 2022, up 18.5% over Q1 2021 sales.
The fact that Pinterest managed to grow its revenue, and cut its losses, even as it suffered a 9% year over year decline in Monthly Active Users ("MAUs," which fell to 433 million) shows that management is doing a better job of monetizing its most loyal users. Even as MAUs declined in all three of its global regions of operation -- U.S. and Canada, Europe, and "rest of world" -- Pinterest saw its average revenue per user soar, up 31%, 40%, and 164%, respectively.
The big question now is, can Pinterest continue growing, and maybe even turn a profit this year? The answer to that question is tricky because, in a curious choice, Pinterest guided investors on what to expect for revenue in the second quarter with a comparison to Q2 2021, predicting slower 11% growth year over year. However, when addressing the expenses that will eat away at that revenue, and determine whether Pinterest can earn a profit, management shifted to describe this number in terms of sequential growth -- up 10% from Q1 2022.
So how does that math work? Well, according to data from S&P Global Market Intelligence, Q2 2021 revenue was $613 million -- so 11% growth from that would be about $680 million in revenue in Q2 2022. Meanwhile, operating costs were about $579 million in Q1 2022, so 10% growth in that would be about $637 million.
Result: $680 million minus $637 million looks to me like Pinterest just predicted it will earn a profit in Q2 -- at least before interest and taxes. No wonder investors are excited.