What happened
Don't put a pin in it -- it turns out Pinterest (PINS -1.26%) 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.
So what
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.
Now what
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.
