Pinterest(US:PINS)2025-05-08 20:17Part I Financial Statements (Unaudited) Total assets of $5.28 billion, revenue of $855.0 million (16% YoY increase), and a shift from a $24.8 million net loss to an $8.9 million net income, with $363.7 million in operating cash flow Condensed Consolidated Balance Sheets As of March 31, 2025, total assets were $5.28 billion, with cash and cash equivalents increasing to $1.25 billion, total liabilities at $594.2 million, and equity at $4.69 billion Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $1,252,310 | $1,136,460 | | Marketable securities | $1,362,913 | $1,376,409 | | Accounts receivable, net | $709,994 | $893,403 | | Total current assets | $3,402,258 | $3,484,707 | | Total assets | $5,282,696 | $5,342,660 | | Liabilities & Equity | | | | Total current liabilities | $404,399 | $398,133 | | Total liabilities | $594,227 | $591,506 | | Total stockholders' equity | $4,688,469 | $4,751,154 | | Total liabilities and stockholders' equity | $5,282,696 | $5,342,660 | Condensed Consolidated Statements of Operations Q1 2025 revenue grew 16% to $855.0 million, resulting in a net income of $8.9 million, a turnaround from a $24.8 million net loss in Q1 2024, with diluted EPS of $0.01 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $854,988 | $739,983 | | Total costs and expenses | $890,465 | $794,399 | | Loss from operations | $(35,477) | $(54,416) | | Net income (loss) | $8,922 | $(24,812) | | Diluted net income (loss) per share | $0.01 | $(0.04) | Condensed Consolidated Statements of Comprehensive Income (Loss) Comprehensive income for Q1 2025 was $10.6 million, a significant improvement from a $26.4 million comprehensive loss in Q1 2024, driven by net income and positive other comprehensive income Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) | $8,922 | $(24,812) | | Other comprehensive income (loss), net of taxes | $1,668 | $(1,602) | | Comprehensive income (loss) | $10,590 | $(26,414) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $4.69 billion in Q1 2025, primarily due to $175.0 million in stock repurchases and $187.4 million in share-based compensation expense - Repurchased 5.0 million shares of Class A common stock for $175.0 million during Q1 202531 - Recorded share-based compensation expense of $187.4 million for Q1 2025, an increase from $162.5 million in Q1 20243133 Condensed Consolidated Statements of Cash Flows Net cash from operating activities was $363.7 million in Q1 2025, with investing activities providing $11.9 million and financing activities using $260.7 million, primarily for stock repurchases Net Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $363,706 | $356,146 | | Net cash provided by (used in) investing activities | $11,949 | $(3,119) | | Net cash used in financing activities | $(260,701) | $(82,952) | - Cash used in financing activities increased significantly year-over-year, driven by $175.0 million in Class A common stock repurchases in Q1 2025, which did not occur in Q1 202435 Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, a $939.2 million AWS commitment, a $2.0 billion stock repurchase program with $1.72 billion remaining, and Q1 2025 revenue of $632.1 million primarily from U.S. and Canada - The company has a purchase commitment with AWS requiring at least $3.25 billion in cloud services through April 2029, with a remaining commitment of $939.2 million as of March 31, 202554 - In November 2024, a $2.0 billion stock repurchase program was authorized. During Q1 2025, 5.0 million shares were repurchased for $175.0 million, leaving $1.72 billion available64 Revenue by Geography (in thousands) | Region | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | U.S. and Canada | $632,134 | $546,584 | | Europe | $147,176 | $124,042 | | Rest of World | $75,678 | $69,357 | | Total revenue | $854,988 | $739,983 | Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2025 revenue grew 16% to $855.0 million, driven by 10% MAU growth and 5% ARPU growth, resulting in $8.9 million net income and $171.6 million Adjusted EBITDA, supported by strong liquidity Overview of First Quarter Results Pinterest reported Q1 2025 revenue of $855.0 million (16% YoY growth), 570 million MAUs (10% growth), $8.9 million net income, and $171.6 million Adjusted EBITDA, with $2.6 billion in cash and marketable securities Q1 2025 Key Metrics | Metric | Q1 2025 | YoY Change | | :--- | :--- | :--- | | Revenue | $855.0 million | +16% | | Monthly Active Users (MAUs) | 570 million | +10% | | Net Income | $8.9 million | N/A (from loss) | | Adjusted EBITDA | $171.6 million | +36% | | Free Cash Flow | $356.4 million | +3.6% | Trends in User and Monetization Metrics Global MAUs grew 10% to 570 million, and Global ARPU increased 5% to $1.52, with the strongest ARPU growth in Rest of World (29%) - Global MAUs increased to 570 million as of March 31, 2025, a 10% year-over-year increase, primarily due to ongoing investments in relevance and personalization7781 Quarterly ARPU by Region (YoY Change) | Region | Q1 2025 ARPU | YoY Change | | :--- | :--- | :--- | | Global | $1.52 | +5% | | U.S. and Canada | $6.54 | +8% | | Europe | $1.00 | +17% | | Rest of World | $0.14 | +29% | Non-GAAP Financial Measures Non-GAAP measures show Q1 2025 Adjusted EBITDA of $171.6 million (up from $126.1 million), 17% constant currency revenue growth, and $356.4 million in free cash flow Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income (loss) | $8,922 | $(24,812) | | Adjustments (Depreciation, SBC, etc.) | $162,727 | $150,801 | | Adjusted EBITDA | $171,649 | $126,089 | - Constant currency revenue for Q1 2025 was $865.1 million, representing 17% YoY growth, compared to the reported 16% growth. This indicates a $10.1 million unfavorable impact from foreign exchange rates105 Free Cash Flow Reconciliation (in thousands) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $363,706 | $356,146 | | Less: Purchases of property and equipment | $(7,289) | $(12,113) | | Free cash flow | $356,417 | $344,033 | Results of Operations Q1 2025 revenue grew 16% to $855.0 million, driven by a 49% increase in ad impressions despite a 22% decrease in ad prices, leading to $8.9 million net income and $171.6 million Adjusted EBITDA - Q1 2025 revenue growth was driven by a 49% increase in the number of advertisements served, which was partially offset by a 22% decrease in the price of advertisements compared to Q1 2024117 - Research and development expenses increased by 18% ($51.4 million) YoY, primarily due to a 22% increase in personnel expenses from higher headcount and a $17.1 million increase in share-based compensation120 Costs and Expenses as a Percentage of Revenue | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Cost of revenue | 23% | 24% | | Research and development | 39% | 38% | | Sales and marketing | 30% | 31% | | General and administrative | 12% | 14% | | Total costs and expenses | 104% | 107% | Liquidity and Capital Resources As of March 31, 2025, liquidity included $2.62 billion in cash and marketable securities, an undrawn $500 million credit facility, and $175.0 million in Q1 2025 stock repurchases - The company has a $500.0 million revolving credit facility, which was undrawn as of March 31, 2025129132 - During Q1 2025, the company repurchased 5.0 million shares of Class A common stock for $175.0 million, with $1.72 billion remaining under the repurchase program135136 - Net cash used in financing activities increased by $177.7 million YoY, primarily due to the increase in stock repurchases139 Quantitative and Qualitative Disclosure About Market Risk The company faces market risks from foreign currency and interest rate fluctuations, with a hypothetical 100 basis point interest rate increase impacting marketable securities by $8.8 million, and no current hedging activities - The company's primary market risks are foreign currency exchange and interest rate fluctuations147 - A hypothetical 100 basis point increase in interest rates would decrease the market value of cash equivalents and marketable securities by $8.8 million as of March 31, 2025149 - The company does not currently engage in hedging activities for foreign currency exchange risk148 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective150 - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting151 Part II Legal Proceedings The company is involved in ordinary course legal proceedings related to intellectual property and data privacy, with management not expecting a material adverse effect on financial results - Pinterest is involved in ordinary course legal proceedings related to intellectual property, data privacy, content, and other matters153 - The company does not believe there is a reasonable possibility that the final outcome of current legal matters will have a material adverse effect on its business or financial results155 Risk Factors Key risks include reliance on advertising revenue, user engagement, intense competition, data privacy regulations, third-party dependencies, content liability, and the dual-class stock structure concentrating voting power Risks Related to Business Strategy and Growth Growth risks include heavy reliance on advertising revenue, the need to attract and retain users, intense competition from larger tech companies, challenges in international expansion, and potential negative impacts from AI development - Substantially all revenue is generated from advertising, and the business could be harmed by the loss of advertisers, a reduction in their spending, or failure to attract new ones158 - The business depends on attracting and retaining an engaged user base; failure to do so could render the platform less attractive to advertisers and harm revenue164 - The company faces significant competition from large, established companies like Amazon, Meta, and Google, which have greater resources and larger user bases180 - Continued development and use of AI technologies present risks including reputational harm, legal liability, evolving regulations (like the EU AI Act), and competition208210 Risks Related to Data, Security and Privacy Significant risks include data security compromises, impacts from browser changes (e.g., Apple's ITP) on ad effectiveness, and compliance with evolving global privacy regulations like GDPR and CCPA - A compromise of security could lead to loss of user and advertiser trust, reputational harm, and significant legal and financial costs212 - Changes by browser developers like Apple (e.g., AppTrackingTransparency) and Google impair the ability to measure ad effectiveness, which could reduce advertiser spending223225 - The company is subject to complex and evolving data privacy laws globally, such as GDPR and CCPA, which could require costly changes to business practices and limit targeted advertising229230 Risks Related to Business Operations Operational risks include dependence on technology infrastructure, where interruptions could harm user and advertiser retention, and challenges in attracting and retaining key personnel in a competitive talent market - The business depends on the reliable performance of its technology infrastructure; service interruptions or outages could cause a loss of users and advertisers238 - The failure to attract and retain key personnel, including executives and specialized engineers, could disrupt operations and harm financial results243245 Risks Arising from Reliance on Third Parties Reliance on third parties poses risks, including dependence on search engines for traffic, app stores for distribution, third-party login providers, and critical reliance on Amazon Web Services (AWS) for cloud infrastructure - The company depends on internet search engines like Google to direct significant traffic; changes in search algorithms or policies can negatively impact user growth and engagement249250 - Pinterest depends on Amazon Web Services (AWS) for the vast majority of its compute, storage, and data transfer services. Any disruption or interference with AWS could negatively affect operations254 - A significant number of users authenticate via third-party providers like Facebook, Apple, or Google. Discontinuation of these services or policy changes could adversely affect user growth and retention253 Risks Related to Legal and Regulatory Matters Legal and regulatory risks include potential liability for platform content, uncertain interpretations of legal protections (CDA, DMCA), increasing global legislative scrutiny, government restrictions on access, and intellectual property challenges - The company may be held liable for content published on its platform, and legal protections like the Communications Decency Act (CDA) and Digital Millennium Copyright Act (DMCA) are subject to uncertain interpretation and legislative changes264265 - Governmental authorities outside the U.S. have restricted, and may in the future restrict, access to the platform, which could adversely affect user growth270 - The company's use of "open source" software could subject it to litigation or unfavorable license conditions, potentially requiring it to release proprietary source code279 Risks Relating to Financial Statements and Performance Financial risks include a limited operating history, past operating losses, potential inability to maintain profitability, quarterly fluctuations due to seasonality, and risks related to tax liabilities and net operating loss carryforwards - The company has a limited operating history at its current scale, has incurred operating losses in the past, and may not maintain profitability in the future285286 - Quarterly operating results are likely to fluctuate due to factors like seasonality in advertiser spending, user engagement, and macroeconomic conditions288 - User metrics like MAUs are calculated using internal data and are subject to inherent measurement challenges, and any real or perceived inaccuracies could harm the business289 Risks Related to Ownership of Our Class A Common Stock Risks include the dual-class stock structure concentrating approximately 73.5% of voting power with Class B stockholders, potential stock price volatility, and anti-takeover provisions that could deter mergers or tender offers - The dual-class stock structure concentrates approximately 73.5% of voting power with Class B stockholders, limiting the ability of Class A stockholders to influence corporate matters306 - The trading price of Class A common stock has been and is likely to continue to be volatile due to market fluctuations, changes in operating performance, and other factors311 - Anti-takeover provisions in the company's governing documents and Delaware law could make a merger, tender offer, or proxy contest difficult318 Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, the company repurchased 5,030,146 shares, with 4,997,892 under the stock repurchase program, leaving approximately $1.72 billion available Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Approx. Value Remaining in Program | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | 32,254 | $30.53 | — | $1,899,801,819 | | Feb 2025 | 2,748,536 | $36.75 | 2,748,536 | $1,798,796,938 | | Mar 2025 | 2,249,356 | $32.90 | 2,249,356 | $1,724,801,819 | | Total | 5,030,146 | | 4,997,892 | | Other Information No directors or Section 16 officers adopted or terminated Rule 10b5-1 trading plans during Q1 2025 - No directors or section 16 officers entered into or terminated a Rule 10b5-1 trading plan during the quarter ended March 31, 2025324 Exhibits Exhibits filed with the 10-Q include employee equity award agreements, CEO and CFO certifications, and financial data in Inline XBRL format - Filed exhibits include forms of the 2019 Omnibus Incentive Plan agreements for performance-based RSUs, stock options, and standard RSUs325 - Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits325