(Reuters) – Pinterest Inc reported a bigger-than-expected first-quarter loss on Tuesday as the image sharing company incurred higher costs, sending its shares down 10% in extended trade.
The company had withdrawn its full-year outlook in April, citing growing uncertainty due to the impact of the pandemic on the economic environment and its effect on advertiser demand.
“Our cost of revenue has generally grown with users rather than revenue, which in this environment puts some pressure on gross margins,” Pinterest said.
The company said it saw a sharp deceleration in the middle of March as advertisers responded to changes in demand due to COVID-19.
Advertisers have pulled or cut marketing budgets to rein in costs due to the coronavirus-related uncertainty, impacting social media platforms including Pinterest, Facebook and Twitter, that rely on digital advertising sales.
“The spread of COVID-19 has certainly had an impact on our business and the businesses of our advertisers,” Chief Financial Officer Todd Morgenfeld said in a statement.
Pinterest’s first-quarter revenue, however, beat estimates, as coronavirus-led lockdowns forced people to stay indoors and seek engagement and entertainment online.
The company, which calls its users “Pinners”, said monthly active users globally jumped 26% to 367 million during the quarter and it saw record levels of engagement.
Use of social media apps has surged recently as the pandemic has forced people to stay at home, and made them increasingly reliant on these apps to stay connected.
Net loss widened to $141.2 million, in the first quarter ended March 31, from $41.4 million, a year earlier.
Excluding items, the company reported a loss of 10 cents per share, bigger than analysts’ average estimate of 9 cents, according to IBES data from Refinitiv.
Total costs and expenses surged about 69% to about $418 million.
Pinterest’s total revenue rose 35% to $272 million, beating analysts’ average estimate of $270.1 million.
Revenue in the United States, the company’s major market, grew 27% to $237 million.
Pinterest generates revenue by placing advertisements next to the pins, or posts, uploaded on the site by users.
(Reporting by Akanksha Rana in Bengaluru; Editing by Vinay Dwivedi)
