Subscribe to the Crunchbase Daily

The firm’s guidance to  startups is to assess their runway (as future financing might become challenging), reassess sales forecasts, raise return on investment for marketing spend, and assess headcount and capital spending. All business fundamentals need to be looked at once again.

The most striking statement in the post is: “In downturns, revenue and cash levels always fall faster than expenses.”

For startups dependent on venture cash to grow, belt tightening to extend the runway–provided you are not too late and raising this quarter–might make sense. In Crunchbase data, we have not yet seen funding slow down. However, funding rounds announced recently were closed in the past couple of months, with conversations and diligence stretching back to a very different funding climate.

In October 2008 Sequoia’s “RIP Good Times” described by TechCrunch’s Michael Arrington as a ” the message was dire with “cuts are a must” and “Get Real or Go Home”.

In the 2008 RIP report, Sequoia claimed the following:

New Realities

• $15 million raised at $100 million post is gone
• Series B/C will be smaller
• Customer uptake will be slower
• Cuts are a must

Need to become cash flow positive

• Increased challenges
• M&A will decrease
• Prices will decrease
• Acquiring entities will favor profitable companies
• IPOs will continue to decrease and take longer

Saying “cuts are a must” might be interpreted as sounding cruel.

In the middle of a health crisis, where people in nonessential industries are mandated to stay home, and with heavy job losses predicted for the travel, hotel and retail industries, getting a new job will be more difficult.

Some jobs are opening up, however. just announced it is hiring to up to 100,000 new full- and part-time workers in delivery and fulfillment centers to address the crisis.

Investors are aware that in the last downturn, new companies–formed in 2008 and its aftermath in 2009–have become significant technology companies. Those companies include , , , , , and . Investors will continue seeking those opportunities, having raised unprecedented funds themselves with no shortage of money to invest. And with valuations likely to be capped, this might just be a good time to invest.

Sequoia signs off with: “Stay healthy, keep your company healthy, and put a dent in the world.”

Illustration: .

Subscribe to the Crunchbase Daily

Two companies will trade freely today for the first time. Both former startups are unicorns, reaching a valuation of $1 billion or more as private companies. Today they begin to convert private, illiquid wealth into liquid securities.

But before each company could trade, it had to price its IPO. And that’s where the similarities between and begin to fade.1

Indeed, while Zoom is going public at a multiple of its final private valuation, Pinterest is going out at a modest discount. To be clear, Pinterest’s slight miss on valuation is only so large a problem; its final valuation is in the eleven-digit range, and that’s a result. But Zoom’s enormous appreciation from private to public helps us understand what public markets are thinking.

Let’s quickly examine where they priced, and what we can learn from the new data.

Zoom

Zoom initially targeted a range of $28 to $32 per share. As we foreshadowed earlier in the week, it was possible that the enterprise video conferencing startup could raise its range. It did.

But after selecting a higher, $33 to $35 per-share range, Zoom priced at $36, just over the higher interval. Per CNBC, .

That figure is impressive due to its size — only very rarely do startups reach a billion dollar valuation, let alone a liquid multiple of that figure — and the huge gap up it represents from Zoom’s final private valuation of just over $1 billion ().

There is a catch in the above. Zoom’s 2018 revenue came to $330.5 million. That was up more than 100 percent from its 2017 haul of $151.5 million. But with a $9.2 billion valuation, Zoom is now worth 27.8 times its 2018 revenue. That multiple will go down after Zoom posts its Q1 2019 earnings (the new results will increase the size of its trailing revenue, boosting the size of the denominator in revenue multiple calculations, lowering the resulting figure), but only so far.

Zoom is now priced to grow like hell, and could get dinged if it misses growth expectations. Perhaps its recent history of profitability will give it more space to maneuver, but with a revenue multiple of nearly 28x, it won’t have much room for error.

Pinterest

Pinterest initially targeted a $15 to $17 price range for its shares. It wound up pricing its equity at $19 per share, giving it a valuation ; the same Bloomberg report notes that “[i]ncluding restricted stock and options” in valuation calculations pushes Pinterest’s worth to $12.7 billion.

But the $10.1 billion valuation figure has raised the prospect of deflating unicorns. I’ve written about the topic here if you want more.

What’s more interesting than Pinterest ceding small valuation ground (late-stage investors have protection against such eventualities; what impact the discount will have on employees isn’t clear) is how close its final valuation came to Zoom’s own.

The gap between $9.2 billion and $10.1 billion is $900 million. That’s a lot to most folks, but for two companies formerly worth around $1 billion and over $12 billion, winding up going public within $1 billion of each other is fascinating.

Pinterest put up more than double the revenue that Zoom did in 2018, $755.9 million compared to Zoom’s $330.5 million. But Pinterest didn’t double over the year before; instead, the social giant expanded from $472.9 million in 2017 to its 2018 result, a gain of about 60 percent (more on Pinterest’s results here).

Pinterest also has a history of losses, albeit decreasing. The company lost just over $182 million in 2016, a touch more than $130 million in 2017, and about $62.5 million in 2018. Coupled to solid revenue growth, Pinterest’s results paint a clear, and proximate path to profitability.

But it’s only worth about a billion more than Zoom because slower growth and less profitability diminish the value of extant, or past revenues in the mind of investors. Pinterest is still worth more than Zoom, just not as much as you might have guessed given their relative revenue scale.

The lesson in this is that revenue alone is not all that matters. Something that Lyft recently learned, for example.

More tomorrow on how they trade, and what we can learn from that. Happy IPO day.

Illustration: .

Subscribe to the Crunchbase Daily

With 75 million shares on offer, and an additional 11.25 million in reserve for underwriters Goldman Sachs, JP Morgan Chase and Allen & Co., the offering could raise $1.13 billion to $1.28 billion, or $1.29 billion to $1.46 billion including the extra shares.

The Raise

That’s a big raise for a company with $627.8 million in cash on-hand at the end of its most recently reported period, according to its latest SEC filing. The firm anticipates having north of $1.5 billion in cash on its books following its debut.

Pinterest will have the cash it wants, but it will have to pay a bit more than it likely expected; the firm’s share price is lower than its final privately-set, per-share price. The social giant is going public at a discount to its former value.

Indeed, as (it’s early in San Francisco, so let’s allow her to handle the multiplication):

In terms of valuation — if you calculate Class A, Class B, plus options for additional Class B for total shares outstanding totalling 664.84 million shares — this values Pinterest at $10.64 billion in the midrange ($16/share), with the full range being $10 million (at $15/share) and $11.3 billion (at $17/share).

The mid-range figure of $10.6 billion will be the most-quoted this week most likely. Note however that Pinterest’s worth dips when calculated using a non-diluted figure. So if you see a smaller valuation number out there it’s likely not wrong; it’s merely taking a more conservative line on what counts.

No matter the figure, all fall under Pinterest’s final private valuation of $12.2 billion pre-money, and $12.35 billion after the $150 million it raised is added to the mix. This is a down IPO, but one that preserves much of the guesswork that went into the Pinterest valuation when the company’s shares were illiquid.

I’d hazard that Pinterest hopes to raise its price. But why it would be able to is hard to see. At the top-end of its valuation (Lunden’s $11.3 billion figure) is a full 14.9x its 2018 revenue. When the firm releases final Q1 results, we’ll be able to calculate a more-current number that will lower the resulting multiple slightly.

Now, let’s recall what we need to know about Pinterest’s path to today.

Road To Now

Since it was founded a decade ago, Pinterest has raised It was last valued at $12.3 billion when it in June 2017. (For a more detailed look at how the company’s valuation has climbed over the years, check out our piece from last summer.) Backers include Jordan Fudge’s , and among others. It’s over a dozen companies, including search engine .

The platform has remained popular over time with monthly active users and 1.5 million businesses using the platform in 2018, according to the company. About half of those users are U.S.-based, indicating that Pinterest still has plenty of potential users to target around the world. Who knew that an app serving as a virtual pinboard to allow people to save their favorite images would explode to this extent?

Q1 Notes

Finally today, a brief look at Pinterest’s Q1 2019, which the firm provided unaudited figures for. This is not an attempt by the company to avoid reporting hard figures; it’s an effort to get as much data into the S-1 as it can, allowing it to go public in a hurry, not waiting for firmer results to come in.

Quickly, Pinterest expects its Q1 2019 revenue to come between $198.9 million and $201.9 million, up sharply from its Q1 2018 result of $131.4 million. The company’s operating loss fell from $55 million in Q1 2018 to between $50.5 million and $47.5 million.

The aggressive revenue ramp may keep investors content, even as the company’s Q1 net loss stays sticky.

Illustration:

Subscribe to the Crunchbase Daily

The company’s SEC filing was widely expected to land today, after news broke this morning that the company was accelerating its IPO run. Recent market conditions have looked good, with the fantastically unprofitable Lyft managing to find more buyers than it had shares to sell. The ridehailing firm will likely raise its price, sell more shares, or both.

But Pinterest’s IPO has a cleaner ramp to profits, as we’ll see. Let’s check the numbers.

Financial Facts

Before we begin, Pinterest uses the calendar year instead of an amended fiscal calendar. We’ll examine it using full-year periods that correspond to the years as we know them.

Pinterest has consistently reported revenue growth and falling losses. The top and bottom lines of its financials, then, are each pointing in the correct direction.

In 2016, Pinterest posted $298.9 million in revenue, resulting in a net loss of $182.1 million. In 2017, both numbers improved. Pinterest saw top line of $472.9 million, and a smaller $130.0 million net loss. And in 2018, the most-recent full year period, Pinterest lost a far smaller $63.0 million against revenue of $755.9 million.

Pinterest grew 58.2 percent from 2016 to 2017, and 60.0 percent from 2017 to 2018. That acceleration in revenue growth, coupled with falling net losses, could endear investors looking for a path to profitability and a growth story. Pinterest may be able to afford both during its impending roadshow.

The unicorn’s revenue is lower-margin than what some software companies post. In 2018, the company’s more than $755 million in revenue brought cost of revenue expenses of over $241 million. That left Pinterest with a gross margin of around 68 percent in the year. Its 2017 gross margin was around 62 percent. That improvement is a boon to Pinterest, a company with a stiff $12.35 billion valuation to defend.

Turning to its cash position, the company is nearly comically rich. Pinterest closed calendar 2018 with nearly $628 million in cash and equivalents. That’s a mountain of duckets, exacerbated by its modest cash burn. Pinterest’s operating cash flow improved from -$102.9 million in 2017 to -$60.4 million in 2018, and the firm flipped from negative investing cash flow to positive last year. The company had years of cash on-hand before it filed. After its offering, the company will be well-set for future growth, presuming that it doesn’t manage to reach positive operating cash flow in short order.

A Big Fourth Quarter

Why is Pinterest pushing its IPO now? The company posted a monster fourth quarter. In the last three months of 2018, Pinterest brought in record revenue of $273.2 million, leading to an outsized profit of $47 million.

Pinterest, unsurprisingly, enjoys the holiday shopping season in the fourth quarter of each year. In the fourth quarter of 2017, for example, Pinterest managed a profit, though it was a smaller $3.4 million piece of net income. The company traditionally loses a lot of money in the first quarter.

So, get out now while the math is fire, as the kids say.

Tip Your Cloud Provider

Before we turn from the company’s financial performance, something caught our eye. Have you ever had a large bill ahead of you? How about three quarters of a billion dollars in cloud spend? Read this:

In May 2017, we amended the enterprise agreement governing our use of services from AWS with an addendum. Under the agreement, as amended by the addendum, we agreed that a substantial majority of our monthly usage of certain compute, storage, data transfer and other services must be provided under the addendum, and we are required to purchase at least $750.0 million of cloud services, which we primarily use for compute, storage and data transfer services, from AWS through July 2023

Dropbox this isn’t, in other words.

Backers And Winners

Pinterest has raised a known total of around from its investors. The company’s biggest funding round was a in May 2015, led by , , and . The company went on to raised $150 million in June 2017 from .

Pinterest did not yet break down the percentage each investor has in the company, in its S-1 filing. However, investors listed include , , , Fidelity, Valiant, as well as co-founder and first CEO (who ). Executives listed include: , the founder and CEO of Pinterest; , general partner at Andreessen Horowitz and CEO of ; and , a director over at .

In terms of acquisitions, Pinterest snapped up 15 companies since being founded in 2009. Most recently it scooped up searching engine in March 2017. Other companies Pinterest owns include , and .

Understanding All That

As we’ve reported, Pinterest had higher expectations for its own growth than what it has put up. But the firm’s big fourth quarter, its history of growth, and notably slowing losses, could help the firm get a firm pitch across the table.

In fact, after seeing Zoom’s profits and Pinterest’s falling losses (measured in dollars, not merely points of revenue), Lyft’s own S-1 looks worse and worse.

As always, more when it prices.

Illustration Credit: Li Anne Dias

This is no mere unicorn IPO, in other words. This is a decacorn���������ܲ��پ��Dz�.

Subscribe to the Crunchbase Daily

News broke at the end of January that Pinterest had reportedly hired Goldman Sachs and JP Morgan Chase to underwrite and advise on its initial public offering.

San Francisco-based Pinterest’s long road to the public markets is nearly anticlimactic, now that it has all but publicly arrived. The company was a long-running IPO candidate that, in recent years, fell behind other private companies that saw their valuations rise more quickly. and are prime examples of the type.

But, Pinterest has grown its revenue into the hundreds of millions, expanded its user base also into the nine-figures, all of which supports its eleven-figure valuation. If Pinterest will be able to extend its valuation past the $12 billion mark is an obvious question; if it can’t, it will essentially IPO flat. That’s still better than what managed, but, everyone wants a markup when they take on fresh dilution.

Historical Notes

As we charted here before, Pinterest’s valuation rose over time as it accreted more capital to its accounts:

It’s an impressive fundraising record (you can see the same data in Crunchbase ). In total, Pinterest over its life, having been born in 2009. Backers include and among many others.

The successive capital events did not spring from rocks, of course. Pinterest has put up impressive growth over time. From this report of ours, here’s what a flurry of media reports over the years compile into when you graph out Pinterest’s revenue and user base over time:

With news still fresh that Lyft could go on a roadshow in short order, and that the ride-hailing company’s S-1 could drop next week, we’re finally off the IPO races.

As we reported earlier today, it’s been something of a dearth thus far.

Illustration Credit:

Follow Crunchbase News on

has hired bankers for its IPO,. The FT reports that “Pinterest has hired Goldman Sachs and JPMorgan Chase to advise” it on its impending public offering.

Pinterest has raised over in outside venture funding to date. Its investors include , , , and , among .

If you recall from our prior coverage, Pinterest has been a perennial IPO candidate. This could finally be its year. We’ve dug into Pinterest’s growth story before so we won’t bore you with it again, but when the social giant does drop a public filing we’ll be especially interested in the quality of its revenue, the changing pace of its revenue growth, and its operating costs.

While Slack’s blistering path to the public markets is expected to go well (the company is so certain of its impending success that it may pursue a direct listing), Pinterest is more of a question mark. The firm may be in rude health, or it may be just pretty alright.

Whichever is the case, the company earned a roughly $12.3 billion valuation (post-money) in its last round of funding, inked with . This puts Pinterest on the larger side of 2019’s possible IPO candidates, roughly in line with ride-hailing firm , which also hired JP Morgan to handle its IPO.

Of course, with nothing firmly on the calendar yet, there’s still plenty of uncertainty over when (or if) Pinterest will go public this year.

A chart of Pinterest’s prior rounds was added following initial publication.

�������ܲ��ٰ����پ��Dz�:��

, a social giant worth in excess of $10 billion, may list its shares publicly in April of 2019, according . That the San Francisco-based company intends to float next year is not a surprise. That Pinterest might go out in April may, however, be sooner than some anticipated.

Follow Crunchbase News on

The Journal’s details several other key data points. Adding to what we already know about Pinterest’s user growth and revenue expansion, the company reached “more than 250 million monthly active users” in the first month of Q3 according to the WSJ, and “is poised to generate revenue in excess of $700 million this year.”

Checking in with our prior work, Pinterest saw revenue of $473 million in 2017, against an estimate of $500 million. The company also crossed the 200 million monthly active user count in the year, according to media reports.

So, Pinterest will grow its top line from $473 million to $700 million or more in 2018. At $700 million, the revenue figure represents just under 50 percent growth on a year-over-year basis. Estimates over $700 million quickly give the firm a full 50 percent expansion for the year.

While impressive, Pinterest’s numbers aren’t as good as it, and others had hoped. In 2015, the company  that it would have revenues of $2.8 billion in 2018, not a figure of around $700 million. And it expected 329 million monthly actives, not the figure between 250 and 300 million that it will turn in.

Even more recent Pinterest projections detailed faster-than-delivered revenue growth. This from earlier this year notes that Pinterest “is finally approaching $1 billion in ad revenue” on its road towards an eventual IPO. Or, instead, $700 million.

But worth more than $10 billion, and flush with a lifetime raise total of , it’s time for Pinterest to get out. You go public with the company you have.

Top Image Credit: .

It’s not the only domestic decacorn (a unicorn at least ten times over) targeting a 2019 debut.

Follow Crunchbase News on

Airbnb is joined by , ,�����Ի� in having plans to go public next year, putting a huge slice of the startup market on hock in quick succession. Given that Airbnb has put its IPO back into our minds with its CFO hire, let’s take a quick look at what the three firms are worth, and remind ourselves when they are expected to go out.

Uber

• Current private valuation: $72 billion, following its most recent .
• Capital raised: $24.2 billion in debt and equity ().
• Target IPO date range: From Q1 2019 (From its CEO’s first IPO range), through the year (per .)

Uber’s IPO timing is a mixed bag. The firm’s first estimates of 18 to 36 months put its IPO anywhere from Q1 2019, all the way into 2020. But more recently, Uber has been clear that 2019 is the plan. It’s a huge window, giving Uber plenty of time to get its numbers in line. I’d wager that Uber’s current losses push its IPO into the second half of 2019, but I’m usually wrong.

Uber is the big fish for 2019. If this IPO flops, what else unwinds? (More on Uber’s latest numbers here.)

Pinterest

• Current private valuation: $12.35 billion after its last primary round, .
• Capital raised: in equity.
• Target IPO date range: Mid-2019.

Pinterest is a very interesting company. It doesn’t get the same level of attention as Airbnb or Uber or Lyft, but the firm has a sky-high valuation and large revenues. With $473 million in reported revenues in 2017 and lots more expected in the current year, Pinterest will go into its IPO with something close one billion in trailing revenue. If that is enough to match its valuation, we’ll find out.

I can’t wait to dork out about this IPO, frankly. What are its margins? What percent of advertisers stick year to year? What percentage of its revenue will come from advertising, while we are on the topic? And so forth. It’s going to be screaming fun.

Lyft

• Current private valuation: $15.1 billion after its last in June 2018.
• Capital raised: in equity.
• Target IPO date range: 

Lyft’s potential $15 billion IPO valuation gives the company a lot to prove before its public debut. The company reported an H1’18 revenue of $909 million, with a year-over-year growth of 120.6 percent. The company, which is more unprofitable than its main competitor on a percent-of-revenue basis, has likely been focused on expanding that gross margin ahead of its IPO to give investors more confidence in that ambitious valuation.

Will Lyft go out before Uber? If it does, Uber can drop its prices and sabotage Lyft, which won’t be able to match prices without harming profitability, something that public-market investors care about. But if Lyft goes second, it can do the same to Uber. That’s the fear that many have. If it will hold water we’ll find out, as they can’t both go out at the same time. Right?

Airbnb

• Current private valuation: $31 billion after closing the in May 2017.
• Capital raised: in debt and equity sales.
• Target IPO date range: Possibly as early as .

Now with a fresh CFO on board, the company can get its pants on front-forward and get out. Airbnb over $1 billion in revenue in its most recent quarter and state that the firm is profitable on an EBITDA basis. (In English that means that the firm still loses money, but likely at a pretty slow clip in cash terms. Its GAAP results will be interesting.)

The companies above are worth about a combined $130 billion at their last private valuation. That figure, today, would rise if they all went public. If that will stay true next year is everyone’s question.

Top Image Credit: .

Follow Crunchbase News on &

Over time, Pinterest has carved out a niche distinct from other social giants like Facebook and Twitter, becoming a visual discovery platform where people get inspirations for their daily life.  People often use Pinterest to look up what clothes to wear, where to go for their next vacation, or how to decorate their home.

Recently, the company crossed the mark, growing both in the US and internationally.

During the discussion, Silbermann shared a lesson learned from their international expansion: each country has specific lifestyle needs and interests. Users in Brazil, for example, like to get inspiration on Pinterest for their next tattoo. To understand different cultures and local needs, Pinterest has set up small teams in various countries to talk to the local users about their experience.

When asked if the company has plans for an IPO in the near future, Silbermann said that Pinterest will remain private for now. The company just raised a round in June and is currently valued at . According to its CEO, Pinterest chose to stay private to focus on building its core products and user base.

Besides from its advertising system, Pinterest is working on its . The company Visual Graph in 2013 to bring their strong computer vision engineers on board. “Camera might become the next keyboard,” said Silbermann.

Silbermann also revealed to the audience how he keeps his employees motivated in lieu of liquidity.

“We make sure that the stories of people behind the numbers are brought into the building,” said Silbermann. “We make sure the whole company understands how the business is doing and what is the underlying logic.”

For those that think Pinterest is flying under the radar or past its time, Silbermann responded with explanation and some advice for entrepreneurs: “Silicon Valley focuses on very short-term success but a lot of great things take a long time to build. Having a little bit of a long view on certain bets is important if you want to build something new.”