Pinterest’s fourth-quarter revenue forecast failed to impress investors looking for a boost from the upcoming holiday shopping season, at a time when the biggest online ad sellers vastly outperformed, sending its shares lower. fell 11% in extended trading on Thursday.
The San Francisco, California-based company also announced a new share buyback program of up to $2 billion and canceled the September 2023 program in which $500 million remained for buybacks.
Pinterest’s results follow quarterly reports from digital advertising leaders including Google parent Alphabet, Meta, Reddit and Snap that posted upbeat third-quarter revenue, helped by strong ad spending.
The image-sharing platform faces stiff competition from companies like Meta-owned Facebook and Instagram, which have become go-to platforms for advertisers due to their larger user base.
Pinterest launched the Performance+ suite in October, helping advertisers better target users with new AI tools and automation features on the platform.
“Performance+ is still in the early rollout phase, with many advertisers limiting budget shifts and adoption of new features during holiday peak period,” CFO Julia Donnelly said on a post-earnings call.
The company is also seeing “softening” among food and beverage advertisers, Donnelly said.
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Pinterest forecast fourth-quarter revenue to be between $1.13 billion and $1.15 billion
Pinterest forecast fourth-quarter revenue to be between $1.13 billion and $1.15 billion, the midpoint of which was in line with analysts’ average estimate of $1.14 billion, according to data compiled by LSEG.
It forecast quarterly adjusted operating expenses between $495 million and $510 million, growing 11% to 14% year-over-year, driven by investments in AI talent and product initiatives.
“Pinterest’s third quarter continues a streak of smaller social media competitors orbiting Meta gaining traction with advertisers,” said Emarketer analyst Daniel Konstantinvic.
The “sharp jump” in the company’s expenses shows that its smaller size does not exclude it from cost scrutiny, Konstaninovic added.
Third-quarter revenue grew 18% to $898.4 million, versus estimates of $896.4 million.
Adjusted earnings per share for the quarter were 40 cents, compared to estimates of 34 cents.
Global monthly active users on the platform rose 11% to 537 million in the July-September period, compared to estimates of 531.5 million.
With information from Reuters.
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