A display for image sharing and social media service Pinterest is seen at the Collision conference in Toronto, Ontario, Canada, on June 23, 2022.
Chris Helgren | Reuters
Pinterest Shares fell in extended trading Thursday after the company issued a weaker-than-expected forecast and reported disappointing revenue. The stock pared some of its losses after Pinterest revealed a new partnership with Google.
- Income: $981 million vs. $991 million expected, according to LSEG, formerly Refinitiv.
- Profits: 53 cents per share, adjusted, versus 51 cents per share expected, according to LSEG.
Revenue rose 12% from $877.2 million last year, while net income was $201 million, or 29 cents a share, from $17.49 million, or 3 cents a share, a year earlier.
Monthly active users in the fourth quarter rose 11% to 498 million, beating analysts’ estimates of 487 million. The company said average global revenue per user was $2, below analysts’ estimates of $2.05.
Pinterest said first-quarter revenue would be between $690 million and $705 million, which equates to year-over-year growth of 15 percent to 17 percent. The midpoint of that range, $697.5 million, is below the average analyst estimate of $703 million.
The stock initially sank as much as 28% to an after-hours low of $29.40. After Pinterest CEO Bill Ready announced a “third-party app integration with Google” during a call with analysts, the company’s shares rebounded to $37.82, down nearly 10%.
Google’s integration is similar to Pinterest’s partnership with Amazon that focuses on third-party ads, Ready said. Pinterest touts its partnership with Amazon as key to increasing the company’s overall sales and making it easier for users to buy products they see on the app.
Ready, who previously served as president of Google’s commerce and payments business join Pinterest in 2022, said the company is “quite excited” about the new partnership’s potential to help it “make better money” from markets outside the US
“We see Pinterest as having significantly lower revenue performance overall, but the lowest internationally,” Ready said, adding that 80% of its users but only 20% of its sales are outside the US.
Ready said the Google integration “came out a few weeks ago” and that it helped drive “demand for third-party ads.” He said it was “not a significant contributor to revenue” for Pinterest’s fourth quarter, but could help in the first quarter and “going forward.”
Anomalous market
The company’s report comes as the broadest digital advertising market shows recovery, with After, Alphabet and Amazon All are uploading steam and growing their respective ad units by double digits in Q4. The data suggests businesses are boosting spending on online deals after the cut in 2022 and part of 2023 amid concerns about the Ukraine-Russia war and high interest rates.
But not all online advertising companies see all the advantages. Shares of Snap cratered 35% on Wednesday after the company reported 5% sales growth in the fourth quarter, missing expectations, and the company also issued weak guidance.
Ready said the digital ad market has been improving since last year and retail was the company’s “fastest growing segment.”
“We’re looking across the ad industry [that] Performance matters more than ever and we are winning on that front,” Ready said. “We’re delivering more performance to advertisers than ever before.”
Although Pinterest noted last quarter that the crisis in the Middle East forced some advertisers to halt spending, the company’s chief financial officer Julia Donnelly told analysts that the Israel-Hamas war ultimately had a temporary impact.
Before Thursday’s report, Pinterest shares were up 9.5% this year after rising 53% in 2023.
Costs fell about 10% from a year ago to $785 million, largely due to lower sales and marketing expenses. A year ago Pinterest cut about 5% of its workforce, part of an industry-wide downsizing.
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