Pinterest’s Impressive Third-Quarter Earnings Report and Outlook

Pinterest announced impressive third-quarter earnings on Monday, surpassing both revenue and earnings expectations, causing its stock to surge by 14% during extended trading.

Here’s a breakdown of Pinterest’s performance:

• Revenue: $763.2 million, exceeding the expected $743.5 million (according to LSEG, formerly known as Refinitiv).
• Earnings: 28 cents per share (adjusted), outperforming the expected 20 cents (according to LSEG).

Pinterest’s revenue increased by 11% compared to the third quarter of 2022 when it reached $684.6 million.

During the quarter, the number of global monthly active users rose by 8% compared to the previous year, reaching 482 million users. Analysts had anticipated 473 million global monthly active users. The average revenue per user also exceeded expectations, at $1.61, compared to the projected $1.59.

Pinterest CEO Bill Ready stated, “As we lean into Pinterest’s unique differentiators as a visual search, discovery, and shopping platform, we’re finding our best product-market fit in years. Our users are engaging deeply, and we’re delivering better results for advertisers through improved measurement and innovation across the full funnel.”

For the fourth quarter, Pinterest anticipates revenue growth of 11% to 13%, with the midpoint surpassing analyst estimates, which predicted growth of 11.3%, as per LSEG.

Ready acknowledged the impact of the Israel-Hamas conflict on advertisers, noting that advertisers react to major geopolitical events. The concerns over this conflict led some brand advertisers to temporarily pause their spending. However, Pinterest has seen significant advertisers return, and platforms focused on brand awareness are expected to be more affected if the crisis worsens.

Despite the Middle East crisis, Pinterest remains committed to its focus on shopping, as exemplified by its recent partnership with Amazon.

In its third-quarter earnings report, Amazon revealed that its online advertising unit achieved remarkable growth, with sales increasing by 26% year-over-year to $12.06 billion.

Nonetheless, Ready acknowledged that if the Middle East crisis escalates, leading to more advertisers pausing their online promotional and marketing campaigns, Pinterest may not be entirely immune to the impact.

Pinterest reported a net income of $6.73 million, equivalent to one cent per share, compared to a loss of $65.2 million, or 10 cents per share, during the same period in the previous year.

While expenses for the quarter increased by nearly 2% to $768.2 million from $753.9 million the previous year, the company anticipates a decline in non-GAAP operating expenses for the fourth quarter of 2023, ranging from 9% to 13% year-over-year, excluding the costs of revenue.