TLDR
- Pinterest shares plunged 20% after reporting Q3 earnings of $0.38 per share versus the expected $0.42.
- The company’s Q4 revenue forecast of $1.31-$1.34 billion came in below the $1.34 billion consensus.
- Platform users reached 600 million, surpassing the 590 million analyst estimate.
- Large U.S. retailers reduced ad spending due to tariff-related margin pressures, according to the CFO.
- Tech rivals Meta, Amazon, and Alphabet posted stronger advertising revenue growth for the same period.
Pinterest experienced a sharp sell-off Tuesday evening, with shares tumbling nearly 20% after the company unveiled third-quarter results that missed earnings targets. The visual discovery platform reported earnings of $0.38 per share, below the Street’s $0.42 expectation.
The company generated $1.05 billion in revenue, meeting analyst forecasts and representing 17% growth from the year-ago period. Net income surged 201% to $92.11 million compared to $30.56 million last year.
Despite matching revenue estimates, investors focused on the earnings shortfall and disappointing forward guidance. The company projected fourth-quarter revenue between $1.31 billion and $1.34 billion, with the midpoint trailing Wall Street’s $1.34 billion target.
The after-hours decline erased Pinterest’s year-to-date stock gains. Free cash flow reached $318 million, while adjusted EBITDA totaled $306 million, exceeding the $295 million estimate.
Platform Reaches 600 Million Users
Pinterest’s global monthly active users climbed to 600 million in the third quarter. The figure beat analyst expectations of 590 million and represents the platform’s highest user count to date.
User growth accelerated from 578 million in the previous quarter. International expansion and product improvements drove the increase in platform engagement.
The company posted global average revenue per user of $1.78, just under the $1.79 forecast. Revenue from the U.S. and Canada segment reached $786 million, missing the $799 million estimate.
CEO Bill Ready highlighted artificial intelligence advancements in the company’s platform. He described Pinterest as an “AI-powered shopping assistant” leveraging visual search capabilities to serve 600 million consumers.
Retail Tariffs Create Advertising Headwinds
CFO Julia Donnelly addressed revenue challenges during the quarterly earnings call. She pointed to “pockets of moderating ad spend” from large U.S. retailers facing tariff-related margin pressure.
The White House announced 10% tariffs on imported timber and lumber in September. Additional 25% duties will apply to kitchen cabinets, bathroom vanities, and related furniture categories.
Donnelly expects continued market uncertainty into the fourth quarter. She specifically cited the new tariff’s impact on the home furnishing category affecting advertiser behavior.
Digital Ad Market Shows Mixed Results
Other technology platforms reported stronger advertising performance last week. Meta’s revenue climbed 26% year-over-year to $51.24 billion, with nearly all coming from online ads.
Amazon’s advertising business grew 24% to $17.7 billion. Alphabet’s total ad sales increased nearly 13% to $74.18 billion, with YouTube contributing $10.26 billion.
Reddit delivered exceptional results with 68% revenue growth to $585 million. The platform’s daily active users rose 19% to 116 million, topping analyst predictions.
Morgan Stanley analysts revised their Pinterest outlook following the results. They acknowledged being “wrong about Pinterest’s ability to drive durable, faster than expected revenue growth” from platform improvements.
U.S. and Canada remains Pinterest’s most profitable market despite underperforming at $786 million. The company continues investing in AI and visual search technology to improve monetization.
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