Pinterest shares fall due to weak outlook, revenue decline

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 Google partnership.

• Income: $981 million versus $991 million expected, according to LSEG, formerly known as Refinitiv.
• Earning: 53 cents per share, adjusted, versus 51 cents per share expected, according to LSEG.

Revenue rose 12% from $877.2 million a year earlier, while net income was $201 million, or 29 cents a share, up from $17.49 million, or 3 cents a share, a year earlier.

Monthly active users rose 11% to 498 million in the fourth quarter, beating analysts’ estimates of 487 million. The company said its global average revenue per user was $2, below analyst estimates of $2.05.

Pinterest said first-quarter revenue will be between $690 million and $705 million, which equates to 15% to 17% growth year-over-year. The middle of that range, $697.5 million, is below the average analyst estimate of $703 million.

The stock initially fell as much as 28% to a low of $29.40 after hours. The company’s shares rose to $37.82, equivalent to a decline of about 10%, after Pinterest CEO Bill Ready announced “third-party app integration with Google” during a call with analysts.

The Google integration is similar to Pinterest’s partnership with Amazon focusing on third-party ads, Ready said. Pinterest is highlighting its Amazon partnership to boost the company’s overall sales and make it easier for users to purchase the items they see on the app.

Ready, who was president of Google’s commerce and payments business before joining Pinterest in 2022, said the company is “very excited” about the potential of the new partnership to help it better “monetize markets” outside the U.S. ” Is.

“We see that Pinterest is significantly less monetized across the board, but is the least monetized internationally,” Ready said, noting that 80% of its users but only 20% of its sales are outside the US.

Ready said the Google integration “went live a few weeks ago” and has helped drive “third-party ad demand.” He said it “was not a significant revenue contributor” to Pinterest’s fourth quarter, but could help in the first quarter and “going forward.”

The company’s report comes as the broader digital advertising market continues to show improvement meta, Alphabet And Amazon All are moving fast and growing their respective ad units by double digits in the fourth quarter. The data shows businesses are increasing spending on online promotions after cutting spending in parts of 2022 and 2023 due to concerns about the Ukraine-Russian war and higher interest rates.

But not all online advertising companies are seeing profits. Snap shares fell 35% on Wednesday after the company reported fourth-quarter sales growth that was 5% behind expectations and the company also issued weak guidance.

Ready said the digital advertising market has been improving over the past year and retail is the company’s “fastest growing segment.”

“We’re looking across the entire advertising industry [that] Performance matters more than ever, and we’re winning on that front,” Ready said. “We’re driving more performance for advertisers than ever before.”

Although Pinterest noted last quarter that some advertisers had paused their spending due to the Middle East crisis, the company’s finance chief 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 nearly 10% to $785 million from a year earlier, mainly due to a decline in sales and marketing expenses. Pinterest cut its workforce by about 5% a year ago, part of industrywide cuts.

Watch: CNBC’s full interview with Snap CEP Evan Spiegel