Published : 1 month ago, on 08/11/2024

By Jaspreet Singh

(Reuters) -Pinterest’s fourth-quarter revenue forecast failed to impress investors looking for a boost from the upcoming holiday shopping season, at a time when bigger online ad sellers largely outperformed, sending its shares down 11% in extended trading on Thursday.

The San Francisco, California-based company also announced a new stock buyback program of up to $2 billion and canceled the September 2023 program under which $500 million were left for repurchase.

Pinterest’s results follow quarterly reports by digital ad bellwethers – including Google-parent Alphabet, Meta Platforms, Reddit and Snap – which posted upbeat third quarter revenue, helped by robust ad spending.

The image-sharing platform faces stiff competition from the likes of Meta-owned Facebook and Instagram, which have become the go-to platforms for advertisers because of their larger user base.

Pinterest released 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 “softness” among food and beverage advertisers, Donnelly said.

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 to $510 million, growing 11% to 14% from a year earlier, driven by investments in AI talent and product initiatives.

Pinterest’s Q3 continues a streak of smaller social media competitors orbiting Meta gaining ground with advertisers,” Emarketer analyst Daniel Konstantinovic said.

The company’s “steep jump” in expenses show that its smaller size does not exclude it from scrutiny around costs, Konstantinovic added.

Revenue for the third quarter grew 18% to $898.4 million, compared with estimates of $896.4 million.

Adjusted profit per share for the quarter came in at 40 cents, compared with estimates of 34 cents.

Global monthly active users on the platform rose 11% to 537 million in the July-to-September period, compared with estimates of 531.5 million.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Shailesh Kuber)