Pinterest Follows Snap in Posting Disappointing Revenue
(Bloomberg) -- Pinterest Inc. slid in late trading after fourth-quarter revenue missed analysts’ estimates, following social media peer Snap Inc. in suffering from sluggish sales.
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Sales rose 12% to $981 million in the period, Pinterest said in a statement Thursday, compared with an average estimate of $990.2 million. The pinboard-style search company topped projections for user growth, reaching 498 million monthly users, an all-time high.
After initially falling more than 20% in extended trading, the shares pared the decline — bolstered by the announcement of a new partnership with Google. The stock was down about 7.8% as of 5:06 p.m. in New York.
The results follow a disappointing report from Snap, which suffered a stock plunge this week after holiday-season sales missed projections. Meta Platforms Inc., meanwhile, posted better-than-expected revenue last week.
At Pinterest, Chief Executive Officer Bill Ready has been trying to weather a shaky industry by offering targeted, direct-response ads. When Ready became CEO in 2022, such ads made up only a third of the company’s business. Now that category accounts for more than two-thirds.
Direct-response ads can be more valuable than other kinds because they’re designed to drive a specific action, such as clicking on a promotion or purchasing an item, as opposed to simply building brand awareness.
The company also has focused on shoppable content, making it easier for users to buy the things they see on pinboards. As part of that push, Pinterest announced a partnership with Amazon.com Inc. in May. The new pact with Google is similar and should help Pinterest generate more revenue from international markets, Ready said during a conference call Thursday.
“More than half of users on Pinterest are here to shop,” Ready said in a separate interview. The company’s shopping push has benefited from the site’s popularity with Gen Z — now the largest and fastest-growing demographic on Pinterest.
Pinterest expects revenue of $690 million to $705 million in the current quarter. The midpoint of that range would miss the $700.2 million that analysts have estimated.
Total operating expenses were $785 million for the holiday quarter, lower than the $820 million that analysts were expecting. Ready said that “disciplined expense management” was a key focus in 2023, and pointed out that the company slowed the pace of hiring when he took over in mid-2022.
Still, Pinterest cut 150 employees one year ago. While Ready dismissed the idea of further layoffs, he said that Pinterest was in a good place.
“We’ve got a team that’s executing well, delivering great things for our users and advertisers,” he said.
(Updates with Google deal starting in third paragraph.)
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