Pinterest beats quarterly estimates on ad market recovery; shares up

PINTEREST beat estimates for third-quarter revenue and profit on Monday (Oct 30), as a stabilising digital advertising market helped draw marketers to the image-sharing platform, sending its shares up 13 per cent in aftermarket trading.

The company expects an adjusted core earnings margin of about 600 basis points for 2023 compared with its prior expectation of about 400 basis points, Pinterest CFO Julia Donnelly said on an earnings call.

The results fan optimism about a market rebound after major industry players Alphabet, Meta Platforms and Snap all surpassed quarterly revenue expectations last week on the back of a pick-up in their advertising business.

They also suggest that a push to drive up shopping on the Pinterest app through partnerships with the likes of Amazon.com was paying off for the company that lets users create online pinboards.

“Pinterest has a number of company-specific efforts underway, including improving the efficacy of its ads when it comes to conversion, that’s enabling it to outperform right now,” DA Davidson analyst Tom Forte said.

Brokerages including Bernstein have been optimistic about the benefits from the partnership, saying it could drive up Pinterest’s fourth-quarter revenue.

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The San Francisco, California-based company’s revenue rose 11.5 per cent to US$763.2 million for the quarter ended Sep 30, compared with Wall Street estimates of US$743.5 million, according to LSEG data.

Global monthly active users (MAUs) on the image-sharing platform rose 8 per cent to 482 million.

Excluding items, Pinterest earned a profit of 28 US cents per share, compared with analysts’ estimates of 20 US cents a share.

The company expects current-quarter revenue to grow in the 11 per cent to 13 per cent range year over year, compared with estimates of revenue growth of 11.3 per cent.

CEO Bill Ready said Pinterest faced a “minor short-term impact” due to the Middle East conflict as some brands paused advertising spend temporarily.

“But we’ve since seen those advertisers largely return.”

Last month, media research and investment firm Magna raised its forecast for US ad spending growth to 5.2 per cent from 4.2 per cent, for calendar 2023. It expects digital ad sales to rise 9.6 per cent in the period. REUTERS