Pinterest's Q4 Revenue Forecast and Stock Buyback

By Jaspreet Singh

Pinterest's fourth-quarter revenue forecast has not impressed investors as the holiday shopping season approaches. Shares dropped 11% in extended trading on Thursday, reflecting concerns amidst stronger performances from larger online ad competitors.

The San Francisco-based company has announced a new stock buyback program worth up to $2 billion, while cancelling the previous program that had $500 million remaining for repurchase.

Pinterest's results come after positive reports from other digital ad leaders like Google-parent Alphabet, Meta Platforms, Reddit, and Snap, all benefiting from increased ad spending.

Faced with stiff competition from Meta-owned platforms like Facebook and Instagram, which attract more advertisers due to their larger user bases, Pinterest released its new Performance+ suite in October. This suite aims to help advertisers more effectively target users using advanced AI tools and automation features.

CFO Julia Donnelly noted that Performance+ is still in its early stages, with many advertisers cautious about budget shifts during the holiday rush. She also mentioned "softness" in advertising from the food and beverage sector.

For Q4, Pinterest forecasts revenue between $1.13 billion and $1.15 billion, aligning with analysts’ expectations at an average of $1.14 billion. The company projects adjusted operating expenses for the quarter to be between $495 million and $510 million, which represents an 11% to 14% increase year-over-year, driven by investments in AI and product development.

Emarketer analyst Daniel Konstantinovic emphasized that Pinterest's third-quarter results reflect a trend of smaller social media competitors gaining traction with advertisers. He also pointed out that the company's increased expenses indicate that it is under scrutiny for its costs, regardless of its size.

Third-quarter revenue increased by 18% to $898.4 million, slightly surpassing estimates of $896.4 million. The adjusted profit per share for the quarter was 40 cents, higher than the anticipated 34 cents. Moreover, the platform's global monthly active users rose by 11% to 537 million during the July-to-September period, compared to estimates of 531.5 million.