By Jaspreet Singh
(Reuters) -Pinterest’s (PINS) fourth-quarter revenue forecast failed to impress investors looking for a boost from the upcoming holiday shopping season at a time when larger online ad sellers have largely outperformed, sending shares down in extended trading on Thursday fell by 11%.
The San Francisco, California-based company also announced a new stock repurchase program of up to $2 billion and canceled the September 2023 program, leaving $500 million for buybacks.
Pinterest’s results follow quarterly reports from digital advertising companies – including Google parent Alphabet, Meta Platforms, Reddit and Snap – which posted positive revenue in the third quarter, helped by robust ad spending.
The image-sharing platform is facing stiff competition from Meta-owned Facebook and Instagram, which have become the go-to platforms for advertisers due to their larger user bases.
Pinterest released the Performance+ suite in October, which allows advertisers to better target users with new AI tools and automation features on the platform.
“Performance+ is still in the early stages of rollout, with many advertisers limiting budget shifts and new feature adoption during the peak holiday season,” 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 the average analyst estimate of $1.14 billion, according to data compiled by LSEG.
It forecasts operating expenses, adjusted on a quarterly basis, will be between $495 million and $510 million, up 11% to 14% from a year earlier, driven by investments in AI talent and product initiatives.
“Pinterest’s Q3 continues a series of smaller social media competitors pivoting around Meta and gaining traction with advertisers,” said Emarketer analyst Daniel Konstantinovic.
The “steep increase” in the company’s costs shows that its smaller size does not exclude the company from scrutiny over costs, Konstantinovic added.
Third-quarter revenue grew 18% to $898.4 million, compared to estimates of $896.4 million.
Adjusted earnings 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 from July to September, compared to estimates of 531.5 million.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shailesh Kuber)
