Pinterest Inc. surpassed predictions for quarterly revenue on Thursday, providing a rare ray of sunshine in the otherwise downbeat sector of social media and driving the shares of the image-sharing platform 15% higher in after-hours trading.
Earnings of internet companies including Alphabet Inc, Meta Platforms Inc, and Snap Inc. have all been negatively impacted by a fall in advertising spending as a result of decades-high inflation.
However, according to Pinterest’s findings, its advertising revenue held up well during the wider industry slowdown, and users continued to visit its image-sharing platform to get ideas for projects like home remodeling and recipe-based cooking.
After three consecutive quarters of user decline, Pinterest saw user growth in the July–September period, with its worldwide monthly active users increasing 2.8% sequentially to 445 million, above Factset estimates of 437.4 million.
According to finance chief Todd Morgenfeld on a conference call with investors, an upgrade to Apple Inc.’s iOS 16 in September contributed to some of the growth.
He continued by saying that Pinterest’s ad revenues are mostly driven by e-commerce and consumer products, which is why they have remained resilient.
In reference to Pinterest’s emphasis on retail and consumer products, D.A. Davidson analyst Thomas Forte said “what hurt Pinterest before (during the pandemic) is helping them now.”
“The bigger opportunity going forward is to find a way to drive incremental engagement on the platform and get monthly active users growing again and improve monetization since growth is slowing.”
The third quarter’s sales for Pinterest rose 8% to $684.6 million. Refinitiv reports that the amount was far more than the experts’ average expectation of $666.7 million, despite the fact that growth was at its weakest in over two years.
The company’s average global revenue per user increased 11% to $1.56. Above analyst expectations of $0.06 per share, it earned an adjusted profit of $0.11 per share.
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