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Pinterest (PINS) Q4 2023 earnings report

An exhibit for image sharing and social networking service Pinterest is seen at the Collision conference in Toronto, Ontario, Canada, on June 23, 2022.

Chris Helgren | Reuters

Pinterest Shares fell in extended trading Thursday after the company issued a weaker-than-expected forecast and reported disappointing revenue. The stock pared some of its losses after Pinterest revealed a new partnership with Google.

  • Revenue: $981 million versus $991 million expected, according to LSEG, formerly known as Refinitiv.
  • Profits: 53 cents per share, adjusted, versus the expected 51 cents per share, according to LSEG.

Revenue rose 12% from $877.2 million a year earlier, while net income was $201 million, or 29 cents per share, up from $17.49 million, or 3 cents per share. action, from the previous year.

Monthly active users in the fourth quarter rose 11% to 498 million, beating analyst estimates of 487 million. The company said its global average revenue per user was $2, less than analyst estimates of $2.05.

Pinterest said first-quarter revenue will be between $690 million and $705 million, which equates to 15% to 17% year-over-year growth. Half of that range, $697.5 million, is below analysts’ average estimate of $703 million.

Shares initially sank as much as 28% to an after-hours low of $29.40. After Pinterest CEO Bill Ready announced a “third-party app integration with Google” during a call with analysts, the company’s stock recovered to $37.82, a drop of nearly the 10%.

There are still

The Google integration is similar to Pinterest’s partnership with Amazon that focuses on third-party ads, Ready said. Pinterest has been touting its partnership with Amazon as key to increasing the company’s overall sales and making it easier for users to purchase the products they see on the app.

Ready, who was president of Google’s commerce and payments business before joining Pinterest in 2022, said the company is “pretty excited” about the potential of the new partnership to help it “better monetize markets” outside the US. USA

“We consider Pinterest to be very under-monetized across the board, but it is the least monetized internationally,” Ready said, adding that 80% of its users, but only 20% of its sales, are outside the US. US

Ready said the Google integration “went live a couple of weeks ago” and that it helped increase “demand for third-party advertising.” He said it “did not contribute significantly to revenue” for Pinterest’s fourth quarter, but could help in the first quarter and “going forward.”

Uneven market

The company’s report comes at a time when the overall digital advertising market is showing a recovery, with Goal, Alphabet and Amazon all gaining momentum and growing their respective ad units by double digits in the fourth quarter. Data suggests companies are increasing spending on online promotions after cutting it in 2022 and part of 2023 over concerns about the war between Ukraine and Russia and high interest rates.

But not all online advertising companies are seeing the benefits. Snap shares plunged 35% on Wednesday after the company reported fourth-quarter sales growth of 5%, below expectations, and the company also issued weak guidance.

Ready said the digital advertising market is improving from last year and that retail was the company’s “fastest growing segment.”

“We’re seeing across the advertising industry that performance matters more than ever and we’re winning on that front,” Ready said. “We’re delivering more performance to advertisers than ever before.”

Although Pinterest noted last quarter that the Middle East crisis caused some advertisers to pause their spending, the company’s chief financial officer, Julia Donnelly, told analysts that the war between Israel and Hamas ultimately had a temporary impact.

Ahead of Thursday’s report, Pinterest shares were up 9.5% this year after rising 53% in 2023.

Costs fell about 10% from a year earlier to $785 million, largely due to a decline in sales and marketing expenses. A year ago, Pinterest cut about 5% of its workforce, part of an industry-wide staff reduction.

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