Pinterest records solid quarter on ad spending boost

Pinterest Inc.’s first-quarter revenue and profit outpaced market estimates on Wednesday, mainly driven by higher ad spending by businesses.

The image-sharing platform posted earnings of $0.10 per share, surpassing the market estimate of $0.04. Consequently, its revenue came in at $575.00 million, well above the $573.00 million expected.

However, Pinterest mentioned that its global monthly active users declined 9.00% from a year ago to 433.00 million.

This figure missed the analysts’ expectation of 437.90 million total MAUs. The company attributed the downdraft to the overwhelming pandemic growth in the year-ago quarter.

Moreover, it also blamed Russia’s recent invasion of Ukraine, taking a hit on its operations in Europe.

At the same time, the social networking service cited lower search traffic caused by Google’s algorithm change in November 2021.

Meanwhile, its global average revenue per user was $1.33, representing an annual increase of 28.00%. The metric beat Wall Street’s forecasted ARPU of $1.31.

Subsequently, company executives attributed the growth to the younger demographic, specifically Gen Z.

In addition, it is also highly reliant on the North American market, accounting for 31.00% of the revenue. This points to more opportunities as the business branches out into new areas.

Correspondingly, shares of the firm strengthened 8.09% or 1.51 points to $20.18 per share on Wednesday’s post-trading.

Before the earnings release, Pinterest stocks lost 2.86% or 0.55 points to $18.67 per share in the regular hours market.

Investors are on edge about the overall macroeconomic conditions. For instance, the war in Kyiv and supply chain issues have weighed on advertising businesses.

At the same time, Apple’s iPhone privacy changes and inflation have hampered marketers.

Pinterest, Snap, Google foresees headwinds

Furthermore, Pinterest expects Q2 revenue to jump about 11.00% year-over-year, suggesting about $680.00 million in sales. However, the outlook came in lower than the market expectations of $693.00 million.

The social media giant explained that the weakness came from the persisting macroeconomic issues. Eventually, it echoed the same commentary from larger competitor Meta Platforms Inc.

Last week, rival Snap also mentioned it could continue to face a challenging operating environment. It anticipated its customers to pause campaigns or reduce advertising budgets due to the mounting prices.

Similarly, Google’s YouTube also noted the ongoing platform-related headwinds, resulting in lower ad results. As a result, the video-sharing platform’s ad revenue was $6.87 billion, trailing the $7.51 billion estimated.