By Vansh Agarwal and Shreyaa Narayanan
(Reuters) -Pinterest Inc beat estimates for quarterly revenue on Thursday, making it a rare bright spot in an otherwise downbeat social media sector and sending the image-sharing platform’s shares 15% higher in after-hours trading.
A decline in advertising budgets because of decades-high inflation has roiled earnings of online players from Alphabet Inc to Meta Platforms Inc and Snap Inc.
But Pinterest’s results show its ads business stayed resilient amid the wider industry downturn and people were still engaging with its image-sharing platform for inspiration to take up activities such as home renovation and recipe-based cooking.
Pinterest returned to user growth in the July-September period after three straight quarters of decline, with its global monthly active users rising 2.8% sequentially to 445 million, above Factset estimates of 437.4 million.
Part of the growth was fueled by an update to Apple Inc’s iOS 16 in September, finance chief Todd Morgenfeld said on a call with analysts.
He added the resilience in ad sales was driven by the fact that a large portion of Pinterest’s ad sales come from e-commerce and consumer goods.
“What hurt Pinterest before (during the pandemic) is helping them now,” said D.A. Davidson analyst Thomas Forte, referring to the company’s focus on retail and consumer goods.
“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.”
Pinterest’s third-quarter revenue rose 8% to $684.6 million. While the pace of growth was its slowest in nearly two years, the figure came in well above analysts’ average estimate of $666.7 million, according to Refinitiv.
The company’s global average revenue per user jumped 11% to $1.56. It earned an adjusted profit of $0.11 per share, above analyst estimates of $0.06 per share.
(Reporting by Vansh Agarwal, Shreyaa Narayanan and Eva Matthwes in Bengaluru; Editing by Anil D’Silva and Shinjini Ganguli)