By Jaspreet Singh
(Reuters) -Pinterest forecast current-quarter revenue above Wall Street estimates on Thursday, signaling its artificial intelligence tools are boosting advertising spend on the platform and sending its shares up 16% in extended trading.
Despite uncertainty over marketing budgets, the company’s emphasis on direct response ads — designed to prompt specific actions like shopping, app downloads or website visits — continues to drive ad spend.
Pinterest’s results came after the termination of a duty-free import loophole in the U.S., which, combined with deepening trade tensions, has constrained ad budgets for some social media platforms.
Finance chief Julia Donnelly said on the post-earnings call that Pinterest is “not immune to the macro environment,” but added that the company is confident in its “multiple revenue initiatives.”
“We have observed a reduction in spend from Asia-based e-commerce retailers in the U.S., given the change in the de minimis exemption; however, we have also seen a geographic diversification from some of those Asia-based retailers to our European and rest-of-world user regions,” Donnelly added.
Rivals Facebook-parent Meta and Reddit topped revenue expectations in the first quarter. In contrast, Snap said that it would not issue a quarterly forecast due to economic uncertainty.
Pinterest is becoming increasingly attractive to advertisers due to its largest and fastest growing user cohort, Gen Z, along with its “Performance+” automation and AI tools for creating personalized ad campaigns.
CEO Bill Ready also announced a third-party ad deal with Magnite to help the company “aggregate smaller sources” of advertising demand. The company already has such deals with Google and Amazon.com.
Pinterest’s global monthly active users rose 10% to 570 million in the first quarter, exceeding analysts’ average estimate of 564 million, according to data compiled by LSEG.
The quarterly results show the company “can sustain momentum without the holiday tailwind,” eMarketer senior director Jeremy Goldman said.
Pinterest forecast second-quarter revenue of $960 million to $980 million, above estimates of $966.3 million.
Revenue of $855 million for the first quarter beat estimates of $846.6 million. But adjusted earnings per share of 23 cents missed estimates of 26 cents.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Alan Barona)