Reuters-Piny Inc beat estimates for quarterly revenue on Thursday, making it a rare bright spot in an otherwise downbeat social media sector and sending the platform's shares 15 per cent higher in after-hours trading.
A decline in advertising budgets because of decades-high inflation has roiled the earnings of online players, from Alphabet Inc to Meta Platforms Inc. and Snap Inc.
Pinterest's ads business remained 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.
After three straight quarters of decline, Pinterest returned to user growth in July-September, with its global monthly active users rising by 2.8 per cent to 445 million, above Factset estimates of 437.4 million.
Finance chief Todd Morgenfeld said on a call with analysts that part of the growth was fueled by an update to Apple Inc's iOS 16 in September.
He said that a large portion of Pinterest's ads sales come from e-commerce and consumer goods, which is a reason for the resilience in ad sales.
What hurt Pinterest before during the Pandemic is helping them now, said D.A. Thomas Forte, Davidson's analyst said, was referring to the company's focus on retail and consumer goods.
There is a bigger opportunity going forward to drive incremental engagement and get monthly active users growing again and improve monetization since growth is slowing. Pinterest's third-quarter revenue went up 8 per cent to $684.6 million. The growth rate was its slowest in nearly two years, but it came in well above analysts' average estimate of $666.7 million, according to Refinitiv.
The average revenue per user of the company jumped 11 per cent to $1.56. It earned an adjusted profit of $0.11 per share, above analyst estimates of $0.06 per share.