Pinterest shares fall as revenue, earnings benefit from ads and user engagement increase

By Jon Swartz

Pinterest Inc.'s stock were volatile in after hours trading following a surge in advertising, user engagement and some AI bets.

Shares of Pinterest (PINS) initially spiked 9% in extended trading Tuesday after the company reported quarterly results that topped analysts' revenue and earnings estimates, but soon sank to a 4% loss. The stock ended the after-hours session down 2.8%.

"Users are coming back more often and engaging more deeply," Chief Executive Bill Ready said in an interview. Global monthly active users increased 8% year over year to 465 million -- the best user growth performance in two years.

At the same time, enhanced AI capabilities helped match consumers with shoppable content that is most relevant to them, Ready said.

Thanks to a focus on cost efficiencies, Pinterest returned to adjusted EBITDA margin expansion in Q2, added Julia Brau Donnelly, who joined Pinterest as chief financial officer from Wayfair Inc. (W).

The image-sharing platform reported a fiscal second-quarter net loss of $34.9 million, or 5 cents a share, compared with a net loss of $43.1 million, or 7 cents a share, in the year-ago quarter. Adjusted earnings were 21 cents a share.

Revenue was $708 million, compared with $666 million a year ago. Analysts surveyed by FactSet had expected on average net earnings of 12 cents a share on revenue of $696 million.

Pinterest provided third-quarter revenue guidance in the high single-digits year over year without providing specific numbers. Analysts polled by FactSet are forecasting $737 million.

Like Alphabet Inc.'s (GOOGL)(GOOGL) Google and Facebook parent Meta Platforms Inc. (META) before it, Pinterest benefitted from a surge in advertising and user engagement.

Shares of Pinterest have gained 19% this year, while the broader S&P 500 index is also up 19% in 2023.

-Jon Swartz

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08-02-23 0757ET

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