Pinterest Gains After Reporting Profit That Tops Estimates

(Bloomberg) -- Pinterest Inc. rose Thursday after the company reported stronger-than-expected profit and revenue that met analysts’ estimates.

Still, the search-and-discovery platform’s user base declined for the second consecutive quarter, and the company gave a revenue forecast for the holiday period that fell short of estimates due to Covid-related issues. 

Third-quarter net income was $94 million, or 14 cents a share, compared with a loss of $94.2 million, or 16 cents, a year earlier, the San Francisco-based company said Thursday in a statement. Profit, excluding some items, was 28 cents a share, topping analysts’ average estimate of 22 cents, according to data compiled by Bloomberg.

Pinterest reported sales increased 43% to $633 million in the quarter ended Sept. 30, in line with analysts’ estimates. 

Chief Financial Officer Todd Morgenfeld said ad tracking changes from Apple Inc. didn’t have a material impact on Pinterest’s business in the third quarter, in part because the service uses a lot of its own data around user interests to target ads. Revenue was affected by a few percentage points by lower demand in advertising for consumer packaged goods because of pandemic-related issues, like the supply chain disruptions, Morgenfeld added.

Shares gained about 5% in extended trading after closing at $44.64 in New York. The stock has declined 34% this year.

Pinterest originally benefitted from global lockdowns driven by the Covid-19 pandemic as people stayed home looking for things to do around the house, like decorating, gardening and cooking. Pinterest’s global user base grew to 483 million users in the first quarter -- an increase of almost 43% in the five quarters since the end of 2019.

But the company also suffered as the intensity of the pandemic waned and people started returning to other activities. The company’s user base declined in the April-June period from the previous quarter for the first time in three years.

Pinterest reported total monthly users gained less than 1% to 444 million in the third quarter from a year ago. The number reflected a decline of 10 million users from the previous three-month period. Analysts projected about 463 million monthly users, according to data compiled by Bloomberg. 

The smaller user base is the result of Covid-related lockdowns easing, as people return to work, school and other activities outside the home, the company said in a letter to shareholders. The “pandemic unwind” meant fewer people are searching for ideas on topics such as home decor, gardening and cooking. Pinterest provided a mid-quarter update in its letter, saying the service had 447 million total users as of Nov. 2.

The company said revenue growth will be in the “high teens” in the period ending in December, far short of the analysts’ average estimate of 26% sales growth.

Pinterest stock jumped in mid-October when Bloomberg News reported that PayPal Holdings Inc. was considering a $45 billion acquisition of the company. PayPal said Oct. 25 it wasn’t pursuing the deal. Morgenfeld declined to comment on whether Pinterest was holding acquisitions talks with PayPal or any other suitors. 

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