On Monday, February 6, image-sharing site Pinterest Inc reported quarterly revenue below expectations, joining competitors Alphabet and Snap in sounding the alarm on a still-weak ad market.
Shares of the business, which forecasted a modest increase in revenue for the first quarter, pared losses and were down 3% in extended trade after plummeting 15%.
High inflation and aggressive interest rate rises by global central banks have dampened the economic outlook over the past several months, causing advertisers to reduce their marketing spending.
After a difficult 2022 in which advertising-reliant firms faced declining budgets and plummeting stock values, this week’s fourth-quarter data from Alphabet to Meta Platforms indicate that they are not yet out of the woods.
Pinterest projected first-quarter revenue growth in the low-single digits, compared to Refinitiv statistics indicating a growth rate of about 7%.
Chief Financial Officer Todd Morgenfeld, who is scheduled to depart the firm on 1 July, cautioned that Pinterest anticipates US small and medium business and mid-market advertisers to continue to experience “outsized issues” in the first quarter.
Morgenfeld noted that the firm has adopted cost-cutting measures, such as a decrease in recruitment employees and the closure of certain smaller, underutilized office spaces, to reduce its spending profile in 2023.
“The greater story is on the cost-cutting side, where we anticipate the already announced job cutbacks to enable considerable margin increase through 2023,” said CFRA Research analyst Angelo Zino.
Monthly active users (MAUs) for the corporation increased by 4% to 450 million, but fell short of expectations of 452.3 million.
Over the next 12 months, Pinterest’s board of directors has authorized the buyback of up to $500 million worth of its Class A common shares.
The company’s sales for the quarter ending December 31 increased by 4% to $877 million. On average, analysts had anticipated $886,3 million.
Pinterest earned a profit of 29 cents per share excluding adjustments, compared to analyst projections of 27 cents per share.