Pinterest reports strong revenue growth on success of AI ad tools

Pinterest’s fourth quarter earnings and first quarter forecast exceeded market expectations, driven by successful AI-powered advertising tools and record user growth.

Key performance metrics: Pinterest delivered strong fourth quarter results and an optimistic first quarter outlook, demonstrating momentum in both user growth and revenue generation.

• Global monthly active users reached an all-time high of 553 million, surpassing analyst estimates of 545.8 million and representing an 11% year-over-year increase
• Fourth quarter revenue grew 18% to $1.15 billion, beating market expectations of $1.14 billion
• First quarter revenue is projected between $837 million and $852 million, above consensus estimates of $832.8 million

AI-driven advertising innovation: Pinterest’s investment in artificial intelligence tools is attracting advertisers and driving revenue growth.

• The Performance+ suite uses AI to help advertisers better target users through automation features
• Shoppable content and rising Gen Z user engagement are making the platform increasingly attractive to marketers
• E-commerce merchants can integrate products through platform-specific extensions for services like Shopify and Adobe Commerce

Strategic partnerships: Third-party advertising agreements are helping Pinterest diversify its revenue streams.

• Expanding partnerships with Google and Amazon are contributing to revenue growth
• These collaborations help Pinterest overcome its historical dependence on North American advertising dollars
• The platform is working to accelerate the execution of these third-party integrations

Financial outlook: The company provided strong guidance for adjusted earnings while noting one temporary setback.

• First quarter adjusted core earnings are forecast between $155 million and $170 million, exceeding analyst estimates of $140.8 million
• Fourth quarter adjusted profit per share of 56 cents missed estimates of 65 cents due to tax adjustments
• CEO Bill Ready emphasized that the company’s strategy is succeeding, with increased user engagement and platform actionability

Market reaction and growth potential: While Pinterest shows promising growth, analysts identify areas for continued expansion.

• The company’s shares jumped 19% in extended trading following the earnings announcement
• Industry experts note that Pinterest’s global engagement remains strong, though advertising revenue is still heavily concentrated in North America
• The success of third-party advertising integrations could be crucial for future revenue diversification, despite historical challenges in implementation speed