Pinterest shares plunged as much as 20% in after-hours on Thursday after the social media company reported a fourth-quarter earnings miss and issued weak guidance.
Here’s how the company did, compared to analysts’ consensus estimates from LSEG:
- Earnings per share: 67 cents adjusted vs. 69 cents expected
- Revenue: $1.32 billion vs. $1.33 billion expected
Pinterest said it expects first-quarter sales to come in between $951 million to $971 million, trailing analyst estimates of $980 million.
This is the second quarter in a row in which Pinterest shed a fifth of its value after delivering Wall Street disappointing results.
The company’s fourth-quarter sales rose 14% year-to-year. Net income for the fourth quarter came in at $277 million, down 85% from a year prior, when net income was $1.85 billion and included a deferred tax benefit.
Fourth quarter sales in the U.S. and Canada region came in at $979 million, which was ahead of StreetAccount’s estimates of $973 million.
Pinterest recorded $541.5 million in adjusted earnings before interest, taxes, depreciation and amortization, or EBIDTA. That figure fell short of the $550 million that analysts were projecting.
The company said that fourth-quarter global monthly active users jumped 12% year-over-year to 619 million. Wall Street was expecting that figure to be 613 million.
Pinterest CEO Bill Ready told analysts during an earnings call that the company is “not satisfied with our Q4 revenue performance, and believe it does not reflect what Pinterest can deliver over time.”
Ready said that Pinterest “absorbed an exogenous shock this year related to tariffs” that affected the company’s top retail advertisers, thus hurting the social media firm’s online ad business. He later added that while Pinterest sees “opportunity over the long term” from large advertisers, “the near-term outlook for this cohort on our platform remains pressured given these headwinds.”
Pinterest finance chief Julia Donnelly said during the earnings call that the hiccups affecting large retailers “created a more meaningful headwind than we expected.” Those same big global retailers also pulled back on ad spend in Europe, she said.
“Looking ahead to Q1, we expect these headwinds will continue and may become slightly more pronounced in Q1, including in the UK and in Europe,” Donnelly said.
Ready said the company plans to more heavily court small-to-medium-sized and international advertisers so its core online ad business doesn’t rely so heavily on the bigger retailers.
“Most importantly, we need to further broaden our revenue mix and accelerate the next phase of our sales and go-to-market transformation,” Ready said.
Pinterest revealed in January that it would lay off less than 15% of its workforce and reduce its office space in an effort to shift resources to technical teams prioritizing the development of “AI-powered products and capabilities.”
The company then fired staffers who built a tool to quantify the layoffs, and Ready admonished them during a companywide meeting, saying that “there’s a clear line between constructive debate and behavior that’s obstructionist,” CNBC reported.
Speaking about the layoffs, Donnelly told analysts that Pinterest’s January restructuring and ongoing sales unit overhaul “may cause some near term disruption, which we factored into our guidance to be prudent.”
