Pinterest's Revenue Surpasses Its Competitors' in Order to Stand Out in the Social Media Gloom

Pinterest Inc. beat quarterly sales estimates on Thursday, making it a rare bright spot in the generally bleak social media sector and sending the image-sharing platform's shares 15% higher after hours.

The income of online companies ranging from Alphabet (NASDAQ:GOOGL) Inc. to Meta Platforms Inc. and Snap Inc. has been badly impacted by a decline in advertising budgets caused by decades-long inflation (NYSE:SNAP).

Despite the general industry slowdown, Pinterest's (NYSE:PINS) advertising revenue remained robust, and customers continued to use its image-sharing platform to find inspiration for activities such as home repair and recipe-based cooking.

Global monthly active Pinterest users climbed 2.8% sequentially to 445 million, above Factset's expectation of 437,4 million.

On a conference call with analysts, Apple Inc's (NASDAQ:AAPL) chief financial officer Todd Morgenfeld indicated that the September release of iOS 16 helped the company's growth.

According to him, the majority of Pinterest's ad sales come from e-commerce and consumer goods, which has contributed to the stability of ad revenues.

"What harmed Pinterest previously (during the epidemic) is helping them now," said Thomas Forte, an analyst at D.A. Davidson, in reference to the company's focus on retail and consumer products.

Since growth is decelerating, the greatest opportunity for the future is to devise a plan to generate incremental engagement on the platform, raise the number of monthly active users, and increase monetization.

In the third quarter, Pinterest's revenue climbed by 8% to $684,6 million. According to Refinitiv, while the growth rate was the slowest in more than two years, the total came in well above the average analyst projection of $666.8 million.

The average global revenue per user rose 11% to $1.56. It produced an adjusted profit per share of $0.11, exceeding analyst expectations of $0.06.