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(Bloomberg) — Pinterest Inc. projected revenue for the current quarter that fell short of analysts’ estimates, a sign that the search platform’s advertising business may not be growing as quickly as expected despite the upcoming holiday shopping season. The stock plunged more than 19% in after-hours trading.
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The San Francisco-based company expects revenue to be $1.31 billion to $1.34 billion for the fourth quarter, according to a statement published Tuesday. The midpoint of that range is below the average analyst estimate of $1.34 billion, according to data compiled by Bloomberg.
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Pinterest Chief Financial Officer Julia Brau Donnelly said during a call with investors on Tuesday that tariffs impacting the home furnishings category could have a negative impact on the company’s holiday-quarter revenue.
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Pinterest, which people use to find ideas for recipes, fashion and home decor, posted third-quarter sales of $1.05 billion, which was in-line with expectations. User growth in the US and Canada, the company’s most lucrative market, was up just 1 million users over the prior quarter.
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The company makes almost all of its revenue from advertising, and has leaned heavily into its role as a “visual search” engine to help people find inspiration for topics like fashion and home improvement projects. The company just launched “Pinterest Assistant” last week, marketed as the first AI-powered, visual-first collaborator for online shopping. Users are able to talk to the assistant about their shopping needs in an effort to mirror the real-life shopping experience.
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“Our investments in AI and product innovation are paying off,” said Chief Executive Officer Bill Ready in the statement. “We’ve become a leader in visual search and have effectively turned our platform into an AI-powered shopping assistant for 600 million consumers.”
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Pinterest reported 600 million monthly active users for the three-month period that ended on Sept. 30, beating analyst estimates of 590 million total users.
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But the service had just 103 million monthly users in the US and Canada, barely up from 102 million users in the prior quarter. Even though users in Canada and the US make up just 17% of the site’s global base, they generate roughly 75% of Pinterest’s revenue.
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(Updates to include comment from earnings call in the third paragraph)
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