Pinterest’s fourth-quarter revenue outlook disappoints amid European regulatory pressure
Key Facts
The revenue range implies annual growth of 8% to 12%, according to the company’s guidance in its earnings release. The outlook follows revenue growth of 12% in the third quarter, compared with 18% in the second quarter. Pinterest announced its results and guidance on October 29. In after-hours trading following the announcement, the stock fell 9.6%, according to Investing.com.
Third-quarter revenue was $1.17 billion, below the average analyst estimate of $1.21 billion, while adjusted earnings per share were $0.46, compared with an expected $0.49, according to Investing.com. Meanwhile, global monthly active users rose 10% year over year to a record 661 million. The figures show the user base expanding as revenue growth slows, in a quarter when the company faced several headwinds. The chief executive did not attribute the slowdown solely to the European factor, but detailed the effects of timing and currency factors alongside the regulatory change. Global revenue growth was 12% in the third quarter, after 18% in the second quarter, he said on the earnings call.
The chief executive said 3 percentage points of the growth slowdown were linked to the World Cup, Prime Day timing and foreign exchange, while another 3 percentage points resulted from the removal of the de minimis exemption in Europe. He said the change led some cross-border sellers to cut their spending more than the company had expected. The impact of those sellers had stabilized by the fourth quarter, he said, but would continue to weigh on international revenue growth during the period. The company does not expect their spending to return during the holiday season, he added. The regulatory factor therefore remains a drag on near-term guidance, alongside the factors that reduced third-quarter growth.
Regional differences were clear in average revenue per user: it was $1.21 in Europe in the third quarter, down 7% year over year, compared with $8.38 in the United States and Canada, up 10%. Management said the growth rate of underlying European activity, excluding cross-border sellers, halved in the third quarter compared with the second. But it said growth in that activity had accelerated since the start of the fourth quarter to a level above that of the second quarter. In the United States and Canada, revenue has grown at a mid-teens pace since the start of the year, accelerating from 2025. These indicators reflect uneven geographic performance, with sellers continuing to weigh on international activity despite an improvement in the pace of underlying European activity.
Pinterest shares fell in after-hours trading following the October 29 announcement, but the prior daily closes do not measure that reaction. The stock closed at $21.23 on October 26, then $20.58 on October 27 and $20.92 on October 28, according to EL7 data. The October 28 close came a day before the results and guidance were released. The 9.6% decline occurred in trading after Thursday’s announcement, according to Investing.com. Management expects cross-border sellers to continue weighing on international revenue growth in the fourth quarter, while saying growth in underlying European activity had exceeded the second-quarter level since the start of that period.