pinterest Shares fell as much as 20% in after-hours trading Thursday, with CEO Bill Ready saying the company had “absorbed this year’s exogenous shock related to tariffs” that affected major retail advertisers.
The company reported that its fourth quarter results were broadly in line with expectations, with revenue broadly in line with expectations, but issued a weak outlook for the current fiscal year.
Here’s how the company performed compared to LSEG’s analyst consensus forecasts:
Earnings per share: 67 cents adjusted, 69 cents expected; Revenue: $1.32 billion, $1.33 billion expected.
Reddy told analysts on Thursday that the company was “not satisfied with our fourth quarter revenue performance and believes this number does not reflect what Pinterest can deliver over the long term.”
The company’s fourth quarter sales increased 14% compared to the same period last year. Net income for the fourth quarter was $277 million, an 85% decrease compared to net income of $1.85 billion, including deferred tax benefits, in the same period last year.
This is the second consecutive quarter that Pinterest, which has disappointed Wall Street, has seen its value cut by a fifth. Julia Donnelly, Pinterest’s head of finance, said on a conference call with analysts that the impact of tariffs on large retailers “created more significant headwinds than we anticipated.” Those retailers have also cut advertising costs in Europe, she said.
The retail industry is reeling from increased shipping fees due to President Donald Trump’s ongoing trade war. The trade war has also led to companies charging higher prices to customers and reducing the number of products they can bring to market. In addition to implementing job cuts, the retail industry has also scaled back advertising to deal with ongoing trade issues.
Pinterest said it expects first-quarter revenue to be between $951 million and $971 million, lower than analysts’ expectations of $980 million.
“We expect these headwinds to continue into the first quarter and may become slightly more pronounced in the first quarter, including in the UK and Europe,” Donnelly said.
Pinterest posted adjusted earnings before interest, taxes, depreciation, and amortization (EBIDTA) of $541.5 million. The figure was lower than the $550 million that analysts had expected.
While Pinterest sees “long-term opportunities” from large advertisers, Reddy said, “Given these headwinds, the near-term outlook for this demographic on our platform remains under pressure.”
Mr. Reddy said the company intends to take tougher action against small and medium-sized advertisers and international advertisers to make its core online advertising business less dependent on large retailers.
“Most importantly, we need to further expand our revenue mix and accelerate the next phase of our sales and go-to-market transformation,” he said.
The disappointing results come after the company announced in January that it would lay off less than 15% of its employees and reduce its office space in order to shift resources to its technology team, which prioritizes developing “AI-powered products and features.”
Pinterest has since fired the staffer who developed the tool to quantify layoffs, and Reddy admonished them at a company-wide meeting, telling them “there is a clear line between constructive discussion and disruptive behavior,” CNBC reported.
Mr Donnelly said on Thursday that the January restructuring and ongoing review of the sales force “could be disruptive in the short term and we have factored that into our prudent guidance”.
Despite this result and the gloomy outlook, Pinterest announced that its global monthly active users rose 12% year over year to 619 million in the fourth quarter, a record high. Wall Street had expected the number to be 613 million.
Fourth-quarter sales in the United States and Canada region were $979 million, beating StreetAccount estimates of $973 million.
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