Pinterest leverages AI tools to outpace revenue expectations

Pinterest‘s AI-powered advertising tools are driving stronger-than-expected revenue growth, highlighting how visual discovery platforms are capitalizing on artificial intelligence to attract advertisers despite economic uncertainties. The company’s focus on direct response ads and its growing Gen Z user base are proving particularly valuable as it navigates a complex advertising landscape affected by both international trade tensions and changing import regulations.

The big picture: Pinterest forecast second-quarter revenue between $960 million and $980 million, exceeding Wall Street estimates of $966.3 million and sending shares soaring 16% in after-hours trading.

• The company’s first-quarter revenue reached $855 million, beating analyst expectations of $846.6 million.
• Monthly active users grew 10% year-over-year to 570 million, surpassing the expected 564 million.

Behind the numbers: Despite broader economic uncertainty affecting some competitors, Pinterest’s emphasis on direct response advertising is continuing to drive advertiser spending.

• The platform’s “Performance+” automation and AI tools, which create personalized ad campaigns, are making Pinterest increasingly attractive to advertisers.
• The company’s largest and fastest-growing user demographic is Gen Z, a coveted audience for marketers.

What they’re saying: Finance chief Julia Donnelly acknowledged that Pinterest is “not immune to the macro environment” but expressed confidence in the company’s “multiple revenue initiatives.”

• “We have observed a reduction in spend from Asia-based e-commerce retailers in the U.S., given the change in the de minimis exemption; however, we have also seen a geographic diversification,” Donnelly noted.
• eMarketer senior director Jeremy Goldman said the quarterly results show Pinterest “can sustain momentum without the holiday tailwind.”

Expanding partnerships: CEO Bill Ready announced a new third-party advertising deal with Magnite to help the company “aggregate smaller sources” of advertising demand.

• This arrangement complements existing partnerships with major platforms Google and Amazon.

Industry context: Pinterest’s strong performance stands in contrast to mixed results across social media companies.

• Meta and Reddit exceeded revenue expectations in the first quarter.
• Snap declined to issue a quarterly forecast, citing economic uncertainty.

Worth noting: Pinterest’s adjusted earnings per share of 23 cents missed analyst expectations of 26 cents despite the revenue beat.