Pinterest Shares Fall After Reporting Lukewarm Sales Guidance Despite Beating Earnings

Pinterest shares fell 7% in extended trading on Tuesday after the company reported better-than-expected earnings and revenue but issued lukewarm sales guidance.

Here's how the company did, compared to analysts' consensus estimates from LSEG:

Earnings per share: 43 cents adjusted vs. 36 cents expected

Revenue: $1.18 billion vs. $1.15 billion expected

Sales rose 18% from $998.2 million a year earlier, while the company's net loss for the period was $47 million, a loss of 8 cents per share, Pinterest said in a statement. The social media company posted net income of $38.76 million, or 6 cents per share, a year ago.

"Our Q2 results reflect the scale and strength of our platform," Pinterest CEO Bill Ready said in the release.

Revenue this quarter should come in between $1.19 billion and $1.21 billion. The midpoint of $1.2 billion was in line with analyst expectations. The guidance "assumes a modest headwind from foreign exchange based on current spot rates," Pinterest said.

Pinterest finance chief Julia Donnelly told analysts during an earnings call that the World Cup ending and Amazon 's Prime Day moving to the second quarter impacted brand spending and thus third-quarter guidance.

"The shift of Prime Day from Q3 last year into Q2 this year resulted in an approximately half-point benefit to Q2 and will represent a roughly half-point headwind to Q3 as multiple brands and retailers increase their advertising spend around that moment," Donnelly said. "Lastly, in Q2, we saw a nearly one-point benefit from World Cup-related spend that will not repeat in Q3."

Adjusted earnings for the quarter of $311 million, topped analyst projections of $270 million, according to StreetAccount.

The company's global monthly active users, or MAUs, jumped 11% year-over-year to 640 million, beating estimates of 635 million.

Global average revenue per user, or ARPU, was $1.86, ahead of projections.

During the earnings call, Ready also discussed Pinterest's use of freely available, so-called open-weight artificial intelligence models, a topic of rising interest in corporate board rooms as companies increasingly focus on AI's high costs.

"At this point, any CEO that's not taking advantage of open source models is almost certainly wasting a lot of their shareholders' money," Ready said. "And especially that's true now that you have hyperscalers making it really easy to take advantage of that open source in their their secure environment, so that you can leverage the open source in your own cloud environment, so that it's safe, it's secure."

As Pinterest continues using a mixture of both proprietary and open-weight AI models, Donnelly explained to analysts how the company manages AI-related costs using "model routing infrastructure." This lets Pinterest use "higher-cost models for complex work while using lighter, lower-cost options for routine tasks," she said.

Still, Donnelly noted that "As AI adoption continues to grow, we expect both AI-related compute and token spend to grow over time."

"We see that these investments are ROI positive, and that investment growth is planned and included in our outlook that we've provided," Donnelly said.