San Francisco, California – Pinterest’s fourth-quarter revenue forecast fell short of expectations, disappointing investors hoping for a boost during the holiday shopping season. This news comes as major online advertising companies like Google-parent Alphabet, Meta Platforms, Reddit, and Snap all exceeded their third-quarter revenue forecasts, driven by strong ad spending.

The image-sharing platform continues to face tough competition from Meta-owned Facebook and Instagram, which are preferred by advertisers due to their larger user bases. Despite this, Pinterest recently introduced its Performance+ suite in October, offering advertisers new AI tools and automation features to improve user targeting on the platform.

During a post-earnings call, Pinterest’s CFO Julia Donnelly noted that the Performance+ suite is still in the early stages of rollout, with many advertisers hesitant to shift budgets or adopt new features during the peak holiday season. Donnelly also mentioned a decline in advertising from food and beverage companies, contributing to softer-than-expected revenue forecasts for the fourth quarter.

In response to the revenue outlook, Pinterest announced a new stock buyback program of up to $2 billion, canceling a previous program with $500 million left for repurchase by September 2023. The company expects fourth-quarter revenue to range between $1.13 billion and $1.15 billion, aligning with analysts’ average estimate of $1.14 billion.

Despite the challenges, Pinterest reported a revenue growth of 18% to $898.4 million in the third quarter, surpassing estimates of $896.4 million. Adjusted profit per share for the quarter also exceeded expectations at 40 cents, compared to estimates of 34 cents. Additionally, global monthly active users on the platform increased by 11% to 537 million from July to September, beating estimates of 531.5 million.

Analysts note that Pinterest’s expenses have significantly risen, reflecting the company’s ongoing investments in AI talent and product initiatives. This increase in expenses signals that even as a smaller player in the social media landscape, Pinterest must prioritize cost management and operational efficiency to remain competitive with larger platforms.

Overall, Pinterest’s performance in the third quarter demonstrates its resilience in the ever-evolving digital advertising market, as smaller competitors continue to gain traction with advertisers seeking alternative platforms outside of the dominant players like Meta-owned properties.