Pinterest stock takes a hit after missing Q4 revenue expectations

Pinterest, the popular online image board, recently released its fourth quarter earnings report for 2022, revealing mixed results and a weak outlook for the first quarter of 2023.

The company's stock saw a dip in extended trading after missing analyst expectations for revenue and issuing a light forecast for the first quarter. In this article, we'll take a closer look at Pinterest's earnings report, its impact on the company's stock, and the state of the digital advertising industry.

Revenue and Earnings: A Missed Opportunity

Pinterest reported revenue of $877 million for the fourth quarter of 2022, missing the expected amount of $886.3 million. The company also recorded earnings of 29 cents per share, beating the expected 27 cents. However, these results were not enough to prevent a dip in Pinterest's stock in extended trading.

In contrast, the company's overall sales for 2022 saw a 9% year-over-year increase to $2.8 billion. Pinterest also reported that its global monthly active users increased by 4% year-over-year to 450 million, with average revenue per user (ARPU) in the US and Canada region rising 6% in the fourth quarter to $7.60.

Light Outlook for the First Quarter of 2023

Pinterest's earnings report comes with a weak outlook for the first quarter of 2023, with the company expecting sales to increase by "low single digits" compared to the same period last year. Analysts were expecting growth of 6.9% to $614.8 million, which is significantly higher than Pinterest's outlook.

In response to this outlook, Pinterest CEO Bill Ready stated, “While the industry as a whole is facing headwinds, we are adapting quickly to a changing macro environment and are committed to creating a more positive online experience for our users and advertisers.”

Shaking Up the Executive Team

Along with the earnings report, Pinterest announced that its CFO and head of business operations, Todd Morgenfeld, will leave the company on July 1, 2023. Additionally, the company's chief marketing and communications officer, Andréa Mallard, and its chief revenue officer, Bill Watkins, will now report directly to CEO Bill Ready.

These changes come as Pinterest recorded a net income of $17 million in the fourth quarter but logged a net loss of $96 million for the full year. The company also laid off around 150 employees last week, joining the growing list of tech companies like Meta, Alphabet, and Salesforce that have recently fired workers.

State of the Digital Advertising Industry

Pinterest's earnings report follows many ad-supported companies reporting tepid results, with Meta reporting a 4% year-over-year drop in sales to $32.2 billion, and Alphabet's Google ad business recording a 3.6% drop in revenue to $59 billion in the fourth quarter of 2022. Meanwhile, revenue in Alphabet's YouTube unit fell 8% year-over-year to $7.96 billion in the fourth quarter.

Snap also reported slightly higher sales in the fourth quarter compared to the same period last year, but missed analyst expectations of $1.31 billion. The only bright spot in the digital advertising industry was Amazon's digital advertising unit, which saw sales jump 19% to $11.6 billion.

Pinterest's fourth quarter earnings report reveals mixed results and a weak outlook for the first quarter of 2023. The company's revenue missed analyst expectations, and its net loss for the full year raises concerns.

However, Pinterest's global monthly active users and ARPU in the US and Canada region increased, offering some hope for the company's