(Reuters) -Pinterest Inc’s first-quarter revenue and profit surpassed market estimates on Wednesday as the image-sharing platform benefited from higher ad spending by businesses, sending its shares 9% higher in extended trading.
Like its peers, Pinterest posted strong user growth in the early months of the pandemic as home-bound consumers sought projects to keep themselves entertained. But that boom has faded with the easing of lockdowns, prompting the company to double down on efforts to grow its ad business.
Revenue rose 18% in the first three months of the year to $575 million, driven by strength in the retail advertising and international businesses. Analysts on average were expecting a figure of $572.5 million, according to Refinitiv IBES data.
“We benefited significantly from strength in retail. And I would imagine that based on what we’re seeing that, that will continue,” Chief Financial Officer Todd Morgenfeld said on a post-earnings call.
Company executives also pointed to user growth in the younger demographic, especially Gen Z.
While the company’s overall monthly active users (MAUs) declined 9% to 433 million, it posted a rise in mobile app MAUs, the group which accounts for most its revenue.
UKRAINE CONFLICT IMPACT
Pinterest’s 11% revenue growth projection for the second quarter was, however, below market expectations. The company blamed the weakness on the Ukraine crisis, echoing commentary from larger peer Meta Platforms Inc.
Recent earnings reports from Google parent Alphabet Inc and Snap Inc have also highlighted the impact of the Ukraine conflict on digital ad spending.
On an adjusted basis, Pinterest earned 10 cents per share in the first quarter, exceeding Wall Street estimates of 4 cents per share.
(Reporting by Sonia Cheema and Tiyashi Datta; Editing by Aditya Soni)