Pinterest shares plunged as much as 20% after hours Thursday as CEO Bill Ready said the company “absorbed an exogenous shock this year related to tariffs” that affected top retail advertisers.
The company reported a fourth-quarter earnings miss, revenue that was roughly in line with expectations and issued weak guidance for the current period.
Here’s how the company did, compared to analysts’ consensus estimates from LSEG:
Earnings per share: 67 cents adjusted vs. 69 cents expectedRevenue: $1.32 billion vs. $1.33 billion expected
Ready told analysts on Thursday that the company is “not satisfied with our Q4 revenue performance, and believe it does not reflect what Pinterest can deliver over time.”
The company’s fourth-quarter sales rose 14% year-to-year. Net income for the fourth quarter came in at $277 million, down 85% from a year prior, when net income was $1.85 billion and included a deferred tax benefit.
This is the second quarter in a row in which Pinterest shed a fifth of its value after delivering Wall Street disappointing results. The impact of tariffs on large retailers “created a more meaningful headwind than we expected,” Pinterest finance chief Julia Donnelly said on the call with analysts. Those retailers also pulled back on ad spend in Europe, she said.
The retail sector has been reeling from President Donald Trump’s ongoing trade war, which raised the price of shipping costs, leading to companies charging customers higher prices and a reduction in the number of products they can put on the market. Besides implementing layoffs, the retail sector also pulled back on advertising to deal with the ongoing trade issues.
Pinterest said it expects first-quarter sales to come in between $951 million to $971 million, trailing analyst estimates of $980 million.
“Looking ahead to Q1, we expect these headwinds will continue and may become slightly more pronounced in Q1, including in the U.K. and in Europe,” Donnelly said.
Pinterest recorded $541.5 million in adjusted earnings before interest, taxes, depreciation and amortization, or EBIDTA. That figure fell short of the $550 million that analysts were projecting.
While Pinterest sees “opportunity over the long term” from large advertisers, Ready said “the near-term outlook for this cohort on our platform remains pressured given these headwinds.”
The company plans to more heavily court small-to-medium-sized and international advertisers so its core online ad business doesn’t rely so heavily on large retailers, Ready said.
“Most importantly, we need to further broaden our revenue mix and accelerate the next phase of our sales and go-to-market transformation,” he said.
The disappointing results come after the company in January announced that it would lay off less than 15% of its workforce and reduce its office space in an effort to shift resources to technical teams prioritizing the development of “AI-powered products and capabilities.”
Pinterest then fired staffers who built a tool to quantify the layoffs, and Ready admonished them during a companywide meeting, saying that “there’s a clear line between constructive debate and behavior that’s obstructionist,” CNBC reported.
The January restructuring and ongoing sales unit overhaul “may cause some near term disruption, which we factored into our guidance to be prudent,” Donnelly said on Thursday.
Despite the results and gloomy outlook, Pinterest said that fourth-quarter global monthly active users jumped 12% year-over-year to 619 million, representing an all-time high. Wall Street was expecting that figure to be 613 million.
Fourth quarter sales in the U.S. and Canada region came in at $979 million, which was ahead of StreetAccount’s estimates of $973 million.
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