Pinterest expects slower quarterly revenue growth as ad competition heats up

Pinterest anticipates a slowdown in revenue growth for the third quarter, citing intense competition in the digital advertising sector from major players like Meta's Instagram. The company's shares dropped 6% in extended trading after the forecast was released.

To counter this, Pinterest has been developing Performance+, its AI-driven suite for advertisers, aiming to optimize campaigns with less manual input. However, this comes as competitors like Meta improve their own ad automation tools, Reddit launches similar products, and OpenAI increasingly focuses on advertising.

Adding to the competitive landscape, Google has revamped its image search with AI-powered features that resemble Pinterest's visual discovery approach, signaling a broader industry shift towards AI in search and shopping. Pinterest projects third-quarter revenue between $1.19 billion and $1.21 billion, a 13% to 15% increase, which is slower than the 18% growth seen in the second quarter.

Despite the growth concerns, Pinterest reported second-quarter revenue of $1.18 billion, surpassing estimates. The company also saw an 11% rise in global monthly active users to 640 million and a 7% increase in average revenue per user. Pinterest recently acquired tvScientific to expand its advertising reach into connected TV.

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AI is at the heart of our momentum and is a clear accelerant for our business.