By Shreyaa Narayanan and Vansh Agarwal
(Reuters) -Image-sharing platform Pinterest Inc reported lower-than-expected quarterly revenue on Monday joining peers Alphabet Inc and Snap Inc in sounding the alarm on a still-weak ad market.
Shares of the company, which projected tepid first-quarter sales growth, pared losses and were down 3% in extended trading after falling 15%.
Advertisers have slashed their marketing budgets over the past few months as high inflation and aggressive interest rate hikes from global central banks have put a dampener on economic outlook.
After a challenging 2022 in which advertising-dependent companies faced shrinking budgets and cratering stock prices, fourth-quarter results this week from Alphabet to Meta Platforms Inc showed they were not yet in the clear.
Pinterest said it expected revenue to grow in low-single-digits in the first quarter, compared with estimates of about 7% growth, according to Refinitiv data.
Chief Financial Officer Todd Morgenfeld, who is set to leave the company on July 1, warned Pinterest expects weakness to persist among U.S. small and medium business and mid-market advertisers in the first quarter as they continue to face “outsized challenges”.
The company had taken cost cutting measures including reductions to recruiting staff and closures of some smaller and less utilized office spaces to reduce its expense profile in 2023, Morgenfeld added.
“The bigger story is on the cost cutting side of things where we expect the previously announced job cuts to support meaningful margin expansion through 2023,” said Angelo Zino, analyst at CFRA Research.
The company’s global monthly active users (MAUs) grew 4% to 450 million, but fell below estimates of 452.3 million.
Pinterest said its board authorized a share repurchase program of up to $500 million of its Class A common stock over the next 12 months.
The company’s revenue in the fourth quarter ended Dec. 31 grew 4% to $877 million. Analysts on average had expected $886.3 million.
Excluding items, Pinterest posted a profit of 29 cents per share against analyst estimates of 27 cents.
(Reporting by Vansh Agarwal and Shreyaa Narayanan in Bengaluru; Editing by Krishna Chandra Eluri)