To The Moon

$Pinterest, Inc.(PINS)$ is down 15% after hours, after reporting Q3 earnings that also beat expectations but guidance that worried investors.

Performance

Revenue of $898 million increased 18% year-over-year, better than market expectations of a 17.5% year-over-year increase;

Non-GAAP EPS rose to $0.40, above market expectations of $0.34.

Global monthly active users grew 11% to a record 537 million.

Regional Performance

Domestic operations in the U.S. and Canada performed well, with revenues growing 16% to $719 million; Europe revenues grew 20% to $137 million; and other regions grew 38% to $42 million.

Monthly active user growth came primarily from overseas.U.S./Canada MAUs to 99 million, up only 3%; Europe MAUs to 139 million, up 8%, and other regions up 16% to 300 million.

In terms of ARPU, the company's overall ARPU grew 5% to $1.70.Of this, APRU in the US/Canada grew 13% to $7.31; ARPU in Europe grew 10% to $1.00; and ARPU in the rest of the world grew 18% to $0.14

Our investments in AI are driving results, delivering better personalized experiences for users and better performance for advertisers, and our low-funnel advertising tools are the fastest growing part of our business," said CEO Bill Reddy in an early response to the report."Advertisers are increasingly relying on Pinterest to engage our growing audience, who see us as a great place to find inspiration, curate and shop."

Investment highlights

PINS also fell after reporting earnings in the last quarter when it warned of a tougher environment in Q3 and lowered its revenue expectations.

This time around, it is guiding for Q4 revenue of $1.125 billion to $1.145 billion, with a median of $1.135 billion below market expectations of $1.14 billion;

Meanwhile Q4 operating expenses (excluding cost of revenues) will grow 11% to 14% to $495 million to $510 million overall, above market expectations.

Therefore, while peers $Snap Inc(SNAP)$ and $Meta Platforms, Inc.(META)$ have announced results that exceeded expectations and solid guidance, PINS's poor guidance also gave investors the impression that the company is not doing well, and in the face of the current incremental growth of AI on the advertising industry, PINS does not seem to have eaten more of the dividends.

And operating expenses are expected to rise, but also make investors think that the company is "buying traffic", so as to reduce the valuation expectations.