Pinterest has told investors to expect third-quarter revenue growth of 13% to 15%, a step down from the pace it just reported. The company is betting that its expanding suite of AI-powered advertising tools can help it hold its own against much larger rivals Meta and Google, who have been sharpening their own ad offerings.
The guidance came alongside the company's second-quarter results, which showed the platform still has momentum. Revenue rose 18% year over year to $1.18 billion, while monthly active users grew 11% to 640 million. Average revenue per user (ARPU) — a key metric that shows how much money the company makes from each user — increased 7% to $1.86.
Why growth is cooling
The slowdown in the third-quarter outlook isn't necessarily a sign that Pinterest is losing users or engagement. Rather, it reflects the reality that advertisers can shift their budgets quickly when they see better performance elsewhere. The company's forecast of $1.19 billion to $1.21 billion in revenue is roughly in line with the $1.20 billion consensus from LSEG, suggesting that Wall Street had already braced for a softer quarter.
Pinterest operates in a highly competitive digital advertising market. Meta and Google have spent years refining their ad targeting and measurement tools, and both have been integrating AI to improve ad performance. That puts pressure on smaller platforms like Pinterest to prove that their ads can deliver comparable returns.
To counter that, Pinterest has been rolling out AI-driven features that aim to make ads more relevant and easier for brands to create. These tools can help advertisers automatically generate ad variations, target users more precisely, and measure campaign effectiveness. The company has said these investments are central to its strategy, even as growth cools.
What it means for investors
For everyday investors, the key takeaway is that Pinterest is still growing, but at a slower pace than before. The company's user base is expanding, and it's making more money per user, which are positive signs. However, the guidance suggests that the competitive pressure from bigger ad platforms is real and could continue to weigh on growth.
Investors should also note that Pinterest's stock can be volatile, as it often trades on expectations for future growth. When a company guides below the previous quarter's pace, it can spook the market, even if the numbers are still healthy. That's why it's important to look at the full picture — user growth, ARPU, and the company's ability to innovate — rather than just the headline revenue figure.
Pinterest's situation is not unique. Other companies that rely on advertising have faced similar challenges as big tech platforms dominate the market. For example, Match Group's revenue outlook disappointed despite growth at Hinge, showing how even niche platforms can struggle to meet expectations. Similarly, McDonald's saw US sales growth fall short as its value push failed to connect, a reminder that consumer-facing companies often face headwinds that are hard to predict.
The AI ad race
Pinterest is not alone in turning to AI to boost ad performance. Across the tech sector, companies are investing heavily in AI to improve their products and services. ON Semiconductor's AI data center boom is a prime example of how AI is driving growth in some areas, even as other segments lag. For Pinterest, AI is a way to differentiate itself and offer advertisers something that Meta and Google might not provide.
The company has been experimenting with AI-generated ad creatives, which allow brands to upload a few images and let the system produce multiple variations. It has also improved its shopping features, making it easier for users to go from inspiration to purchase. These efforts are designed to increase the return on ad spend for marketers, which could help Pinterest win a larger share of their budgets.
However, the competitive landscape remains tough. Meta and Google have vast amounts of user data and sophisticated AI systems, and they continue to innovate. Pinterest's smaller scale means it has to be more nimble and creative to stay relevant.
Looking ahead
Investors will be watching Pinterest's next few quarters to see whether its AI investments start to pay off in the form of faster revenue growth. The company's ability to grow ARPU will be a key indicator, as it shows whether advertisers are willing to spend more per user on the platform.
In the meantime, the stock's reaction to the guidance will depend on how investors weigh the slowdown against the company's long-term potential. Pinterest has a loyal user base and a unique niche in the social media landscape, focused on inspiration and discovery rather than social networking. If it can successfully leverage AI to improve ad performance, it could still deliver solid growth for years to come.
For now, the message from Pinterest is clear: growth is slowing, but the company is fighting back with technology. Whether that's enough to keep pace with the giants remains to be seen.
