META Meta Platforms Inc

By Sarah E. Needleman 

Pinterest Inc. posted strong revenue and user growth in the third quarter, as the social-media company saw significantly greater pandemic-fueled engagement than it did in the spring and said it benefited from an advertiser boycott at Facebook Inc.

The image-sharing company that makes money exclusively through advertising sales said revenue rose 58% from a year earlier to $443 million, compared with 4% growth in the second quarter. Analysts surveyed by FactSet expected sales of $383 million.

An advertiser boycott against Facebook over the summer helped Pinterest, the company said. But it added that it isn't clear how long that trend will last, particularly after the U.S. presidential election takes place. Facebook and Twitter Inc. report third-quarter results Thursday.

In the third quarter, advertiser demand was driven by strength from small and medium businesses, Pinterest said.

For the current quarter, San Francisco-based Pinterest expects revenue to grow approximately 60%. The company said it would have projected a bigger increase if not for uncertainty about the pandemic's impact on the wider economy and the fact that it is operating a largely remote workforce.

Monthly users world-wide rose by 37% in the third quarter to 442 million, beating analysts' expectations of an 11% increase. International user numbers soared 46% compared with 13% for the U.S. Growth was particularly strong among users under the age of 25, the company said, keeping up a trend it has seen for the past several quarters.

Pinterest reported a third-quarter loss of $94 million. That figure, it said, reflects a one-time charge of $90 million during the period for the termination of an office lease in San Francisco. It compares with a loss of $125 million in the same quarter a year ago.

The company reported adjusted earnings before interest, tax, depreciation and amortization of $93 million, up from $4 million in the same quarter a year ago. Wall Street expected $28 million of earnings on that adjusted basis.

Pinterest's strong results come about a week after Snap Inc. also reported a surge in revenue and users in the latest quarter driven by strong user engagement with people stuck at home.

In recent months Pinterest has made efforts to become more attractive to advertisers. It formed a partnership with software provider Shopify Inc. to help brands get discovered and generate sales and created a verified merchant program that places a blue check mark on profiles of retailers verified by its employees for having fair return policies and shipping rates and in-stock merchandise.

Pinterest, which launched in 2010 and now has more than 2,400 employees world-wide, has previously said it is working to build a more inclusive culture and make sure its product reflects those values. In recent months it has added two Black women to its board of directors.

The company was sued in August by its former operating chief, Francoise Brougher, for wrongful termination and retaliation. The suit alleged a culture of secretiveness among top male executives that resulted in Ms. Brougher being left out of key meetings and decision-making. A trial could take place next year. Pinterest has declined to comment on the case.

Separately, two former female employees in June alleged gender and race discrimination, as well as pay inequities, while working at Pinterest. Shortly after the company said it hired a law firm to conduct an independent review of its workplace culture. That review hasn't yet come out and a company spokesman declined to say if or when it would be made public.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

(END) Dow Jones Newswires

October 28, 2020 16:46 ET (20:46 GMT)

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