PINS Q3 Deep Dive: AI Investments, International Expansion, and Margin Pressures Shape Outlook

Social commerce platform Pinterest (NYSE: PINS) met Wall Streets revenue expectations in Q3 CY2025, with sales up 16.8% year on year to $1.05 billion. On the other hand, next quarter’s revenue guidance of $1.33 billion was less impressive, coming in 1% below analysts’ estimates. Its non-GAAP profit of $0.38 per share was 8.8% below analysts’ consensus estimates.

Is now the time to buy PINS? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Pinterest’s third quarter was met with a significant negative market reaction, as its results revealed both strengths and challenges. While user growth remained robust and management cited ongoing momentum in visual-first shopping and AI-powered recommendations, the company’s non-GAAP profits fell short of Wall Street expectations. CEO Bill Ready pointed to continued record user engagement, especially among Gen Z users, and highlighted the platform’s progress as an AI-driven shopping assistant. However, CFO Julia Donnelly acknowledged that larger U.S. retailers faced margin pressures due to tariffs, which contributed to a moderation in ad spend in North America.

Looking ahead, Pinterest’s guidance reflects expectations for steady revenue growth, but management flagged persistent uncertainty in the digital ad market and continued investment in product innovation. CEO Bill Ready emphasized the company’s focus on enhancing AI capabilities, including the rollout of Pinterest Assistant and deeper integration of visual search tools. Julia Donnelly noted that infrastructure and R&D investments will remain high, aiming to support international monetization and expand mid-market advertiser adoption. Management cautioned that margin expansion may slow as Pinterest continues to invest in AI-driven automation and global sales initiatives.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to accelerating international monetization, strong user engagement trends, and ongoing AI-driven product developments, while also noting tariff-related headwinds for U.S. advertiser demand.

• International monetization gains: Pinterest’s largest growth opportunities came from international markets, where shopping ad revenue in Europe and the rest of the world more than doubled the regions’ overall revenue growth rates. Management highlighted that 30% of international revenue now comes from shopping ads, compared to just 9% two years ago, signaling successful export of its lower funnel playbook.
• Visual search and AI innovation: Recent launches of multimodal visual search and the Pinterest Assistant, a voice-activated AI shopping aid, were designed to deepen user engagement and commercial intent. CEO Bill Ready described Pinterest as an "AI-powered shopping assistant" that proactively curates recommendations, differentiating it from traditional search platforms.
• Performance+ campaign traction: The AI-driven Pinterest Performance+ suite continued to drive adoption, particularly among mid-market and smaller advertisers. These advertisers saw a 12% higher monthly growth rate in ad spend post-adoption, with Performance+ campaigns simplifying setup and yielding a 24% higher conversion lift over traditional campaigns.
• Tariff impacts on U.S. retailer spend: CFO Julia Donnelly noted that some large U.S. retailers reduced ad budgets due to tariff-related margin pressures, which affected overall ad demand in North America. However, emerging verticals like financial services, travel, and telecom are growing digital ad share and present new opportunities for Pinterest.
• Content quality and Gen AI strategy: While embracing generative AI (Gen AI) content for growth, management addressed user preferences for content quality. Pinterest is deploying AI-powered recommender systems and user controls that allow for moderation of AI-generated content, seeking to balance engagement and content standards.

Drivers of Future Performance

Pinterest’s guidance is shaped by ongoing AI-driven product development, efforts to broaden monetization internationally, and continued investment in infrastructure and sales.

• AI and product innovation: Management believes continued enhancements to visual search, voice-powered shopping assistance, and automation via the Performance+ suite will drive deeper user engagement and incremental ad spend. CEO Bill Ready cited plans to expand multimodal search and Pinterest Assistant access, aiming to improve user retention and shopping conversion rates.
• International monetization expansion: The company expects further gains as it localizes its advertising playbook and integrates with regional marketing tech partners. Julia Donnelly identified Europe and rest-of-world geographies as underpenetrated and key to future revenue growth, with ongoing focus on shopping ad formats and catalog uploads.
• Margin variability and investment needs: Management cautioned that infrastructure and R&D spending, especially for AI and sales teams, will pressure margins in the near term. Pinterest aims for long-term EBITDA margin targets but expects the pace of expansion to moderate as it invests in product and market expansion. The company also flagged ongoing tariff risks and potential volatility in U.S. advertiser demand.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will monitor (1) the effectiveness and user adoption of AI-driven features like Pinterest Assistant and multimodal search, (2) the pace of international monetization as new ad formats and catalog integrations roll out in Europe and emerging markets, and (3) whether margin expansion can be sustained while infrastructure and R&D investments accelerate. We will also track the resilience of U.S. advertiser demand amid ongoing tariff headwinds.

Pinterest currently trades at $26.95, down from $32.93 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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