Pinterest's European Ad Slump Makes Q4 the Real Test

Pinterest's record audience did not translate into the holiday outlook investors expected. The company ended the third quarter with 661 million monthly active users, up 10%, but guided fourth-quarter revenue to $1.425 billion to $1.475 billion. Even the top of that range was below the roughly $1.52 billion consensus cited by TIKR.

Third-quarter revenue rose 12% to $1.174 billion, below Pinterest's prior range of $1.19 billion to $1.21 billion. Adjusted earnings were $0.46 a share, compared with the cited $0.49 estimate, while GAAP earnings were $0.04 a share against the cited $0.09 estimate.

Europe explains much of the gap between audience growth and revenue. Monthly users in the region grew 7% to 161 million, but revenue stayed flat at $193 million. Average revenue per user fell 7% to $1.21. In the United States and Canada, revenue grew 14% and average revenue per user rose 10% to $8.38.

Chief Executive Bill Ready attributed the European weakness to reduced spending by cross-border sellers after a regulatory change removed a customs exemption for low-value imports. He said that pressure cut European growth by roughly 11 percentage points and accounted for about three points of the six-point slowdown in global revenue growth from the second quarter. The timing of Prime Day and the World Cup accounted for two points, while foreign exchange accounted for one.

The advertising mechanics also weakened. Impressions rose 17%, but ad prices fell 4%. That combination can still produce growth, yet it means Pinterest needed substantially more ad volume to offset lower pricing.

Management called the fourth-quarter range a prudent baseline and said quarter-to-date growth was broadly tracking the third quarter's 12% pace. Using the $1.319 billion reported in the fourth quarter of 2025, 12% growth would produce about $1.478 billion, just above the new range. Pinterest also said its core European enterprise business, excluding affected cross-border sellers, had begun to accelerate again.

Profit guidance leaves less room for comfort. Pinterest expects fourth-quarter adjusted EBITDA of $538 million to $588 million. The midpoint of $563 million is about 8% below the roughly $612 million consensus cited by TIKR. Management still expects an adjusted EBITDA margin near 30% for the full year, but it also expects cost of revenue to rise at a low-teens rate from the third quarter because of GPU capacity and the absence of a one-time contractual benefit.

Pinterest has expanded programmatic ad buying through Amazon Ads, Google Display & Video 360 and Yahoo's demand-side platform. Management cautioned that those channels take time to scale, and the initial regional list did not include Europe.

The next quarter has a clear test. Revenue near or above $1.475 billion would support management's claim that the worst cross-border pressure has stabilized. A result near $1.425 billion, especially with European revenue still flat, would show that record user growth remains easier to achieve than stronger monetization.