By Jaspreet Singh
(Reuters) - Pinterest (NYSE:PINS) forecast first-quarter revenue above market estimates on Thursday, betting on the image-sharing platform's artificial intelligence-powered advertising tools to boost ad spend, sending its shares up 19% in extended trading.
The forecast followed better-than-expected record monthly active users and revenue during the fourth quarter, thanks to a robust holiday shopping season.
Advertisers turn to Pinterest for its AI-driven ad tools such as Performance+ suite, designed to help advertisers better target users with automation features.
"Our strategy is paying off. People are coming to Pinterest more often, the platform has never been more actionable," CEO Bill Ready said in a statement.
Rising Gen Z users and new shoppable content have made the platform more lucrative for marketers.
That is bolstered by Pinterest's third-party ad deals with Google (NASDAQ:GOOGL) and Amazon.com (NASDAQ:AMZN), which are expanding and helping the company to diversify its revenue streams.
"Pinterest has strong global engagement, but the ad dollars are still disproportionately tied to North America," said Jeremy Goldman, senior director of briefings at eMarketer.
"Expanding third-party ad integrations could open up new revenue streams, but execution here has historically been slow."
Ecommerce merchants such as those on Shopify (NYSE:SHOP) or Adobe (NASDAQ:ADBE) Commerce can integrate their products into Pinterest by using platform-specific extensions that are offered by the company.
Its first-quarter revenue forecast of $837 million to $852 million was above analysts' average estimate of $832.8 million, according to data compiled by LSEG.
The company expects adjusted core earnings of $155 million to $170 million, above the average estimate of $140.8 million.
Global monthly active users on the platform were at an all-time high of 553 million, exceeding estimates of 545.8 million. They rose 11% from a year earlier.
Revenue in the fourth quarter ended December 31 grew 18% to $1.15 billion, compared with estimates of $1.14 billion.
Adjusted profit per share of 56 cents missed estimates of 65 cents due to certain tax adjustments in the quarter.