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Pinterest Lifts Revenue Forecast as AI Ad Tools and Gen Z Engagement Drive Growth

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Pinterest (PINS) raised its second-quarter revenue outlook on Thursday, citing strong advertiser demand fueled by AI-powered tools and continued engagement from its growing Gen Z user base. The upbeat forecast pushed shares up 16% in after-hours trading, signaling renewed investor confidence despite macroeconomic uncertainty.

The company expects Q2 revenue between $960 million and $980 million, beating analysts’ average forecast of $966.3 million, according to LSEG data. First-quarter revenue came in at $855 million, surpassing expectations of $846.6 million, though adjusted earnings per share of 23 cents missed the consensus estimate of 26 cents.

Pinterest’s strength lies in its “Performance+” automation and AI features, which help advertisers create more targeted, personalized campaigns. This, combined with Pinterest’s focus on direct response ads — such as those driving shopping or app downloads — has positioned the platform as a reliable marketing channel, even amid tightening ad budgets.

Key Growth Drivers:

  • Gen Z users are the platform’s fastest-growing and most engaged demographic.

  • Global monthly active users grew 10% year-over-year, reaching 570 million — well above the expected 564 million.

  • Pinterest is expanding ad partnerships with third parties like Magnite, adding to existing deals with Google and Amazon to aggregate demand from smaller advertisers.

Finance chief Julia Donnelly acknowledged that broader economic pressures — including the end of the U.S. “de minimis” import exemption and ongoing trade tensions — have impacted some advertisers, especially Asia-based e-commerce firms. However, she noted that many of those advertisers are shifting focus to European and other international audiences on Pinterest.

Compared to rivals, Pinterest is faring well. While Meta and Reddit also reported strong Q1 revenues, Snap declined to provide guidance due to market volatility, highlighting Pinterest’s relative resilience.

eMarketer’s Jeremy Goldman summed up the performance, saying,

“The results show Pinterest can sustain momentum without the holiday tailwind.”

As Pinterest sharpens its ad-tech offering and diversifies its advertiser base, the platform appears well-positioned to navigate market headwinds and tap into new growth regions.

Snap Beats Profit Estimates on Advertising Platform Strength

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Snap Inc. (SNAP) exceeded Wall Street’s quarterly profit expectations on Tuesday, benefiting from significant improvements to its advertising platform. This growth helped boost its shares by 6% in after-hours trading. Amid growing uncertainty about a potential ban of TikTok in the U.S., analysts believe Snap could capitalize on the situation.

CEO Evan Spiegel stated that the uncertainty surrounding TikTok has been beneficial to Snap, as advertisers are focused on diversifying their ad spend and contingency planning. Snap is also considering increasing the price of its Snapchat+ subscription service to further raise its average revenue per user. The company reported a significant jump in Snapchat+ subscribers, which doubled to 14 million in the fourth quarter.

Snap has been heavily investing in artificial intelligence and machine learning tools to create more personalized ads. A notable shift in its strategy has been an emphasis on direct response ads, designed to prompt specific actions like app downloads or website visits, particularly as brand awareness ads show signs of weakness. These efforts have allowed Snap to tap into small- and mid-sized businesses, which have become the largest contributors to the company’s advertising revenue growth in 2024.

The company is also planning to expand its advertising formats, such as Sponsored Snaps (video ads in users’ inboxes) and Promoted Places (business location highlights on Snap Map), into additional markets.

“Snap’s diligent work on its ad platform and diversifying its revenue streams through subscriptions have paid off,” said Jasmine Enberg, principal analyst at eMarketer.

Snap reported adjusted earnings per share of 16 cents for the fourth quarter, surpassing analysts’ average estimate of 14 cents. The company also saw a 9% increase in daily active users, reaching 453 million, slightly surpassing the expected 450.8 million. For the first quarter of 2024, Snap forecasts revenue between $1.33 billion and $1.36 billion, with adjusted EBITDA expected to range between $40 million and $75 million, which is slightly below analyst expectations of $78.1 million.

Quarterly revenue rose 14% to $1.56 billion, marginally surpassing the average forecast of $1.55 billion.

 

Xreal Unveils New AR Glasses with Self-Designed Chip to Compete with Meta and Snap

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Xreal, a company backed by Alibaba, launched its latest augmented reality (AR) glasses on Wednesday, aiming to rival competitors like Meta and Snap in the growing AR market.

The new Xreal One Series features the X1 chip, the company’s first self-designed processor. This development marks a significant enhancement in the glasses’ capabilities, eliminating the need for a companion device previously required to connect to phones, laptops, or gaming consoles. With the new chip, users can now see their content on a massive digital screen directly in front of them, without relying on external devices like the previous Beam accessory.

Chi Xu, CEO of Xreal, called the X1 chip “the biggest upgrade in Xreal history and probably the biggest upgrade for the entire consumer AR glasses sector,” adding that the three-year development process was crucial for making the product more competitive. Xu emphasized that the company needed a custom chip to unlock new features and differentiate itself from the competition.

Xreal, one of the leading companies in the AR glasses market, faces tough competition from other tech giants like Snap, which introduced new Spectacles in September, and Meta, which continues to push its Meta Ray-Ban partnership. Additionally, Qualcomm is collaborating with Google and Samsung on their own AR glasses.

Unlike Meta’s headsets, which are large and costly, Xreal is betting on glasses as the future of AR for mass-market adoption. “People have started to realize a headset doesn’t make sense, we need to go to lighter form factors to the glasses category,” said Xu. However, he acknowledged that the challenge is delivering a headset-like experience in a much smaller, more portable form factor.

The Xreal One and Xreal One Pro glasses start at $499 and $599, respectively.

Although AR technology has generated a lot of buzz in recent years, the market has yet to explode. High-cost and uncomfortable large headsets have failed to take off, and companies like Xreal and Meta are focusing on making glasses more compelling. However, the lack of content and clear use cases remains a hurdle for wider adoption. Xu stressed that developing good hardware is essential to attracting developers and creating the ecosystem necessary for AR to thrive.

Looking ahead, Xu projected that Xreal will sell 500,000 units of its previous products by 2025, nearly doubling this year’s sales.