May 4 (Reuters) - Pinterest forecast second-quarter revenue above analysts' estimates on Monday, betting on steadily growing spending by advertisers, sending the image-sharing platform's shares 15% higher in extended trading.
The company has been ramping up investments in artificial intelligence, rolling out upgrades to its Performance+ ad suite that automates creative production and delivers more personalized targeting.
Those efforts and its focus on attracting small- and mid-sized businesses are beginning to help ease pressure from a pullback by some large advertisers facing higher costs due to tariffs and geopolitical conflicts.
"Large advertisers remain important for stability but are not the primary growth driver," said Lenny Zéphirin, principal and analyst at The Zéphirin Group.
Demand from small- and mid-sized businesses is improving for Pinterest, but it remains cyclical and sensitive to tariffs and other macroeconomic issues, he said.
The results come a month after activist investor Elliott disclosed a fresh $1 billion equity stake, backing Pinterest's strategy for ad revenue and supporting a new $3.5 billion share repurchase program.
Pinterest has struggled to keep pace with deep-pocketed rivals such as Meta's Instagram and Facebook, as major advertisers scaled back spending on its platform as AI tools rapidly reshape the online advertising market and tariff-driven costs force brands to protect margins.
Rival platforms are also leaning into AI to boost growth. Reddit last week forecast strong revenue gains driven by AI-powered ad tools.
Pinterest in February completed its acquisition of tvScientific, a move aimed at extending advertisers’ reach beyond social media and into connected TV, opening up new ad budgets.
The company expects second-quarter revenue between $1.13 billion and $1.15 billion, above analysts' estimates of $1.11 billion, according to data compiled by LSEG.
It ended the first quarter with 631 million global monthly active users, up from the 570 million it had reported last year.
Revenue for the first quarter rose 18% to $1.01 billion, above estimates of $966.25 million.
(Reporting by Kritika Lamba in Bengaluru; Editing by Sahal Muhammed)
