User growth hits record high in Q3, but revenue "loses steam": Citi maintains neutral rating on Pinterest (PINS.US)

Zhihu Tong Finance APP noted that images sourced from the social platform Pinterest (PINS.US) showcased a mixed set of results in its third quarter 2026 report. According to Citi, although the platform's Monthly Active Users (MAU) hit a record high, weaker monetization in various regions led to both revenue and profits missing expectations, with fourth quarter guidance also coming in below market consensus. Citi maintains a “Neutral/High Risk” rating on the stock, with a target price of $27.

Strong user growth but lagging monetization

In the third quarter, Pinterest’s global MAU reached 661 million, marking a year-on-year increase of 10.2%, exceeding consensus by about 1% and setting a new historical high. However, the expansion in user base did not translate into corresponding revenue growth: global Average Revenue Per User (ARPU) was only $1.08, up just 1.1% year-on-year.

Revenue for the quarter was $1.17 billion, an 11.9% year-on-year increase but about 3% below market expectations. Adjusted EBITDA came in at $339 million with a margin of 28.9%, lower than the market’s expected $347 million and at the bottom end of the company’s own guidance range.

Europe becomes the biggest drag

By region, revenue in the United States and Canada (UCAN) grew roughly 14% year-on-year and remained robust. However, revenue in Europe was about 7% lower than Citi’s forecasts, and its year-on-year growth was nearly flat. Revenue in Rest of World (ROW) also fell short of expectations by about 8%.

Citi believes that the weakness in the European market mainly stems from two factors: first, the company’s own business restructuring adjustments, and second, the new EU regulations, effective since July, on low-value goods tax-free thresholds, which have suppressed cross-border e-commerce advertising. This policy directly impacted social commerce platforms heavily reliant on Chinese cross-border sellers’ ad budgets.

Fourth quarter guidance further disappointed the market. Management expects fourth quarter revenue to increase 8.0% to 11.2% year-on-year (including a mild currency headwind), with the midpoint at $1.45 billion, significantly below market consensus of $1.518 billion (corresponding to about 15% year-on-year growth). Adjusted EBITDA guidance ranges from $538 million to $588 million, also below the market’s expected $601 million.

Product and AI strategies are the focus of the earnings call

Citi highlighted five key topics from the earnings call: user growth trends in the UCAN market, responses to slowing monetization growth across the three regions, the Performance+ product roadmap (covering ROAS smart bidding, lower funnel objectives, and audience prioritization features), search shopping innovations such as visual search ads and self-serve A/B testing, and the adjusted EBITDA margin trajectory as growth investments continue.

The firm believes that products such as Pinterest Assistant and Performance+ could enhance monetization and user engagement, serving as potential catalysts for results to outperform expectations.