By Jaspreet Singh

(Reuters) – Pinterest’s fourth-quarter revenue forecast failed to impress investors looking for a boost from the upcoming holiday shopping period, at a time when the biggest sellers of online advertising significantly outperformed, sending its shares down 11% in extended trading on Thursday.

The San Francisco, California-based company also announced a new stock repurchase program of up to $2 billion and canceled the September 2023 program in which $500 million remained to be repurchased.

Pinterest’s results follow quarterly reports from digital advertising metrics — including Alphabet, Meta Platforms, Reddit and Google parent Snap — which reported upbeat third-quarter revenues, helped by robust ad spending.

The image-sharing platform faces stiff competition from Facebook and Meta-owned Instagram, which have become the go-to platforms for advertisers due to their larger user bases.

Pinterest released the Performance+ suite in October, helping advertisers better target users with new AI tools and automation features on the platform.

“Performance+ is still in its early stages, with many advertisers limiting budget changes and adoption of new features during the peak holiday period,” CFO Julia Donnelly said on a post-earnings call.

The company is also seeing “softness” among food and beverage advertisers, Donnelly said.

Pinterest forecast fourth-quarter revenue in the range of $1.13 billion to $1.15 billion, the midpoint of which is in line with analysts’ average estimate of $1.14 billion, according to data compiled by LSEG.

It projects adjusted quarterly operating expenses of between $495 million and $510 million, up 11% to 14% from a year earlier, driven by investments in AI talent and product initiatives.

“Pinterest’s third quarter continues a series of smaller social media competitors orbiting Meta that are gaining traction with advertisers,” said Daniel Konstantinovic, an analyst at Emarketer.

The company’s “sharp increase” in expenses shows its small size does not exclude it from scrutiny of costs, Konstantinovic added.

Third-quarter revenue increased 18% to $898.4 million, compared to an estimated $896.4 million.

Adjusted earnings per share for the quarter came in at 40 cents, compared to 34 cents expected.

The number of monthly active users on the platform increased by 11%, reaching 537 million between July and September, compared to an estimated 531.5 million.

(Reporting by Jaspreet Singh in Bangalore; Editing by Shailesh Kuber)