Like Snap (SNAP) and to an extent Microsoft's (MSFT) recent reports, Pinterest's (PINS) Q3 report suggests online ad spend has been rebounding in a big way lately.
For the second time in three months, Pinterest has blasted off post-earnings after trouncing revenue estimates, issuing strong guidance and beating user growth expectations.
Revenue of $442.6 million blew past a FactSet consensus of $383 million, with annual growth soaring to 58% from Q2's 4%. And in spite of a much tougher annual comp, Pinterest guided for revenue growth to accelerate slightly to 60% in Q4 (the consensus was at just 35%).
Monthly active users (MAUs) rose 6% sequentially and 37% annually to 442 million. U.S. MAUs rose 13% annually to 98 million and international MAUs rose 46% to 343 million.
Pinterest's revenue growth inflected sharply in Q3. Source: Pinterest.
These numbers arrive eight days after Snap delivered a big Q3 beat of its own, with revenue of $679 million (up 52% annually) topping consensus by $122 million and DAUs of 249 million (up 19%) beating by 5 million (unlike Pinterest, Snap didn't issue Q4 guidance, citing COVID-related uncertainty).
And Pinterest's report arrives a day after Microsoft reported stronger-than-expected LinkedIn revenue growth thanks to a 40% increase in LinkedIn's Marketing Solutions (ad) revenue. Microsoft did also report a 10% drop in search ad revenue (weak ad spend in verticals such as travel and hospitality remains a headwind), but that was a little better than Q2's 18% drop.
It's worth noting here that in addition to an improving spending environment, both Pinterest and Snap are benefiting from some company-specific factors.
Both companies indicated that their ad sales have gotten a boost from Facebook (FB) advertiser boycotts, and each one has also been aggressively rolling out new ad products and tools over the last 12-to-18 months. Pinterest has been investing in developing new ad solutions for online retailers and other direct response advertisers, while Snap has been investing in new sponsored lens options and video and e-commerce ad formats.
Snap's revenue growth also inflected in Q3. Source: Snap.
But both companies also noted that an improved demand environment is a tailwind as well, as brand ad spend rebounds and e-commerce ad spend remains elevated. Pinterest highlighted consumer packaged goods (CPG) firms and omnichannel retailers as two verticals that saw a strong Q3 pickup in brand ad spend.
Also: Though it's worth keeping in mind that its business skews more towards direct response ads rather than brand ads, ad agency Merkle shared data that suggests its clients' Q3 ad spend on platforms such as Facebook, Instagram, Google Search and Amazon.com (AMZN) generally picked up.
Merkle's client Instagram ad spend growth rose to 34% from Q2's 30%, while spending growth for Facebook proper improved to 12% from 4%. And though Prime Day was pushed out from Q3 to Q4 this year, spending growth improved to 50% from 22% for Amazon's Sponsored Product ads, and to 74% from 58% for its Sponsored Brand ads.
Google Search ad spending growth only improved to 11% from 9%, but this had much to do with a 40% drop in travel ad spend. Ad agency Tinuiti reported a stronger 28% increase in client Google Search ad spend, up from 19% Q2 growth.
All of this makes for an interesting setup as Twitter (TWTR) , Facebook, Alphabet/Google (GOOGL) and Amazon share their own Q3 ad sales figures on Thursday afternoon.
It's not guaranteed that all of the online ad sales numbers shared on Thursday will be strong -- I think Twitter in particular has some company-specific headwinds, such as lower sports ratings and ongoing ad-targeting issues, that could help offset favorable trends such as rebounding brand ad spend and the election's near-term impact on engagement.
But what has been shared to date regarding Q3 online ad spend does bode well for what companies will be reporting on Thursday overall.
This article has been corrected to state that Twitter reports on Thursday afternoon, rather than Thursday morning.
