Quick Summary
- First quarter revenue reached $663M, reflecting 69% annual growth and exceeding $611M consensus
- Earnings per share reached $1.01 compared to analyst expectations of 58 cents
- Second quarter revenue forecast of $715M–$725M surpassed the $712M consensus target
- Daily active unique users increased 17% annually to 126.8M; average revenue per user climbed 44% worldwide
- RDDT shares jumped 16% during premarket Friday session after earnings release
Reddit delivered an impressive first quarter performance, exceeding analyst projections across key financial metrics. The company generated $663 million in revenue, marking a 69% increase from the $392 million reported in the same period last year. Earnings per share reached $1.01, significantly outpacing the 58-cent consensus estimate.
Shares climbed over 9% during Thursday’s after-hours session, followed by an additional 16% surge in premarket Friday trading — a significant market response amid heightened scrutiny of the advertising sector following reports from Meta and Alphabet earlier in the week.
Net income jumped to $204 million compared to $26 million during the prior year period.
CEO Steve Huffman emphasized that Reddit has achieved seven consecutive quarters of revenue growth exceeding 60%. He pointed to the company’s “record cash flow of more than $300 million” while maintaining capital expenditures at a minimal $1 million.
“When you look across the more than 300 publicly traded tech companies, there’s only one that combines this type of growth, profitability and efficiency, and that’s Reddit,” Huffman told analysts.
User Metrics and Revenue Per User
Daily active unique users expanded 17% year-over-year to reach 126.8 million, slightly above the 125.9 million analyst projection. Daily active users within the United States totaled 53.5 million, representing 7% annual growth.
Average revenue per user climbed to $5.23, surpassing the $4.81 estimate. Within U.S. markets, ARPU reached $9.63, exceeding Wall Street’s $8.53 forecast.
Huffman stated that Reddit’s target involves reaching 100 million daily U.S. users, although the company has yet to provide a specific timeline.
Artificial Intelligence and Ad Platform Evolution
Reddit’s AI-powered ad platform is delivering measurable results. The platform incorporates features including an AI copywriter designed specifically for Reddit-style advertisements and an automatic image cropping tool that optimizes creative assets across various ad placements.
This technology-driven strategy enables Reddit to compete more effectively against larger platforms such as Meta’s Instagram and Facebook for advertiser spending.
The “Other revenue” segment, primarily comprising data licensing deals, grew 15% year-over-year to $39 million. Google and OpenAI continue as Reddit’s primary data licensing partners.
Huffman characterized these partnerships as extending beyond simple revenue streams — he used terms like “citations” and “mind share” to describe their value. He acknowledged that Reddit operates without proprietary data centers and foundational models, relying on partners to provide that infrastructure.
Chief Operating Officer Jen Wong informed Reuters that Reddit is “still hiring and adding to our talent base” — a different approach compared to the cost-reduction initiatives undertaken by Meta, Snap, and Pinterest during the past year.
Morgan Stanley analysts said U.S. user growth “remains key to driving multiple expansion for Reddit,” adding it would demonstrate the platform’s relevance “even in a future GenAI enabled and agentic landscape.”
Reddit’s 12-month forward P/E ratio stands at 30.40, while Snap trades at 9.93, Pinterest at 10.27, and Meta at 19.05.
Despite the robust quarterly performance, RDDT stock has declined approximately 36% year-to-date entering Friday’s session. Snap and Pinterest have each fallen about 24% during the comparable timeframe.
Second quarter revenue guidance ranging from $715M to $725M exceeded the $712M consensus forecast. Adjusted earnings guidance of $285M to $295M similarly surpassed the $276M average analyst estimate.
