TLDR
- Reddit earnings per share hit $0.80, crushing the $0.51 Wall Street estimate
- Third quarter revenue jumped 68% to $585 million, beating the $546 million forecast
- Net income soared to $163 million from $30 million in the prior year quarter
- Fourth quarter revenue guidance of $655-$665 million topped analyst expectations
- Global daily active users increased 19% to 116 million, exceeding projections
Reddit stock surged more than 12% in after-hours trading following the company’s third quarter earnings report. The social media platform delivered results that exceeded analyst estimates on all key metrics.
The company posted earnings per share of $0.80 versus the $0.51 consensus estimate. Revenue climbed 68% year-over-year to $585 million, topping Wall Street’s projection of $546 million.
Net income reached $163 million compared to $30 million in the same quarter last year. Gross margin expanded to 91%, demonstrating improving profitability across the business.
This marked Reddit’s seventh quarterly report since its initial public offering in 2024. Shares have gained 19% year-to-date in 2025.
AI Tools and Search Drive User Engagement
CEO Steve Huffman credited improvements in search functionality and international expansion for the quarter’s performance. The platform’s search product now reaches more than 75 million weekly users, up from 70 million in the second quarter.
Reddit has begun deploying Reddit Answers, an AI-powered feature designed to enhance search accuracy. CFO Drew Vollero said the company’s AI capabilities improve content discovery and ad targeting without requiring heavy capital investment.
Capital expenditure totaled just $2.1 million for the quarter, representing 0.4% of revenue. Vollero described Reddit as “an AI winner without a lot of AI cost.”
Global daily active users grew 19% to 116 million, surpassing analyst forecasts of 114 million. International users jumped 31% to 64.4 million as Reddit expanded translation services to 30 languages.
U.S. logged-in daily users increased 7% to 23.1 million. This growth rate slowed from the second quarter’s 12% pace but remains the platform’s most valuable advertising audience.
Strong Advertising Growth and Future Outlook
COO Jen Wong reported that total active advertiser count grew over 75% year-over-year. Brand campaigns helped drive app installations and awareness in international markets.
Data licensing revenue, which includes partnerships with Google and OpenAI, rose 7% to $36 million. Huffman said these agreements represent an important long-term revenue opportunity.
Reddit expects fourth quarter revenue between $655 million and $665 million. Analysts had projected $638 million for the period.
Adjusted earnings are forecast at $275-$285 million for the fourth quarter. The guidance reflects continued momentum in user growth and advertising revenue.
Platform Growth and User Retention
Huffman said Reddit will maintain its focus on AI-driven personalization to boost engagement. He emphasized that helping users find relevant communities drives retention on the platform.
“The biggest driver of retention is following communities you care about,” Huffman stated. The company plans to continue removing friction points in the user experience.
International users now represent a growing portion of Reddit’s user base at 64.4 million. The platform’s translation expansion to 30 languages has opened new markets for growth.
Reddit reported gross margin of 91% for the quarter with capital spending of just $2.1 million. The company expects double-digit revenue growth to continue in the fourth quarter.
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