TLDR
- Reddit reported Q4 earnings of $1.24 per share on revenue of $726 million, beating analyst expectations of 94 cents per share and $666 million
- The social media platform saw ad revenue surge 75% to $690 million while daily active users increased 19% to 121.4 million
- Reddit authorized a $1 billion Class A share repurchase program after ending 2025 with $2.48 billion in cash
- The company spent just $3 million on Q4 capital expenditures compared to billions spent by other tech firms on AI
- Q1 revenue guidance of $595-$605 million came in above Wall Street’s $577 million estimate
Reddit shares jumped 5.3% in after-hours trading Thursday following a strong fourth-quarter earnings report. The company posted adjusted earnings of $1.24 per share on revenue of $726 million.
Analysts polled by FactSet had predicted earnings of 94 cents per share on revenue of $666 million. The 32% earnings beat came as welcome news after a difficult week for technology stocks.
Advertising revenue powered the results at $690 million for the quarter. That figure topped estimates of $626 million and marked a 75% gain from the previous year.
The platform’s daily active users hit 121.4 million in Q4. That beat Wall Street’s projection of 120 million and represented 19% growth year-over-year.
CFO Drew Vollero attributed most user growth to international markets. The company has been expanding language translations for popular subreddits.
Buyback Program Signals Strength
Reddit announced a new $1 billion share repurchase program for Class A common stock. The authorization comes after a year of strong financial performance.
Full-year 2025 revenue increased 69% to $2.2 billion. The company swung to a net income of $530 million from a loss in 2024.
Reddit closed out 2025 holding $2.48 billion in cash, cash equivalents and marketable securities. Fourth-quarter gross margins exceeded 91%.
The company guided first-quarter revenue between $595 million and $605 million. That outlook beats analyst consensus of $577 million and represents a jump from $392.4 million in the prior year period.
Minimal AI Investment Sets Reddit Apart
Vollero emphasized Reddit’s lean approach to artificial intelligence spending during an interview with Barron’s. The contrast with competitors proved stark.
“You’re reading a lot about the other companies that are spending hundreds of billions of dollars in capex,” Vollero said. “Our capex in Q4 was $3 million.”
The comment addressed growing investor concerns about AI disruption. Tech stocks had sold off in recent days on fears that AI would replace traditional information services.
Reddit shares fell 21% in the five trading sessions leading up to the earnings report. The broader tech sector faced questions about proving return on massive AI investments.
Vollero defended Reddit’s position in the AI landscape. “The way that we think about AI here is that ultimately, human connection here is paramount,” he said.
Reddit operates its own AI chatbot called Reddit Answers. But the company isn’t matching the enormous infrastructure spending of larger competitors.
“We’re getting the benefits of AI in our business, without the AI cost,” Vollero explained. He expressed confidence that Reddit’s community-driven content will help navigate industry headwinds.
Post-IPO Performance
Reddit debuted on public markets March 21, 2024 at an IPO price of $34 per share. Shares have climbed 344% since then despite recent volatility.
The stock has declined 30% over the trailing 12 months. Thursday’s results provided fresh support for the bull case.
Analysts currently rate Reddit as a Buy with a $197 price target. The company’s market capitalization stands at $28.93 billion.
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