Quick Summary
- First quarter revenue reached $663M, marking a 69% year-over-year increase and surpassing the $611M consensus
- Earnings per share of $1.01 significantly exceeded Wall Street’s 58-cent forecast
- Second quarter revenue outlook of $715M–$725M beat analyst projections of $712M
- Daily active unique users climbed 17% YoY to 126.8M; average revenue per user increased 44% worldwide
- RDDT shares jumped 16% during Friday’s premarket session after the quarterly report
Reddit delivered an impressive first quarter performance, significantly exceeding Wall Street’s projections across key financial metrics. The social media platform reported revenue of $663 million, representing a 69% increase from the $392 million recorded in the same period last year. Earnings per share reached $1.01, substantially outpacing the analyst consensus of 58 cents.
Shares experienced a sharp rally, climbing more than 9% during Thursday’s after-hours session before extending gains another 16% in Friday’s premarket trading — a significant market response, particularly as investors have been closely monitoring the advertising sector following recent reports from Meta and Alphabet.
Net income skyrocketed to $204 million compared to just $26 million in the year-ago quarter.
Chief Executive Steve Huffman emphasized that Reddit has achieved seven consecutive quarters delivering revenue growth exceeding 60%. He pointed to the company’s “record cash flow of more than $300 million” while maintaining minimal capital expenditures of only $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 stated during the analyst call.
User Metrics and Revenue Per User
Daily active unique users expanded 17% year-over-year to 126.8 million, slightly surpassing analyst estimates of 125.9 million. Within the United States specifically, daily active users totaled 53.5 million, reflecting a 7% year-over-year gain.
Average revenue per user came in at $5.23, above the anticipated $4.81. For U.S. users, ARPU reached $9.63, exceeding Wall Street’s $8.53 projection.
Huffman revealed that Reddit’s objective is reaching 100 million daily users in the United States, though the company didn’t provide a specific timeframe for achieving this target.
Artificial Intelligence and Ad Business
Reddit’s AI-powered ad platform is generating tangible results. The company employs sophisticated tools including an AI copywriting system designed specifically for Reddit-style advertisements and an automated image cropping feature that optimizes creative assets for various ad placements.
This strategy is enabling Reddit to compete more effectively against larger competitors like Meta’s Instagram and Facebook for advertising budgets.
The “Other revenue” segment, encompassing data licensing deals, grew 15% year-over-year to $39 million. Google and OpenAI continue to be Reddit’s primary data licensing collaborators.
Huffman characterized these partnerships as extending beyond pure revenue generation — describing them in terms of “citations” and “mind share.” He noted that while Reddit doesn’t operate its own data centers or foundational AI models, its strategic partners provide those capabilities.
Chief Operating Officer Jen Wong informed Reuters that Reddit is “still hiring and adding to our talent base” — a departure from the workforce reduction strategies implemented by Meta, Snap, and Pinterest throughout the past year.
Morgan Stanley analysts indicated that U.S. user growth “remains key to driving multiple expansion for Reddit,” noting it would validate the platform’s continued relevance “even in a future GenAI enabled and agentic landscape.”
Reddit’s 12-month forward price-to-earnings ratio stands at 30.40, versus Snap at 9.93, Pinterest at 10.27, and Meta at 19.05.
Despite the robust quarterly results, RDDT stock remains down approximately 36% year-to-date entering Friday’s trading session. Both Snap and Pinterest have declined roughly 24% during the same timeframe.
Second quarter revenue guidance of $715M–$725M exceeded the $712M consensus forecast. Adjusted earnings guidance of $285M–$295M similarly surpassed the $276M average analyst estimate.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
