Key Highlights
- First quarter revenue reached $663M, climbing 69% compared to last year and surpassing the $611M forecast
- Earnings per share of $1.01 crushed the 58-cent consensus by 74%
- Second quarter revenue outlook of $715M–$725M exceeded the $712M analyst projection
- Daily active uniques increased 17% year-over-year to 126.8M while global ARPU surged 44%
- RDDT stock climbed 16% during Friday’s premarket session after the earnings release
Reddit delivered an impressive first quarter performance, significantly exceeding analyst projections across revenue and profitability metrics. The company generated $663 million in revenue, representing a 69% increase from the $392 million recorded in the same period last year. Earnings per share reached $1.01, substantially outpacing the 58-cent Wall Street consensus.
Shares climbed more than 9% during Thursday’s after-hours session, then extended gains with another 16% surge in Friday’s premarket trading — a significant move in a market that has been closely monitoring digital advertising trends following recent reports from Meta and Alphabet.
Net profit skyrocketed to $204 million compared to only $26 million in the year-ago quarter.
Chief Executive Steve Huffman emphasized that Reddit has achieved seven consecutive quarters of revenue expansion 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 stated during the analyst call.
Expansion in Users and Monetization Metrics
Daily active unique visitors expanded 17% year-over-year to reach 126.8 million, slightly exceeding the 125.9 million analyst estimate. Within the United States specifically, daily active users totaled 53.5 million, representing a 7% annual increase.
Average revenue per user climbed to $5.23, outperforming the $4.81 projection. Domestically, ARPU reached $9.63, beating the $8.53 Wall Street expectation.
Huffman stated that Reddit’s objective is reaching 100 million daily users in the United States, although the company hasn’t provided a specific timeframe.
Artificial Intelligence and Digital Advertising
Reddit’s AI-powered ad platform is delivering tangible results. The platform incorporates features like an AI copywriting tool specifically designed for Reddit-style advertisements and an automated image cropping system that optimizes creative assets for various ad placements.
This technology-driven strategy is enabling Reddit to compete more effectively against larger competitors like Meta’s Instagram and Facebook for advertising budgets.
The “Other revenue” segment, primarily comprising data licensing agreements, 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 simple revenue streams — he emphasized “citations” and “mind share” as key benefits. He noted that while Reddit doesn’t operate internal 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 at Meta, Snap, and Pinterest during the past year.
Morgan Stanley analysts noted that U.S. user expansion “remains key to driving multiple expansion for Reddit,” stating it would validate the platform’s importance “even in a future GenAI enabled and agentic landscape.”
Reddit’s 12-month forward price-to-earnings ratio stands at 30.40, while Snap trades at 9.93, Pinterest at 10.27, and Meta at 19.05.
Despite the impressive quarterly performance, RDDT stock remains down approximately 36% year-to-date entering Friday’s trading session. Both Snap and Pinterest have declined around 24% during the same timeframe.
Second quarter revenue guidance of $715M–$725M surpassed the $712M consensus forecast. Adjusted earnings guidance of $285M–$295M similarly exceeded the $276M average analyst estimate.
