Key Financial Data
- Total revenue: $585 million (+68%)
- U.S. revenue: $480 million (+67%)
- Ex-U.S. revenue: $105 million (+74%)
- Net income: $163 million
- Free cash flow: $183 million (+161%)
- Global daily active users: 116 million (+19%)
- U.S. daily active users: 51.6 million (7%)
- Global weekly active users: 443.8 million (+21%)
- U.S. weekly active users: 256 million (+37%)
- Global ARPU: $5.04 (+41%)
- U.S. ARPU: $9.04 (+54%)
- Read more Q3 media earnings coverage
Shares of Reddit surged more than 13 percent on Friday, one day after the social media platform reported third quarter (Q3) results that beat Wall Street expectations across key line items.
The California-based company reported Q3 revenue of $585 million, up 68 percent from the same period last year and above the $549 million expected by financial analysts. Earnings per share (EPS) rose to $0.80 from $0.16 a year earlier, marking Reddit’s strongest quarterly profit since its initial public offering (IPO) earlier this year.
Daily active users (DAUs) grew 19 percent year over year to 116 million, surpassing the 114 million analysts were expecting. Still, Q3 marked Reddit’s fifth consecutive period of slowing growth, following a 50 percent jump in DAUs during the second quarter of 2024. The gradual deceleration has been a concern for some investors, given that user activity directly drives Reddit’s advertising revenue, its primary source of income.
Most of the platform’s growth came from users outside the United States: Reddit reported 64.4 million international DAUs, above the 62.2 million expected, while U.S. users totaled 51.6 million, slightly below the 51.9 million estimate.
Stock Price
Earlier this year, Reddit’s traffic declined after changes to Google’s search algorithm reduced the visibility of its communities. At the time, CEO Steve Huffman warned that the company could experience “bumpy” waters ahead.
In a letter to shareholders on Thursday, Huffman said he was “encouraged by the mix of growth” seen during the third quarter and credited internal product improvements and marketing campaigns for driving user engagement. He also pointed to new artificial intelligence initiatives that have helped expand Reddit’s monetization opportunities.
Reddit recently launched Reddit Answers, a chatbot-like feature that leverages AI to surface community-sourced responses to user queries. It has also introduced AI-driven advertising and publisher tools, including Reddit Pro, which allows media organizations to monitor how their content circulates across the platform. The Associated Press, NBC News, The Hill and the New York Times are among some of its early adopters.
Looking ahead, Reddit offered stronger guidance than expected for the current quarter. The company projected fourth quarter revenue of $660 million at the midpoint of its outlook, above the $636 million consensus estimate, and adjusted EBITDA of $280 million, ahead of the $258 million forecast.
Reddit went public in March 2024, four years after its communities helped spark the meme stock trading frenzy that reshaped parts of the retail investing landscape. Its shares have since remained volatile as investors gauge whether the company can sustain user and revenue growth amid intensifying competition for online attention.
