Reddit shares soar as Q1 earnings and guidance blow past expectations

Published 05/01/2025, 04:15 PM
© Reuters

Investing.com -- Reddit Inc (NYSE:RDDT) shares surged 15.1% Thursday after the company reported first-quarter earnings and revenue that significantly outpaced Wall Street expectations, while issuing an upbeat outlook for the current quarter. The results offered another signal that the company’s investment in advertising and AI-driven tools is beginning to pay off.

The social platform posted adjusted earnings of $0.13 per share, well ahead of the $0.01 analyst estimate. Revenue of $392.4 million marked 61% year-over-year growth, exceeding consensus expectations of $369.3 million.

Ad revenue, the company’s primary income stream, matched overall top-line growth and reached $358.6 million. Daily active uniques (DAUq), Reddit’s core user engagement metric, increased 31% year-over-year to 108.1 million.

“Over 400 million people now come to Reddit each week—because when you want real opinions, you turn to real people,” CEO Steve Huffman said in a statement. The company reported first-quarter net income of $26.2 million, a sharp turnaround from a $575.1 million net loss a year earlier.

For the second quarter, Reddit projects revenue between $410 million and $430 million, well above average analyst estimates of $392.9 million. Adjusted EBITDA is expected in a range of $110 million to $130 million, underscoring management’s optimism about near-term advertising trends.

The company’s gross margin expanded to 90.5%, up 190 basis points year-over-year, reflecting improved operating efficiency and a growing mix of digital content licensing. Reddit noted strength across its self-serve ad platform and ongoing brand adoption of newer ad formats.

The strong Q1 comes despite a seasonal step down in advertising from the robust Q4 holiday period. In the prior quarter, Reddit delivered record revenue of $427.7 million, boosted by content licensing deals and initial traction from Reddit Answers, its AI-powered chatbot.

Reddit’s push to diversify beyond advertising, through AI partnerships, data licensing, and product innovation, gives it positioning that few in the social media space can replicate. With competition intensifying among social platforms, Reddit’s community-focused ecosystem may prove to be its key differentiator in 2025.

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