Reddit Inc (NYSE:RDDT) shares surged 17% in premarket trading on Friday after the company delivered a strong revenue beat for the first quarter. While diluted earnings per share of $1.01 came in below the analyst forecast of $1.11, investor focus shifted to the platform’s robust top-line growth of 69% year over year.
Revenue and User Growth Exceed Expectations
Total revenue reached $663 million, comfortably ahead of the $609.8 million consensus estimate, driven by accelerating advertising demand. Daily active unique users (DAUq) rose to 126.8 million, up 17% year over year and 4% sequentially from 121.4 million in the prior quarter. The figure also edged past the Street expectation of 126 million.
Higher-value U.S. daily users totaled 53.5 million, slightly below the 53.8 million forecast, according to Bank of America. Logged-in daily users stood at 52 million, also trailing the 52.8 million estimate.
Analyst Justin Post noted that the results reflected “another strong revenue beat while U.S. user trends [are] still soft.”
Management Highlights Platform Strength and AI Positioning
CEO Steve Huffman credited Reddit’s distinctive community-driven model for its improving financial performance and operational efficiency.
“Reddit is a one-of-one business powered by deeply engaged communities and authentic human conversation,” Huffman said in a statement accompanying the results.
Management emphasized that continued user growth combined with strong margins—gross margin reached 91.5%—positions the company well for long-term scaling. Huffman added that the platform’s structure provides “a unique advantage in the age of AI.”
Profitability and Cash Flow Show Strong Gains
Profitability improved significantly during the quarter, with adjusted EBITDA rising 131% to $266 million. Free cash flow also increased sharply to $311 million, compared with $127 million in the same period last year.
Positive Outlook Supports Momentum
For the second quarter, Reddit expects revenue to come in between $715 million and $725 million, exceeding Wall Street expectations at the midpoint of $720 million. The guidance suggests continued strength in monetisation trends.
“Reddit continues to show solid progress on improving ad performance and monetization,” Post added.
Average revenue per user climbed 44% globally to $5.23, driven by a 54% increase in the key U.S. market. Growth in logged-out users, which rose 26% worldwide, indicates expanding reach through search and discovery channels.
International Expansion Drives Further Growth
The platform also saw strong international momentum, with daily users outside the U.S. rising 26% compared with the prior year. Huffman concluded that the company’s current trajectory is “driving a rare combination of growth, profitability, and efficiency.”