Reddit Inc. (NYSE:RDDT) soared more than 12% in premarket trading Friday after the social media company delivered quarterly results that far exceeded Wall Street expectations and issued a confident outlook for the coming quarter.
The company posted impressive revenue growth and a sharp improvement in profitability, driven by higher engagement and stronger monetization efforts. Adjusted earnings per share came in at $0.80, beating consensus estimates by $0.29, while revenue surged 68% year-over-year to $585 million, well above the $546 million expected by analysts.
U.S. revenue climbed 67% to $480 million, while international revenue jumped 74% to $105 million, underscoring Reddit’s expanding global reach.
Net income rose to $163 million, representing 28% of total revenue, up from $30 million a year ago — a sign of growing operating leverage. Adjusted EBITDA more than doubled to $236 million, equal to 40% of revenue, compared with $94 million in the same period last year.
“444 million people come here each week for authentic conversations they can’t find anywhere else,” said Steve Huffman, Reddit Co-Founder and CEO. “And increasingly, for engagement with brands, institutions and publishers.”
Daily Active Uniques (DAUq) grew 19% to 116 million, while gross margin expanded to 91.0%, an improvement of 90 basis points year-over-year, reflecting operational efficiency even amid ongoing investment in moderation and infrastructure.
Advertising revenue surged 74% to $549 million, accounting for more than 93% of total revenue, while other revenue — including data licensing and premium subscriptions — increased 7% to $36 million, highlighting gradual progress in diversifying income sources.
Cash flow also strengthened notably: operating cash flow reached $185 million, and free cash flow hit $183 million, both more than doubling from a year earlier. Fully diluted shares declined slightly to 206.1 million, alleviating investor concerns about dilution.
For the fourth quarter, Reddit projected revenue between $655 million and $665 million and adjusted EBITDA of $275 million to $285 million, indicating continued growth momentum. The results and outlook reinforced investor confidence in Reddit’s scaling strategy and ongoing turnaround.
Bank of America analysts described the results as “another strong revenue beat with mixed user trends,” adding that “advertising execution remains top stock driver,” while raising their price target to $210 from $180. Morgan Stanley also lifted its target to $250 from $230, noting that the company’s “ability to drive higher user retention and user growth via improved personalization/onboarding [remains] key to potential multiple expansion.”