Reddit rides ad boom to surprise Q1 profit
Published: 09:55 02 May 2025 EDT
Shares of Reddit (NYSE:RDDT) jumped as much as 19% in after-hours trading on Thursday after the social media company posted better-than-expected first-quarter results and issued an upbeat outlook.
The company said daily active uniques (DAUq), its key user metric, grew 31% year-over-year to 108.1 million.
Reddit reported revenue of $392 million for the quarter ended March 31, up 61% from a year earlier and topping analysts’ average estimate of $370 million, according to LSEG data. Advertising revenue accounted for $358.6 million, also a 61% increase, while other revenue rose 66% to $33.7 million.
Net income came in at $26.2 million, compared with a net loss of $575.1 million a year ago. Basic and diluted earnings per share were $0.14 and $0.13, respectively, far ahead of the expected $0.01. Adjusted EBITDA surged to $115.3 million, beating the $89 million consensus estimate.
Reddit also forecast second-quarter revenue of $420 million and adjusted EBITDA of $120 million, ahead of Wall Street estimates of $391 million and $107 million, respectively.
Gross margin improved to 90.5%, up 190 basis points from the prior year.
“Over 400 million people now come to Reddit each week—because when you want real opinions, you turn to real people,” said Steve Huffman, Reddit’s co-founder and CEO. “Twenty years in, I have never been more excited about Reddit’s future than I am now.”
Catching up to Meta and Alphabet
Analysts at Oppenheimer highlighted that Reddit’s advertiser count rose 50% year-over-year, with strength in sectors including pharmaceuticals, automotive, retail, telecom and finance. The firm also noted that machine translation tools are helping to improve engagement in international markets such as France, Spain, and Brazil.
“We believe Reddit is well positioned to continue gaining share of the ~$250B digital ad market ex-GOOG and META,” the analysts wrote. “Early monetization efforts have been successful, with pricing holding steady as impressions increased significantly in 2024.”
The brokerage said Reddit’s performance tools were driving better ad ROI, adding that “ad pricing is now starting to become a revenue tailwind.”
Oppenheimer analysts raised their price target on Reddit to $150 from $125 and maintained an “Outperform” rating, citing strength in monetization and user growth despite some moderation in April engagement trends.
Reddit shares gave back around 1.2% in early Friday trade.
