Reddit reported third quarter earnings that exceeded Wall Street forecasts, driven by robust international user growth and expanding advertising revenue. The social media platform posted revenue of $585 million for the quarter ending September 30, surpassing analyst expectations of $549 million, according to Bloomberg. This marks a 68% increase compared to the same period last year.
Daily active users (DAUs) rose 19% year-over-year to 116 million, slightly ahead of the 114 million projected. While this beat expectations, it also continued a trend of slowing user growth, a concern for some investors. Reddit has now reported five consecutive quarters of decelerating DAU growth since a surge of over 50% in Q2 2024. Following the earnings release, Reddit’s stock experienced volatility rising as much as 15% in after hours trading before dipping below the flat line. However, shares rebounded with a 12% gain in pre-market trading on Friday.
Reddit’s international user base was a key driver of Q3 performance, with 64.4 million DAUs reported, ahead of the 62.2 million expected. U.S. DAUs came in slightly below forecasts at 51.6 million versus the anticipated 51.9 million. Earlier this year, Reddit’s traffic was impacted by changes to Google’s search algorithm, which CEO Steve Huffman acknowledged in May, cautioning that the near term could be “more bumpy than usual.”
In a letter to shareholders, Huffman expressed optimism about the company’s growth mix, crediting internal product development and marketing efforts for the improved traffic. Reddit also reported earnings per share of $0.80, a sharp increase from $0.16 in the same quarter last year, when it posted its first profit as a public company. Looking ahead, Reddit offered a bullish forecast for Q4, projecting revenue of $660 million at the midpoint of its guidance—above the $636 million expected. The company also anticipates adjusted EBITDA of $280 million, topping analyst estimates of $258 million.