Steve Huffman, founder and CEO of Reddit, speaks during the WSJ Tech Live conference organized by the Wall Street Journal at Montage Laguna Beach in Laguna Beach, California, on Oct. 21, 2024.
Frederick J. Brown | Afp | Getty Images
Reddit reported better-than-expected profit and loss in its first-quarter report on Thursday, and also issued an optimistic forecast. The stock jumped more than 9% in extended trading.
Here’s how the company fared compared to LSEG’s ratings:
- Earnings per share: $1.01 vs. 58 cents expected
- Net worth: $663 million versus $611 million expected
Revenue jumped 69% in the quarter from $392 million a year ago, Reddit said in an earnings release. Net income rose to $204 million, or $1.01 per share, from $26 million, or 13 cents per share, a year earlier.
Reddit said second-quarter sales should be $715 million to $725 million, ahead of analyst estimates of $712 million. Adjusted earnings will be between $285 million and $295 million, up from an average estimate of $276 million.
Strong results continue to be a trend in online marketing. Meta again Alphabetsdigital ad leaders, both beat the revenue in their earnings reports on Wednesday, showing their fastest growth in years. They also revealed plans to increase their spending on intelligence infrastructure.
Cryptocurrency shares rose on Thursday, while Meta shares fell, underscoring investor concerns about parent Facebook’s heavy use of AI and a lack of cloud business.
The CEO of Reddit, Steve Huffman, told analysts during a call on Thursday that the company’s social media business has grown significantly despite not spending much money on expenses. He noted that Reddit has now had seven consecutive quarters of revenue growth of more than 60% and that the company “has a record revenue of over $300 million.”
“At the same time, our capital costs remain as low as $1 million, underscoring the beauty of Reddit’s super-light model,” Huffman said. “If you look at over 300 publicly traded technology companies, there’s only one that combines this kind of growth, profitability and efficiency, and that’s Reddit.
Reddit’s daily unique worldwide users, or DAUq, rose 17% year over year to 126.8 million in the quarter, ahead of analyst estimates of 125.9 million. The US company’s DAUq came in at 53.5 million in the first quarter, up 7% year-over-year.
Huffman told analysts that Reddit now “has a goal of reaching 100 million US users every day and they’re working on a strategy to get us there,” but he didn’t disclose a timeline.
Average revenue per user, or ARPU, was $5.23, beating analyst estimates of $4.81. The company’s US-specific ARPU came in at $9.63, ahead of the $8.53 that Wall Street was projecting.
The social media company’s “Other income” category, which includes its data licensing business, jumped 15% year over year to $39 million. Google and OpenAI are two of Reddit’s main data licensing partners.
Some of the benefits of the business licensing Reddit’s data outside of revenue include “citations” and “brainstorming,” Huffman said. He also said that “these companies have data centers, basic models” that Reddit does not have internally but are essential to the social media company’s brand and growth strategy.
“We have important partnerships with Google and OpenAI,” Huffman said. Those mean a lot to us, and I think they work together. We continue to inform them.”
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