iWorld
Reddit Q4 revenue rises 70 per cent to $726 million, users hit 121.4 million
CALIFORNIA: Reddit is cashing in on conversation. The social-media firm beat forecasts, guided above expectations and unveiled a $1 billion share buyback, as artificial intelligence tools make its ad platform more potent and more attractive to marketers.
Fourth-quarter revenue surged 70 per cent year-on-year to $726 million, beating estimates of $665.4 million. Earnings per share hit $1.24, well ahead of the 94 cents analysts expected. The update, released alongside a bullish outlook, sent shares up 4 per cent in after-hours trade.
User and monetisation metrics were equally strong. Daily active unique visitors rose 19 per cent to 121.4 million in the quarter ended December 31. Global average revenue per user climbed 42 per cent, a sign that Reddit is extracting more dollars from its growing audience.
The company forecast first-quarter revenue of $595 million to $605 million, above analysts’ average estimate of $577.2 million, according to LSEG data. It also projected adjusted EBITDA of $210 million to $220 million, topping expectations of $202.9 million.
Reddit’s model rests on intent and context. Ads appear directly within subreddit discussion threads, letting brands reach tightly defined communities already discussing relevant topics. That promise is translating into higher spending.
The active advertiser base jumped more than 75 per cent in the fourth quarter, fuelled by new account additions across channels, says chief operating officer Jen Wong on a call with analysts.
AI is increasingly central to the pitch. Reddit’s ad stack now features an AI copywriter that produces platform-specific ad copy and an image auto-crop tool to quickly format creatives. The company is also rolling out AI-powered Max campaigns in beta, which automate campaigns by adjusting bids to hit target costs per result and dynamically selecting headlines and creatives. This move intensifies competition with Meta.
Growth is broad. Eleven of Reddit’s top 15 advertising verticals posted revenue growth of 50 per cent or more year-on-year. Retail, pharmaceuticals, financial services and technology led the charge.
Industry watchers see a virtuous cycle forming.
“Expectations were already high coming into the quarter, but the results still surprised by showing how tightly product momentum, advertiser demand, and user engagement are now reinforcing one another,” says Jeremy Goldman, senior director at Emarketer.
Add a maiden $1 billion share repurchase plan to the mix and the message is clear. Reddit is turning scale into sales and AI into advantage, and advertisers are following the money.
