Reddit Q2 revenue jumps 61% to $805 million

Reddit reported second-quarter revenue of $805 million, a 61% increase from $500 million in the same period last year. The company’s net income rose to $253 million, or $1.25 per share, compared with $89 million, or $0.45 per share, a year earlier.

The results exceeded the $730.4 million revenue estimate from LSEG. Reddit also beat Wall Street estimates on both revenue and earnings for the quarter.

User growth and advertising

Global daily active unique users rose 18% year-over-year to 130.3 million in the second quarter. In the United States, daily active unique users totaled 53.2 million. Regarding the trajectory of this U.S. metric, source S2 reports a 6% annual increase while source S5 notes a sequential decline from the first quarter’s 53.5 million.

Chief Operating Officer Jen Wong stated that the company’s advertiser count grew 70% year-over-year in the second quarter. Overall average revenue per user was $6.18, while the U.S. figure stood at $11.85.

AI licensing and cash flow

Revenue from data licensing, categorized as other revenue, increased 24% year-over-year to $43 million. Reddit’s top partners in this segment are OpenAI and Google.

Free cash flow doubled to $261 million from $111 million in the previous year. CEO Steve Huffman noted that search referrals were choppy in the quarter and traffic was more volatile later in the period.

Third-quarter outlook

Reddit forecasts third-quarter revenue between $860 million and $870 million. This range exceeds analyst expectations, which clustered around $828 million to $829.1 million depending on the source.

The company expects third-quarter adjusted earnings before interest, taxes, depreciation, and amortization to fall between $385 million and $395 million. Wall Street projections for this metric ranged from $368 million to $369 million.

Following the earnings release, Reddit’s stock declined in after-hours trading. Reports on the magnitude of the drop varied, with source S2 reporting a 9% decline, source S5 reporting a decline of over 10%, and source S6 reporting a 6% decline.