Reddit (RDDT) Surges 18% on Q2 Earnings Beat

by MarketNewsData

Reddit crushed Q2 expectations with 78% revenue growth and a surprise profit, driven by surging ad demand and early success in AI monetization—sending the stock up 18%.

Earnings:

  • Revenue: $500 million (↑78% YoY)
  • Adjusted EPS: $0.45 (vs. ~$0.19 est.)
  • GAAP Net Income: $89 million (net margin: 17.9%)
  • Adjusted EBITDA: $165 million (33% margin)

Reddit delivered a blowout quarter, beating revenue and earnings estimates by wide margins. Advertising growth and operational leverage drove profitability.

Revenue Breakdown

  • Advertising Revenue: ~$465 million (↑84% YoY)
  • Other Revenue (Data licensing, etc.): ~$35 million (↑24% YoY)
  • Ads remain the core business—over 93% of total revenue.

User Metrics

  • Daily Active Unique Users (DAUq): 110.4 million (↑21% YoY)
    • U.S.: 50.3 million (↑11%)
    • International: 60.1 million (↑32%)
  • Weekly Users of Reddit Answers (AI Tool): 6 million (vs. 1 million prior quarter)

Reddit’s engagement is growing rapidly outside the U.S., bolstered by translation features now supporting 23 languages.

Q3 2025 Outlook

  • Revenue: $535–545 million (above consensus)
  • Adjusted EBITDA: $185–195 million

The company guided well ahead of expectations, suggesting continued strength in advertising demand.

Conference Call Highlights

  • CEO Steve Huffman emphasized strong advertiser feedback from Cannes and traction of AI-driven tools like Reddit Answers and Reddit Insights.
  • CFO Drew Vollero noted growth across nine of Reddit’s top 15 ad verticals, each rising over 75% YoY—especially in tech, finance, pharma, and retail.
  • Reddit also saw improved ad engagement rates and returns, leading to higher spend per advertiser.

Why the Stock Jumped 18%

  1. Major Ad Revenue Beat: 84% YoY growth crushed expectations.
  2. Profitability Surprise: Rare for a newly public tech platform, Reddit posted both GAAP profits and strong EBITDA margins.
  3. AI Monetization Traction: Reddit Answers and ad tools are helping advertisers better target users and measure ROI.
  4. Strong Q3 Guide: Suggests momentum is accelerating.

Reddit (RDDT) – August 1, 2025

  • Open: $182.00
  • High: $196.68
  • Low: $177.77
  • Close: $188.64 (▲17.47%)

Investor Takeaway

Reddit is quickly scaling into a profitable, high-growth ad business—faster than many peers. With expanding global reach and AI-led monetization, it’s now proving it can convert engagement into dollars.

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