Reddit CEO Steve Huffman stands on the floor of the New York Stock Exchange (NYSE) after ringing the bell to set the stock price at $47 for an initial public offering (IPO) in New York City on March 21, 2024.
Spencer Pratt | Getty Images
redditShares soared 7% on Friday after the company beat expectations for the third quarter and showed strong growth in advertising.
The social media platform’s revenue rose 68% year over year to $585 million, beating LSEG’s forecast of $546 million. Earnings per share totaled 80 cents, beating expectations of 51 cents.
Reddit also announced better-than-expected revenue guidance for the fourth quarter. The company expects sales of $655 million to $665 million, higher than Wall Street’s forecast of $638 million.
Morgan Stanley analyst Brian Nowak wrote that these results “speak to continued progress across the company’s advertising and platform efforts.” “We believe we have a long road ahead for both active advertiser growth (up 75% year-over-year in Q3) and existing advertiser penetration.”
According to Reddit, nine of the top 15 advertisers in the top 15 industries grew by more than 50%. Nowak highlighted Reddit’s continued investment in automation, which is improving its return on ad spend.
Daily active users rose 19% year over year to 116 million, beating Wall Street’s expectations of 114 million.
Reddit attracted more people from Google to the platform and generated advertising dollars from those who created accounts. The company makes more money from logged-in users and has recently expressed concern that AI chat apps like ChatGPT and Google’s AIOverview could impact new user growth.
“We look forward to continuing to do this with these partners, but they are not the primary traffic drivers today,” CEO Steve Huffman said on an earnings call. “But I think there’s a lot of opportunity there as we continue to work together.”
The company’s daily active unique users rose 7% year-over-year to 23.1 million, but this was slower than the 12% growth seen in the second quarter. Globally, the number of logged-in users increased by 14% to 50.2 million.
Reddit’s other revenue, which includes data licensing partnerships with Google and OpenAI, rose 7% year over year to $36 million.
