Reddit, Inc. (NYSE: RDDT) announced its third-quarter 2024 financial results on Tuesday, surpassing analysts’ estimates across several key metrics. The social media giant’s quarterly earnings came in at 16 cents per share, exceeding analysts’ consensus projection of a loss of 8 cents.
This result highlights a substantial improvement from the same period last year, driven by a 68% increase in revenue, which reached $348.4 million. This figure surpassed the expected $311.42 million, underscoring Reddit’s strong advertising revenue and overall growth momentum.
“It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability. Reddit continues to be one of the most visited and trusted sites in the world with opportunities available to us that aren’t available to most companies,” said CEO Steve Huffman.
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Daily active uniques, or DAUq, grew by 47% year-over-year, reaching 97.2 million. This increase in user activity provided a strong foundation for revenue growth, with ad revenue growing by 56% to $315.1 million, bolstered by international expansion and improvements to ad targeting capabilities. Other revenue streams also saw remarkable growth, increasing by 547% year-over-year to $33.2 million.
Reddit’s gross margin also showed notable improvement, rising to 90.1%, up by 280 basis points from the previous year. The company reported net income of $29.9 million, a reversal from the net loss of $7.4 million in the prior year, with a net margin of 8.6%.
Adjusted EBITDA stood at $94.1 million, compared to a loss of $6.9 million last year, reflecting an Adjusted EBITDA margin of 27.0%. Operating cash flow for the quarter was $71.6 million, representing an increase of $79.3 million from the same period in 2023, and free cash flow came in at $70.3 million.
In a strategic move to enhance shareholder value, Reddit invested $66 million to net settle 1.2 million employee shares during the quarter, a transaction that Reddit likely views as a long-term investment in employee retention amid its rapid expansion.
Breaking down the revenue further, Reddit’s U.S. revenue increased by 70% to $288 million, while international revenue grew 57% to $60.4 million.
Looking ahead, Reddit has issued a revenue forecast for the fourth quarter, projecting earnings between $385 million and $400 million, above the current analyst consensus estimate of $356.716 million. The company also expects adjusted EBITDA in the range of $110 million to $125 million.
Following the release of its results, Reddit’s stock jumped nearly 25% in after-hours trading, breaching the $100-mark.
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