Reddit Up Big After Earnings

The surprise $1 billion share repurchase authorization was a pivotal addition to the quarter.

With $2.5B in cash and marketable securities, Reddit now has:

• Capital return optionality

• Downside valuation support

• A signal that management views the recent ~40% drawdown as overdone

This is a meaningful psychological shift for the stock and a key reason shares are up ~9%.

User growth re-accelerated meaningfully:

• Global DAUq reached 121.4M (+19% YoY)

• International DAUq rose 28% YoY, far outpacing the U.S.

Machine translation and localization are clearly working, and international growth is becoming a structural contributor rather than a future promise. This matters because international users are now monetizing faster than prior cohorts.

Advertising continues to be the clear growth driver:

• Ad revenue grew 75% YoY to $690M

• Advertising represented ~95% of total revenue

• ARPU expanded 42% globally, with U.S. ARPU up 53%

This confirms Reddit’s ad stack is not only scaling with users but improving in efficiency — a critical validation after skepticism that growth would slow as comps got tougher.

CEO Steve Huffman framed the quarter as a transition point for the platform:

“We’re entering the next era of Reddit—defined by sharper execution, global expansion, and product innovation that puts real people and conversations at the center.”

The tone was confident and forward-leaning, emphasizing execution, international scale, and turning Reddit’s authenticity into durable utility for users and advertisers.

Q1 2026 Outlook

• Revenue: $595M–$605M

• Adjusted EBITDA: $210M–$220M

While Q1 guidance implies normal seasonal deceleration from Q4, margins remain robust, and management reiterated confidence in sustained growth through 2026. Importantly, nothing in the outlook suggests a slowdown in either demand or monetization efficiency.

Reddit delivered a decisive beat across revenue, earnings, and profitability, extending its streak of strong execution. Revenue accelerated to 70% year-over-year growth, while margins remained elite at scale, the combination the market has been demanding after the stock’s recent pullback.

• Achieved 640K Bitcoin holdings and strong profitability with $163M net income (28% margin), hitting 40% adjusted EBITDA margin—a goal set at IPO. Growing to 116M daily users with 20% YoY growth through machine translation in 30 languages and improved product features.
• Advertising revenue surged 74% YoY to $549M with 75%+ advertiser growth. Improving ad performance through AI-driven models showing 20%+ conversion improvements, while expanding into lower-funnel products like Dynamic Product Ads and automated bidding.
• Launched Reddit Answers integrated into search (75M weekly searchers) and Reddit Pro tools for publishers. Focusing on app growth and international expansion in France, Brazil, India, while maintaining strong product margins despite inventory management challenges.