Reddit Q4 Earnings & Revenues Top Estimates: Buy, Sell or Hold Stock?

Core Insights - Reddit reported fourth-quarter 2024 earnings of 36 cents per share, exceeding the Zacks Consensus Estimate by 44% and showing a sequential increase of 20 cents [1][2] - Revenues reached $427.7 million, surpassing the Zacks Consensus Estimate by 4.57% and reflecting a year-over-year surge of 71.2% [2] - The company demonstrated strong revenue growth and improved profitability, driven by effective product strategies and investments in machine learning and search [2] Financial Performance - U.S. revenues contributed 81.3% to total revenues, increasing 70.1% year over year to $347.7 million, while international revenues rose 76.6% to $80 million [4] - Advertising revenue surged 92.2% year over year to $394.5 million, with other revenue reaching $33.2 million [4] - Adjusted EBITDA increased significantly to $154.3 million from $23.2 million in the previous year, with an adjusted EBITDA margin of 36.1% [8] User Engagement Metrics - Daily Active Uniques (DAUq) rose 39% year over year to 101.7 million, with U.S. DAUq increasing 32% to 48.0 million and international DAUq up 46% to 53.7 million [5] - Weekly Active Uniques (WAUq) grew 42% year over year to 379.4 million, with U.S. WAUq at 172.2 million and international WAUq at 207.2 million [5] Cost Management - Non-GAAP sales and marketing expenses increased 29% year over year to $71.6 million, while R&D expenses rose 20.9% to $125.6 million [7] - As a percentage of revenues, non-GAAP sales and marketing expenses decreased by 550 basis points to 16.7%, R&D expenses fell 1,220 basis points to 29.4%, and general and administrative expenses decreased 490 basis points to 10.4% [7] Cash Flow and Balance Sheet - As of December 31, 2024, Reddit had cash and cash equivalents of $1.84 billion, up from $1.74 billion as of September 30, 2024 [9] - The company generated $90 million in cash from operating activities in the fourth quarter, compared to $71.6 million in the previous quarter, with free cash flow at $89.2 million [9] Guidance - For the first quarter of 2025, Reddit expects revenues between $360 million and $370 million, with adjusted EBITDA anticipated between $80 million and $90 million [11]