Reddit (RDDT) is set to report third quarter earnings after the bell on Thursday as investors watch for any signs of a slowdown in its daily active users and updates about potential expansions of AI licensing deals. Wall Street analysts tracked by Bloomberg project the social media platform will report adjusted earnings per share of $1.07 for the period, up more than 80% from its EPS of $0.59 in the same quarter last year, when Reddit reported its first profit since its IPO. The company is expected to se ...

Core Insights - Reddit's extensive archive of authentic conversations is a key driver for its monetization strategy, particularly through data licensing, which saw a 24% year-over-year increase in other revenues to $34.8 million in Q2 2025 [1][8] - The global AI datasets and licensing market is projected to grow from $381.8 million in 2024 to $1.59 billion by 2030, with a CAGR of 26.8%, positioning Reddit's user-generated content as a valuable resource for AI developers [2] - Engagement features like Reddit Answers and machine translation have expanded user participation, contributing to a 21% year-over-year growth in Daily Active Uniques (DAUq) to 110.4 million and a 22% increase in Weekly Active Uniques (WAUq) to 416.4 million [3][8] Data Licensing Strategy - Reddit's licensing strategy is anchored in its growing base of authentic conversations, creating a self-reinforcing model where increased engagement enhances the dataset's utility for AI training, leading to further revenue opportunities [4] - Despite facing competition from larger tech platforms like Meta Platforms and Alphabet, Reddit's unique archive of community-driven conversations offers a specialized dataset that is difficult to replicate [5][6] Financial Performance - Reddit's stock has increased by 33.8% year-to-date, outperforming the broader Zacks Computer & Technology sector and the Internet Software industry, which rose by 10.8% and 17.6%, respectively [6] - The Zacks Consensus Estimate for Q3 2025 earnings is projected at 49 cents per share, a significant increase from 16 cents per share in the same quarter last year [13]

Financial Data and Key Metrics Changes - The company reported total revenue of $57 million for fiscal year 2025, a 14% increase from $50.2 million in the previous year [12] - Research services revenue was $52.3 million, up 4% year over year, while data revenue contributed $4.7 million, reflecting initial data licensing deals [12] - Adjusted EBITDA for the year was $7.1 million, a significant improvement from an adjusted EBITDA loss of $3.9 million in fiscal year 2024 [16] Business Line Data and Key Metrics Changes - The core services business remains foundational, with targeted investments leading to improved quality, efficiency, and scalability [5] - The launch of the radiopharmaceutical services platform was a major milestone, expanding the company's offerings and capabilities [6][7] - Operating expenses rose by 7% in Q4 due to increased sales and marketing efforts, while R&D and G&A expenses saw modest declines [14] Market Data and Key Metrics Changes - The biotech and pharma R&D budgets remain constrained, but there are early signs of recovery, including a decrease in customer cancellations [6] - The company is focusing on strengthening relationships with big pharma, which are generally more resilient through market cycles [6] Company Strategy and Development Direction - The company aims to create the world's most comprehensive, clinically relevant tumor dataset, bridging the gap between legacy datasets and next-generation AIML-driven discovery pipelines [7] - The transition in leadership to Rob Braynen is expected to enhance the company's strategic direction, leveraging his extensive experience in life sciences and data-driven innovation [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about sustaining growth despite a tight marketplace, emphasizing the need for efficiency and better tools for marketing and sales [22] - The company anticipates a sequential increase in revenue and adjusted EBITDA profit in the upcoming quarters, supported by structural improvements made in fiscal year 2025 [17] Other Important Information - The company ended the year with $9.8 million in cash, up from $2.6 million a year ago, and remains debt-free [16] - The company plans to maintain cash neutrality in the next quarter, with projected cash growth in the second half of the year [17] Q&A Session Summary Question: Current environment and expectations for fiscal '26 - Management acknowledged that while the current environment is still tight, there are glimpses of improvement and they feel confident in sustaining growth [20][22] Question: Data licensing pipeline and expectations - Management indicated that the data licensing business is still in its early stages, with a growing pipeline and expectations for revenue to remain stable before increasing [24] Question: Radiopharmaceutical service agreements - Management described the new radiopharmaceutical services as having higher price tags and margins, with expectations of 50-60% margins due to high demand in the field [26] Question: Capital allocation and investments for growth - Management plans to focus investments on creating new datasets and enhancing data capabilities, with no significant capital expenditures expected [30][31] Question: Updates on Corellia AI programs - Management expressed excitement about the Corellia portfolio and ongoing efforts to raise funds for drug development, highlighting the potential of their drug targets [34]