Key Takeaways Reddit's Q4 ad revenue jumped 75% as ARPU rose 42% and DAUs grew 19% year over year. RDDT's AI-powered Max campaigns drove up to 27% more conversions with lower costs. Snap's Q4 ad revenue rose 5%, but DAUs fell by 3 million quarter over quarter. Reddit (RDDT) and Snap (SNAP) are leading social media platforms that monetize user engagement through digital advertising. While RDDT is an emerging social media platform, gaining traction with community-driven advertising, Snap focuses on visual mes ...

Core Insights - Reddit (RDDT) shares have declined 46.2% in the past month, significantly underperforming the broader Zacks Computer & Technology sector's 2.1% decline and the Zacks Internet - Software industry's 5.3% drop [1][10] Company Performance - Reddit's shares have underperformed compared to peers like Snap (SNAP), Meta Platforms (META), and Pinterest (PINS), with Snap and Pinterest shares down 37.5% and 30.8% respectively, while Meta's shares increased by 6% [2] - The company reported a 75% year-over-year increase in advertising revenues, reaching $690 million in the fourth quarter of 2025, driven by strong user engagement and improvements in Average Revenue Per User (ARPU), which rose 42% year-over-year to $5.98 [6][8] - Daily active users (DAUs) increased by 19% year-over-year to 121 million, and weekly active users (WAUs) grew by 24% year-over-year to 471 million [7] Competitive Landscape - Reddit faces stiff competition from Snap, Meta, and Pinterest, with Snap experiencing a 28% year-over-year increase in total active advertisers due to improved advertising demand [14] - Meta's advertising revenues grew by 24.3% year-over-year to $58.14 billion, accounting for 97.1% of its total revenues in the fourth quarter of 2025 [15] - Pinterest is expanding its advertising capabilities through acquisitions, such as its agreement to acquire tvScientific, enhancing its advertising business on connected TV platforms [16] Valuation and Future Outlook - Reddit's stock is currently trading at a premium Price/Sales ratio of 8.33, compared to the broader sector's 6.54, indicating potential overvaluation [17] - For the first quarter of 2026, Reddit expects revenues between $595 million and $605 million, with a Zacks Consensus Estimate of $614.09 million, reflecting a year-over-year growth of 56.51% [12] - Earnings estimates for the first quarter are pegged at 60 cents per share, indicating a significant year-over-year growth of 361.54% [13]

Financial Data and Key Metrics Changes - Reddit achieved total revenue of $2.2 billion in 2025, representing a 69% year-over-year increase, with Q4 revenue reaching $726 million, up 70% year-over-year [4][12][23] - Net income for the full year was $530 million, with Q4 net income hitting $252 million, which is 35% of revenue [23][25] - Adjusted EBITDA for Q4 was $327 million, representing a 45% margin, while full-year adjusted EBITDA was $845 million, with a 38% margin [23][25] - Free cash flow crossed $250 million in Q4, totaling $684 million for the year, more than triple the previous year [23][25][29] Business Line Data and Key Metrics Changes - Advertising revenue in Q4 grew 75% year-over-year to $690 million, driven by strong performance across various objectives and channels [12][23] - Other revenue, including content licensing, reached $36 million, up 8% [25] - The total active advertiser count grew by over 75% year-over-year in Q4, with significant growth in both large and small to medium businesses [14][15] Market Data and Key Metrics Changes - U.S. revenue increased by 68%, while international revenue grew by 78% year-over-year [14][25] - Daily active users reached over 121 million, up 19% year-over-year, and weekly active users exceeded 471 million, up 24% [4][12] Company Strategy and Development Direction - Reddit is focusing on enhancing user experience through improved onboarding and search functionalities, aiming to drive user growth and engagement [6][9][19] - The company is investing in automation and unique advertising solutions to enhance advertiser value across the full funnel [19][21] - A $1 billion share repurchase program was announced, reflecting confidence in growth and commitment to shareholder returns [10][30] Management's Comments on Operating Environment and Future Outlook - Management highlighted a significant shift in the internet landscape, emphasizing the importance of community and authentic conversations on Reddit [5][6] - The company is optimistic about its positioning for 2026, with plans to scale automation and enhance measurement capabilities [19][22] - Management expressed confidence in the ongoing momentum and the ability to deliver strong financial results [10][23] Other Important Information - Reddit plans to phase out the distinction between logged-in and logged-out users in reporting, focusing instead on overall user engagement [9][32] - The company is committed to maintaining a strong cash position while pursuing growth opportunities through investments and potential acquisitions [30][31] Q&A Session Summary Question: Why do a buyback instead of putting that money towards future growth and product initiatives? - Management stated that the strategy allows for capital return to shareholders while still investing in the business and pursuing M&A opportunities [36][39] Question: Can you elaborate on the revamped onboarding and its impact on retention? - Management noted that streamlining onboarding improves retention and that integrating search with answers has shown positive early results [42][44] Question: How do you see AI-generated content evolving on the platform? - Management acknowledged the potential for AI-generated content but emphasized the importance of transparency and maintaining human interaction [51][53] Question: What is the monetization opportunity with logged-out users? - Management clarified that both logged-in and logged-out users see ads, and the focus is on increasing engagement to enhance monetization opportunities [59][63] Question: How are partnerships with Google and OpenAI evolving? - Management indicated that partnerships are shifting towards product collaboration, aiming to enhance user engagement and community interaction [66][68]

Financial Data and Key Metrics Changes - Reddit achieved total revenue of $2.2 billion in 2025, representing a 69% year-over-year increase, with Q4 revenue reaching $726 million, up 70% year-over-year [4][12][23] - Net income for the full year was $530 million, with Q4 net income hitting $252 million, which is 35% of revenue [23][25] - Adjusted EBITDA for Q4 was $327 million, representing 45% of revenue, and full-year adjusted EBITDA was $845 million, with a 38% margin [23][25] - Free cash flow crossed $250 million in Q4, reaching $264 million, which is 36% of revenue [23][24] Business Line Data and Key Metrics Changes - Advertising revenue in Q4 grew 75% year-over-year to $690 million, driven by strong performance across various objectives and channels [12][25] - Other revenue, including content licensing, reached $36 million, up 8% [25] - Average revenue per user (ARPU) grew 42% year-over-year to $5.98 [26] Market Data and Key Metrics Changes - U.S. revenue grew 68% year-over-year, while international revenue increased by 78% [14][26] - Total active advertiser count grew by over 75% year-over-year in Q4, indicating strong demand across all segments [15] Company Strategy and Development Direction - Reddit is focusing on enhancing user experience through improved onboarding and search functionalities, aiming to drive user growth and engagement [9][19] - The company is investing in automation and unique advertising solutions to improve advertiser performance and streamline onboarding processes [15][19] - A $1 billion share repurchase program was announced, reflecting confidence in growth and commitment to shareholder returns [10][30] Management's Comments on Operating Environment and Future Outlook - Management highlighted a significant shift in the internet landscape, emphasizing the importance of community and authentic interactions on Reddit [5][6] - The company is optimistic about its growth trajectory, with plans to enhance product offerings and user engagement in 2026 [10][22] - Management acknowledged the challenges posed by AI-generated content but emphasized the need for transparency and maintaining human-centric interactions [54][70] Other Important Information - Reddit plans to phase out the distinction between logged-in and logged-out users in reporting, focusing instead on overall user engagement [9][32] - The company is committed to maintaining a strong cash position while pursuing growth opportunities through investments and potential acquisitions [30][31] Q&A Session Summary Question: Why do a buyback instead of investing in future growth? - Management stated that the buyback is part of a balanced capital allocation strategy, allowing for investment in the business, M&A, and shareholder returns [36][39] Question: Can you elaborate on the revamped onboarding and its impact? - Management noted that streamlining onboarding improves retention and that integrating search with answers has led to increased query volumes [44][45] Question: How do you view AI-generated content on the platform? - Management acknowledged the role of AI in enhancing communication but emphasized the importance of maintaining human interactions and transparency [54][68] Question: What is the monetization opportunity with logged-out users? - Management clarified that both logged-in and logged-out users see ads, and the focus is on increasing engagement to enhance monetization opportunities [63][64] Question: How are partnerships with Google and OpenAI evolving? - Management indicated that partnerships are shifting towards product collaboration, aiming to enhance user engagement and community interaction [68][70]

Financial Data and Key Metrics Changes - Reddit achieved total revenue of $2.2 billion in 2025, representing a 69% year-over-year increase, with Q4 revenue reaching $726 million, up 70% year-over-year [3][11][21] - Net income for the full year was $530 million, with Q4 net income hitting $252 million, which is 35% of revenue [21][23] - Adjusted EBITDA for Q4 was $327 million, representing 45% of revenue, while full-year adjusted EBITDA was $845 million, with a margin of 38% [21][23] - Free cash flow crossed $250 million in Q4, totaling $684 million for the year, more than triple the previous year [21][23] Business Line Data and Key Metrics Changes - Advertising revenue grew 75% year-over-year in Q4, reaching $690 million, driven by performance ads and strong growth across various channels and verticals [11][21][23] - Other revenue, including content licensing, reached $36 million, up 8% [23] - Average revenue per user (ARPU) grew 42% year-over-year to $5.98 [24] Market Data and Key Metrics Changes - U.S. revenue increased by 68%, while international revenue grew by 78% year-over-year [12][24] - The total active advertiser count grew by over 75% year-over-year in Q4, indicating strong demand across all segments [12][13] Company Strategy and Development Direction - Reddit is focusing on enhancing user experience through improved onboarding and search functionalities, aiming to drive user growth and engagement [5][8][18] - The company is investing in automation and unique advertising solutions to improve advertiser performance and streamline onboarding processes [12][18] - A $1 billion share repurchase program was announced, reflecting confidence in growth and commitment to shareholder returns [9][27] Management's Comments on Operating Environment and Future Outlook - Management highlighted a significant shift in internet usage, with more users seeking authentic community interactions, positioning Reddit as a trusted platform [4][5] - The company is optimistic about 2026, expecting continued growth driven by enhanced product offerings and advertising solutions [20][32] Other Important Information - Reddit plans to phase out the distinction between logged-in and logged-out users in reporting, focusing instead on overall user engagement [8][30] - The company is committed to maintaining a strong cash position while pursuing growth opportunities through investments and potential acquisitions [27][28] Q&A Session Questions and Answers Question: Why do a buyback instead of putting that money towards future growth and product initiatives? - Management stated that the strategy allows for capital return to shareholders while still investing in the business and pursuing M&A opportunities [34][36] Question: Can you elaborate on the revamped onboarding and its impact on retention? - Management noted that streamlining onboarding improves retention and that integrating search with answers has shown positive early results [40][42] Question: How do you see AI-generated content evolving on the platform? - Management emphasized the importance of transparency and labeling for AI-generated content, ensuring that Reddit remains a platform for human interaction [49][51] Question: What is the monetization opportunity with logged-out users? - Management clarified that both logged-in and logged-out users see ads, and the focus is on increasing engagement to enhance monetization opportunities [57][62] Question: Can you discuss the partnerships with Google and OpenAI? - Management highlighted the growing importance of Reddit as a cited source in AI answers and the shift towards product partnerships with these companies [64][66]

Core Insights - Reddit (RDDT) shares have increased by 35.9% over the past 12 months, outperforming the Zacks Computer & Technology sector's growth of 22.1% and the Zacks Internet - Software industry's increase of 0.8% [1][7] User Engagement and Revenue Growth - In Q3 2025, Average Revenue Per User (ARPU) rose by 41% year over year to $5.04, indicating effective portfolio expansions driving higher monetization [2] - Reddit reported 116 million daily active users and 444 million weekly active users in Q3 2025, both reflecting a 20% year-over-year increase [2] - Advertising revenues surged by 74% year over year to $549 million in Q3 2025, driven by enhanced user engagement and AI tools [5] Advertising Innovations - Reddit launched the beta version of Max campaigns, an AI-powered automated ad solution that optimizes targeting, creative, placements, and budget in real time [6] - Early testers of Max campaigns experienced up to 27% more conversions and lower costs, demonstrating both efficiency and effectiveness [8] Financial Projections - For Q4 2025, Reddit expects revenues between $655 million and $665 million, with the Zacks Consensus Estimate at $668.52 million, indicating a year-over-year growth of 56.30% [9] - The consensus estimate for Q4 earnings is 97 cents per share, reflecting a year-over-year growth of 169.44% [10] - For the full year 2025, the Zacks Consensus Estimate for revenues is $2.15 billion, indicating a year-over-year growth of 65.01% [10] Competitive Landscape - Reddit faces stiff competition from companies like Snap, Meta Platforms, and Pinterest, all of which are expanding their advertising capabilities in the growing digital ad market [11] - Snap's advertising revenues increased by 5% year over year to $1.32 billion in Q3 2025, while Meta's advertising revenues rose by 25.6% year over year to $50.08 billion [12][13] - Pinterest is expanding its advertising portfolio through acquisitions, such as its agreement to acquire tvScientific, enhancing its advertising capabilities [14] Valuation Concerns - Reddit stock is currently trading at a premium, with a forward 12-month Price/Sales ratio of 15.19, higher than its median of 14.24 and the broader sector's 7.41 [15] - The company has a Zacks Rank 3 (Hold), suggesting a cautious approach to accumulating the stock [18]

Core Insights - Reddit (RDDT) shares have surged 96.7% over the past six months, significantly outperforming the broader Zacks Computer & Technology sector, which rose 27.4% [1]. Group 1: Performance Comparison - Reddit's shares have outperformed peers such as Pinterest (PINS), Meta Platforms (META), and Snap (SNAP), with Pinterest shares dropping 18.8% and both Meta and Snap losing 6.6% in the same period [2]. Group 2: User Engagement and Revenue Growth - The company's strong performance is attributed to increased user engagement, with daily active users reaching 116 million and weekly active users at 444 million, both up 20% year over year [6]. - Average Revenue Per User (ARPU) increased by 41% year over year to $5.04, indicating effective monetization strategies [3]. - Advertising revenues surged 74% year over year to $549 million, driven by a growing active advertiser count, which expanded by over 75% year over year [11]. Group 3: AI and Advertising Tools - Reddit is leveraging AI-powered tools to enhance user engagement and search functionality, including the introduction of Reddit Answers, which has seen over 75 million weekly searches [7][8]. - The company has introduced new advertising tools such as Reddit Pixel, Conversion API (CAPI), and Dynamic Product Ads (DPA) to support campaign performance and attract more advertisers [10]. Group 4: Future Earnings Estimates - For Q4 2025, Reddit expects revenues between $655 million and $665 million, with a Zacks Consensus Estimate of $668.52 million, reflecting a year-over-year growth of 56.30% [12]. - The consensus estimate for earnings per share for Q4 is 97 cents, indicating a year-over-year growth of 169.44% [13]. - For the full year 2025, the revenue estimate is $2.12 billion, showing a year-over-year growth of 62.78% [13]. Group 5: Valuation and Investment Opportunity - Reddit's stock is currently trading at a premium, with a forward Price/Sales ratio of 14.44, higher than its median of 14.39 and the sector's average of 6.72 [14]. - The company holds a Zacks Rank 1 (Strong Buy) and a Growth Score of A, indicating a strong investment opportunity [17].

Core Insights - Reddit (RDDT) shares are trading at a premium with a forward 12-month Price/Sales (P/S) ratio of 12.97X, significantly higher than the Zacks Computer and Technology sector's 6.75X and the Zacks Internet - Software industry's 4.95X [1][8] - The company has seen a 19.1% increase in shares year-to-date, although this is below the broader Zacks Computer & Technology sector's rise of 24.2% [5] - Reddit's advertising revenue surged 74% year-over-year to $549 million, driven by a 75% increase in active advertisers [8][12] Financial Performance - RDDT's shares have outperformed peers like Pinterest (PINS), Meta Platforms (META), and Snap (SNAP), which have forward 12-month P/S ratios of 3.88X, 6.88X, and 2.13X respectively [2][8] - The company reported 116 million daily active users and 444 million weekly active users, both up 20% year-over-year [11] - Average Revenue Per User (ARPU) grew 41% year-over-year to $5.04, indicating effective monetization strategies [11] User Engagement and Growth Strategies - Reddit's expanding portfolio, including unique ad solutions like Dynamic Product Ads (DPA), has driven advertiser adoption and performance [12] - International growth is a focus, with ARPU rising 39% year-over-year to $1.84 in international markets [13] - The introduction of Reddit Answers has increased user engagement, with over 75 million weekly searches on the platform [14] AI and Technological Advancements - The company has invested in AI-powered tools to enhance user experience and community moderation, launching Reddit Pro tools for publishers [17][18] - These tools aim to improve content sharing and engagement for Reddit's 110 million daily active users [18] Future Outlook - For Q4 2025, Reddit expects revenues between $655 million and $665 million, with a Zacks Consensus Estimate of $668.07 million, reflecting a year-over-year growth of 56.20% [19] - The consensus earnings estimate is pegged at 98 cents per share, indicating a year-over-year growth of 172.22% [20] - The company's strong advertising business and improved user experience justify its premium valuation, supported by a Zacks Rank 1 (Strong Buy) and a Growth Score of A [21]

Financial Data and Key Metrics Changes - Reddit reported total revenue of $585 million for Q3 2025, representing a 68% year-over-year increase [3][11][17] - The company achieved a net income of $163 million, with a net margin of 28%, an improvement of $133 million from the previous year [3][17][24] - Adjusted EBITDA margin reached 40%, marking the first time this profitability goal set at IPO was achieved [3][17][24] - Average revenue per user (ARPU) grew 41% year-over-year to $5.04 [19] Business Line Data and Key Metrics Changes - Advertising revenue grew 74% year-over-year to $549 million, driven by broad-based strength across objectives, verticals, and geographies [11][19] - Other revenue, including data licensing, reached $36 million, up 7% year-over-year [19] - The total active advertiser count expanded by over 75% year-over-year in Q3 [11] Market Data and Key Metrics Changes - Revenue growth in the U.S. was 67% year-over-year, while international revenue grew 74% [19] - The company reported 116 million daily active users (DAUQ) and 444.444 million weekly active users (WAUQ), both growing around 20% year-over-year [3] Company Strategy and Development Direction - Reddit's strategy focuses on enhancing user experience through product improvements, search capabilities, and international growth [5][8] - The company aims to grow app users by improving retention and diversifying traffic sources, including organic, paid, and publisher-driven [8] - Investments in advertising solutions and unique ad formats are intended to drive performance and efficiency for advertisers [12][15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the operating environment, noting stability but low visibility due to external factors like tariffs [72] - For Q4 2025, revenue is estimated to be between $655 million and $665 million, representing 53% to 55% year-over-year growth [24] - The company aims for a North Star adjusted EBITDA margin of over 50% in the medium term [75] Other Important Information - Reddit is focusing on improving onboarding experiences to enhance user engagement and retention [27][50] - The company is investing in tools for moderators to help grow and strengthen communities [5][6] Q&A Session Summary Question 1: User growth trends and traffic diversification - Management noted that product initiatives, including machine translation, were significant contributors to user growth, with a focus on improving the first session user experience [31][32] Question 2: Revenue opportunity from Reddit Pro - Reddit Pro is seen as a way to bring value to the platform by increasing engagement and potentially converting that into revenue [36][38] Question 3: Marketing spend and user acquisition - The company is currently spending low to mid-single digits as a percentage of revenue on marketing, with a focus on quality user acquisition [40] Question 4: Engagement of users acquired through performance ads - Management highlighted that brand campaigns have led to increased app installs and awareness, providing a foundation for future performance [44][46] Question 5: Simplified onboarding flow results - Early results from the simplified onboarding flow are expected soon, with a focus on streamlining the user experience [50] Question 6: LLM licensing and data value - Management stated that relationships with LLM companies are healthy, focusing on mutual benefits and enhancing user experiences [53][66]

Financial Data and Key Metrics Changes - Revenue grew 78% year over year to $500 million, marking the fastest quarterly growth rate since 2022 [7][28] - Daily active users increased to 110 million, up 21% year over year, with growth in both the U.S. and international markets [7] - Adjusted EBITDA reached $167 million, with a margin of 33%, up over 1,900 basis points year over year [28][29] - GAAP net income was $89 million, translating to $0.48 per basic share [40] Business Line Data and Key Metrics Changes - Advertising revenue grew 84% year over year to $465 million, driven by broad-based strength across the business [20][31] - Other revenue, including data licensing, reached $35 million, growing 24% year over year [31] - Average revenue per user (ARPU) increased 47% year over year to $4.53 [31] Market Data and Key Metrics Changes - Revenue in the U.S. grew significantly, with international markets also showing strong performance, particularly in Europe [31] - The total active advertiser count expanded by over 50% year over year [20] Company Strategy and Development Direction - The company is focusing on improving the core product, enhancing search capabilities, and expanding internationally [12][15] - Strategic investments are being made in sales, marketing, and machine learning to drive user engagement and revenue growth [34][38] - The company is deprioritizing some initiatives, such as the user economy, to concentrate resources on areas that will drive immediate results [13][45] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the unique role Reddit plays in human conversation and its potential for growth [8][10] - The company sees a significant opportunity in becoming a trusted source of information in an increasingly automated world [10][12] - For Q3 2025, the company estimates revenue in the range of $535 million to $545 million, representing 54% to 56% year-over-year growth [41] Other Important Information - The company is investing in machine translation to unlock Reddit for millions of users across various regions [16] - The launch of new products like Dynamic Product Ads and Reddit Insights is expected to enhance advertiser performance and user engagement [22][24] Q&A Session Summary Question: What is one memorable discussion you had at the Cannes Lions Festival? - Management highlighted a discussion where an advertiser realized a new customer segment and expressed excitement about the quality of the team [43] Question: What projects are being prioritized over the user economy? - The focus is on improving user engagement through core app improvements and diversifying traffic sources [45] Question: How are U.S. user trends evolving? - There was a slower start in April, but traction improved throughout Q2, with higher daily active users reported in July [53][54] Question: What innovations are expected in the advertising business? - Exciting developments include Dynamic Product Ads and automation features that enhance advertiser onboarding and performance [56][57] Question: How is the search experience evolving with Reddit Answers? - The company is unifying the search experience to integrate Reddit Answers, making it more accessible for users [63] Question: How have advertiser relationships evolved? - The company has created a global accounts team to better service larger clients and is seeing increased demand for integrated advertising solutions [66] Question: What are the key learnings from marketing efforts? - There is a need to build awareness and consideration, especially outside the U.S., and to create a unique search experience on Reddit [75][78]