Reddit, Inc. Class A ((RDDT)) has held its Q1 earnings call. Read on for the main highlights of the call.
Reddit’s recent earnings call showcased a robust financial performance, marked by significant revenue and user growth, successful international expansion, and innovative product enhancements. Despite these positive developments, the company acknowledged challenges related to search traffic volatility and moderation issues.
Impressive Revenue Growth
Reddit reported a remarkable revenue of $392 million, marking a 61% year-over-year increase. This growth sustains a third consecutive quarter of over 60% revenue increase, highlighting the platform’s strong financial momentum.
Significant User Growth
The platform ended the quarter with 401 million weekly and 108 million daily users, both reflecting a 31% year-over-year increase. This significant user growth underscores Reddit’s expanding reach and engagement.
Strong Advertising Revenue
Advertising revenue grew 61% year-over-year to $359 million, demonstrating broad-based strength across various objectives, channels, verticals, and geographies. This highlights the effectiveness of Reddit’s advertising strategies.
International Expansion Success
International ad revenue saw an impressive 83% year-over-year growth, the fastest in three years. Focus markets like France, Spain, and Brazil grew nearly twice as fast as total international users, showcasing Reddit’s successful global expansion efforts.
Positive EBITDA and Cash Flow
Reddit achieved an adjusted EBITDA of $115 million with a margin of 29%, alongside an operating cash flow of $128 million, the highest ever. The free cash flow margin stood at 32%, reflecting strong financial health.
Innovative Product Developments
Reddit Answers, an AI search feature, reached 1 million weekly users and is expanding globally. Additionally, machine translation is now available in 13 languages, supporting international growth and user engagement.
Search Traffic Volatility
The company experienced variability in search traffic due to changes in Google’s algorithm, which could potentially disrupt short-term user growth. This highlights a challenge in maintaining consistent user acquisition.
Moderation Challenges
Reddit is facing ongoing challenges in maintaining content quality and moderation, with a need to evolve account creation processes to combat fake accounts and bots.
Forward-Looking Guidance
Looking ahead to Q2 2025, Reddit projects revenue between $410 million and $430 million, with an expected adjusted EBITDA of $110 million to $130 million. This indicates year-over-year growth of 46% to 53% and 180% to 230%, respectively. These forecasts underscore Reddit’s strategic focus on expanding its user base and enhancing its advertising capabilities.
In summary, Reddit’s earnings call reflected a strong financial performance with impressive growth metrics and strategic advancements. While challenges such as search traffic volatility and moderation issues persist, the company’s forward-looking guidance suggests continued robust growth and expansion.