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W6/Getty Images; Jenny Chang-Rodriguez/BI
- Reddit’s shares jumped 25% after reporting a profitable quarter with revenue surpassing forecasts.
- The platform experienced a 68% rise in revenue and a 47% increase in daily active users during Q3.
- Innovations like AI-driven translation and an enhanced AMA feature played significant roles in user growth.
Reddit is capitalizing on advancements in artificial intelligence.
The social media platform saw its shares soar by 25% during after-hours trading as it announced its first profit alongside revenues that outperformed market predictions.
In the third quarter, Reddit’s revenue surged by an impressive 68%, reaching $348.4 million compared to the previous year, significantly exceeding analysts’ expectations of $312.8 million.
The company reported earnings of 16 cents per share for Q3, reversing last year’s loss of 13 cents per share. Analysts had anticipated an average loss of about 7 cents per share according to LSEG data.
The number of unique daily active visitors rose by 47%, totaling approximately 97.2 million for the quarter ending September 30. Additionally, global average revenue per user increased by 14%, reaching $3.58.
During the earnings call on Tuesday, Reddit CEO Steve Huffman highlighted the platform’s growing influence as users increasingly turn to it for community engagement and information seeking purposes.
“This quarter saw machine translation attract four times more users than last quarter,” Huffman stated while discussing their AI initiatives aimed at enhancing language translations across various languages including French, Spanish, Portuguese, Italian, and German. He also mentioned plans to expand this feature into over thirty countries by the end of 2025 based on current successes.
Furthermore, Huffman noted improvements made to Reddit’s popular “Ask Me Anything” (AMA) format which resulted in a fivefold increase in AMAs created under this new structure.
The Ascending Trajectory of Reddit
Since going public in March this year, Reddit has enjoyed several outstanding quarters on Wall Street.
In its inaugural quarter as a publicly traded entity, it reported revenues amounting to $243 million—a notable increase of 48% from last year’s figures. The second-quarter results were equally impressive with revenues hitting $281 million—up by an astonishing54%. This consistent upward trend was mirrored by a substantial growth rate among daily active users globally at around51%.
This growth trajectory positions Reddit ahead compared to other social media platforms; for instance Elon Musk’s X recorded only a modest growth rate of1.6% among daily active users during Q2of2024 according to reports from FT . Meanwhile Meta platforms collectively saw only7 %growth accordingto their second-quarter earnings report .
< p > Looking ahead , Reddit anticipates fourth-quarter revenues between$385millionand$400million , while analysts projectanaverageof$357 .9millionaccordingtoLSEGdata.< / p >
< p > Analysts from Jefferies have pointed out that there are promising monetization opportunities within advertising revenue streams , reiterating their Buy ratingonReddit.< / p >
< p > ”We believe RDDT has numerous pathways availableforincreasingimpressionsandpricingover time , contributingtoanexceptionalgrowthprofileforadvertisingrevenue ,” they commentedonTuesday.< / p >
< p > The initial public offering was set at$34pershareand commencedtradingat$47ontheNewYorkStockExchangeonMarch21.< / p >
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