Reddit’s first quarter results exceeded Wall Street’s expectations for both revenue and profitability, yet the market responded negatively. Management attributed the quarter’s strong growth to improvements in advertising performance, increased active advertiser participation, and ongoing product enhancements. Chief Operating Officer Jennifer Wong highlighted that “mid and lower funnel performance revenue accounted for about 60% of total ad revenue and was a major growth driver in the quarter.” CEO Steve Huffman also pointed to the platform’s evolving search and community features as key contributors to user engagement.
Is now the time to buy RDDT? Find out in our full research report (it’s free).
Reddit (RDDT) Q1 CY2025 Highlights:
- Revenue: $392.4 million vs analyst estimates of $369.5 million (61.5% year-on-year growth, 6.2% beat)
- EPS (GAAP): $0.13 vs analyst estimates of $0.01 (significant beat)
- Adjusted EBITDA: $115.3 million vs analyst estimates of $88.79 million (29.4% margin, 29.8% beat)
- Revenue Guidance for Q2 CY2025 is $420 million at the midpoint, above analyst estimates of $394 million
- EBITDA guidance for Q2 CY2025 is $120 million at the midpoint, above analyst estimates of $106.6 million
- Operating Margin: 1%, up from -243% in the same quarter last year
- Domestic Daily Active Visitors: 50.1 million, up 8.6 million year on year
- Market Capitalization: $26.14 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Reddit’s Q1 Earnings Call
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Ron Josey (Citi): Asked about macroeconomic uncertainty in the ad market. COO Jennifer Wong responded that Reddit remains well-positioned due to its role in helping users and brands navigate changing consumer behavior, but acknowledged ongoing volatility.
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Andrew Boone (JMP Securities): Inquired about the drivers behind recent ad pricing gains. Wong explained that pricing is a byproduct of increased advertiser demand and better ad outcomes, rather than an explicit target.
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Benjamin Black (Deutsche Bank): Sought clarity on the sustainability of data licensing revenues. CEO Steve Huffman said it was too early to discuss renewals, but noted ongoing demand from AI partners and a strategy focused on “being open and open for business.”
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Tom Champion (Piper Sandler): Questioned disciplined cost growth despite strong revenue. CFO Andrew Vollero reiterated Reddit’s approach of growing revenue twice as fast as costs and signaled willingness to invest further if high-return opportunities arise.
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Dan Salmon (New Street Research): Asked about the performance of new ad placements within comment threads. Wong reported healthy adoption and strong engagement, especially given the high intent of users reading through conversations.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the rollout and user adoption of AI-powered search features like Reddit Answers; (2) the pace of international ad revenue and user growth as machine translation expands; and (3) ongoing improvements to advertiser tools and measurement, such as dynamic product ads and in-comment placements. Execution on these fronts will provide insight into Reddit’s ability to sustain growth while managing platform complexity.
Reddit currently trades at $144.01, up from $118.68 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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