Reddit delivered a strong third quarter, with results well ahead of Wall Street expectations and a significant positive market reaction. Management attributed this outperformance to robust advertising growth, successful product-led user expansion, and meaningful gains in profitability. CEO Steve Huffman cited improvements in the core Reddit product, increased engagement from new user cohorts, and the scaling of new ad formats as central to the quarter’s momentum. COO Jen Wong highlighted that both organic product changes and targeted marketing efforts contributed to a healthy mix of new daily active users.

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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 From Reddit’s Q3 Earnings Call

• Ronald Josey (Citi): Asked about near-term user growth trends and the role of diversified traffic sources. CEO Steve Huffman replied that growth was balanced between organic and paid channels, with product initiatives like machine translation as key contributors.
• Thomas Champion (Piper Sandler): Inquired about the revenue potential of Publisher Pro tools. COO Jen Wong said the focus is on platform vibrancy and engagement, but acknowledged that increased publisher activity could eventually drive advertising opportunities.
• Naved Khan (B. Riley Securities): Questioned the early results of the simplified onboarding flow. Huffman responded that initial tests are promising, with streamlined experiences expected to improve new user retention.
• Jason Helfstein (Oppenheimer): Sought updates on large language model (LLM) licensing deals. Huffman stated that relationships with partners are collaborative, with ongoing discussions focused on mutual value but no major updates yet.
• Benjamin Black (Deutsche Bank): Asked about margin targets following recent outperformance. CFO Andrew Vollero explained that while 40% was the initial benchmark, the company now sees potential for higher margins over time, though investment will be balanced strategically.

Catalysts in Upcoming Quarters

Looking ahead, our team will be watching (1) the impact of product and onboarding enhancements on user retention and growth, (2) the pace of international user adoption as machine translation and localized content strategies scale, and (3) further automation and AI integration in the ad platform, particularly with respect to advertiser adoption and performance. Execution on these priorities will be central to Reddit’s ability to sustain revenue and margin momentum.

Reddit currently trades at $197, up from $194.54 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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