Reddit (NYSE:RDDT) Releases Earnings Results, Beats Expectations By $0.30 EPS

Reddit (NYSE:RDDT) announced its quarterly earnings results on Thursday. The company reported $1.25 earnings per share for the quarter, topping analysts’ consensus estimates of $0.95 by $0.30, Zacks reports. Reddit had a net margin of 28.60% and a return on equity of 25.48%. The company had revenue of $804.91 million for the quarter, compared to analysts’ expectations of $731.00 million. During the same period last year, the firm posted $0.45 earnings per share. The business’s quarterly revenue was up 61.0% compared to the same quarter last year.

Here are the key takeaways from Reddit’s conference call:

• Strong financial performance: Q2 revenue rose 61% year over year to $805 million, advertising revenue increased 64% to $762 million, and adjusted EBITDA margin reached 43%. Operating cash flow more than doubled to $262 million, with last-twelve-month operating cash flow surpassing $1 billion.
• Advertising momentum remained broad-based. Active advertisers grew more than 70%, scaled-channel revenue doubled, conversion volume increased over 100%, and Reddit Max revenue rose more than 150% sequentially as automation and lower-funnel products gained adoption.
• User growth faced search-referral headwinds. Product-driven gains in daily active users were offset by declining and volatile search traffic, particularly late in the quarter; management acknowledged that user retention remains below industry peers and that direct-user growth will take time.
• Management guided to continued growth in Q3, forecasting revenue of $860 million to $870 million and adjusted EBITDA of $385 million to $395 million, or a 45% margin at the midpoint. Reddit also lowered its full-year stock-based compensation outlook and repurchased approximately $235 million of stock, with $760 million remaining under its authorization.
• Reddit is investing heavily in its product roadmap, including improved feed technology, app onboarding, video, search, shopping ads, and SMB automation. Executives also said data-licensing outcomes with major AI companies remain uncertain and will depend on maximizing value across multiple potential uses.

Reddit Stock Up 0.3%

Shares of RDDT stock traded up $0.54 on Thursday, reaching $178.53. The stock had a trading volume of 11,460,494 shares, compared to its average volume of 3,769,186. Reddit has a 12 month low of $119.27 and a 12 month high of $282.95. The firm has a market capitalization of $34.37 billion, a price-to-earnings ratio of 50.85 and a beta of 1.93. The firm’s 50-day moving average is $176.74 and its two-hundred day moving average is $165.09.

Key Reddit News

Here are the key news stories impacting Reddit this week:

• Positive Sentiment: Q2 revenue rose 61% year over year to $804.9 million, exceeding the $731 million consensus estimate, while adjusted earnings of $1.25 per share surpassed expectations of approximately $0.95. Net profit reached $253 million, compared with $0.45 per share a year earlier. Reddit Q2 earnings report
• Positive Sentiment: Reddit forecast third-quarter revenue of $860 million to $870 million, above the $829.7 million analyst consensus. Management said AI-powered advertising tools are helping attract marketers and support commercial momentum. Reuters report on Reddit guidance
• Positive Sentiment: KeyCorp upgraded Reddit to “Strong Buy,” adding to recent bullish analyst coverage ahead of the earnings release. KeyCorp upgrade report
• Neutral Sentiment: CEO Steve Huffman argued that Google’s AI Overviews cannot yet replace the value of traditional “10 blue links,” but acknowledged that changes to search are affecting the broader web ecosystem. Reddit CEO comments on Google AI Overviews
• Negative Sentiment: Investors remain worried that Google’s AI search summaries are reducing referrals to Reddit. Management described search traffic as “choppy,” and reports suggested Reddit could reconsider its roughly $60 million-a-year Google content deal if AI-driven search continues to divert traffic. Reddit search referral report
• Negative Sentiment: U.S. user growth showed signs of slowing, increasing uncertainty about future engagement, advertising reach and the sustainability of Reddit’s elevated valuation. Consequently, the strong earnings “beat” did not prevent shares from retreating as AI-search risks dominated investor sentiment. TechCrunch analysis of Reddit earnings

Analyst Ratings Changes

RDDT has been the subject of a number of research reports. Jefferies Financial Group set a $250.00 target price on Reddit in a report on Friday, July 10th. Wall Street Zen lowered Reddit from a “buy” rating to a “hold” rating in a research report on Sunday, May 10th. Oppenheimer reaffirmed an “outperform” rating and set a $225.00 price target on shares of Reddit in a research report on Friday, May 1st. Piper Sandler reiterated an “overweight” rating and issued a $215.00 price objective on shares of Reddit in a report on Thursday, July 9th. Finally, Weiss Ratings reissued a “hold (c)” rating on shares of Reddit in a research report on Friday, May 8th. Two equities research analysts have rated the stock with a Strong Buy rating, nineteen have given a Buy rating and eleven have given a Hold rating to the company’s stock. Based on data from MarketBeat, the stock currently has an average rating of “Moderate Buy” and an average price target of $232.23.

Insider Activity at Reddit

In other news, COO Jennifer L. Wong sold 39,166 shares of Reddit stock in a transaction on Tuesday, June 16th. The stock was sold at an average price of $176.94, for a total transaction of $6,930,032.04. Following the completion of the sale, the chief operating officer owned 1,050,339 shares of the company’s stock, valued at approximately $185,846,982.66. This trade represents a 3.59% decrease in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CAO Michelle Marie Reynolds sold 808 shares of the business’s stock in a transaction dated Wednesday, July 1st. The shares were sold at an average price of $200.00, for a total transaction of $161,600.00. Following the completion of the sale, the chief accounting officer directly owned 15,060 shares of the company’s stock, valued at $3,012,000. This represents a 5.09% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last quarter, insiders have sold 169,141 shares of company stock worth $28,680,845. Company insiders own 28.48% of the company’s stock.

Institutional Investors Weigh In On Reddit

A number of large investors have recently added to or reduced their stakes in RDDT. Limestone Investment Advisors LP bought a new position in Reddit in the 3rd quarter valued at about $259,000. SkyView Investment Advisors LLC bought a new position in shares of Reddit in the 2nd quarter valued at $256,000. Evolve Private Wealth LLC bought a new stake in shares of Reddit during the 4th quarter worth $223,000. Qtron Investments LLC acquired a new stake in Reddit in the fourth quarter valued at about $206,000. Finally, McMillan Office Inc. bought a new position in Reddit in the fourth quarter valued at about $193,000.

About Reddit

Reddit is an online social news aggregation, discussion and content-sharing platform organized around user-created communities called “subreddits,” each focused on a particular topic or interest. Registered users submit links, text posts, images and video, and community members vote and comment to surface popular content. The site is accessed via its web platform and mobile apps for iOS and Android, and it supports live events such as Ask Me Anything (AMA) sessions and community-driven discussions.

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit is headquartered in San Francisco and serves a global audience with particularly large user bases in the United States and other English-speaking markets.