5/8/2024: Reddit Earnings Beat Expectations
Reddit reported its first quarterly earnings after the IPO yesterday afternoon. Revenue was $243M vs. $212.8M expected. EPS was -$8.71 vs. -$8.19 expected (The big negative numbers are due to the post IPO stock based compensation.). The company guided Q2 revenue at $240M - $255M vs. $224M expected. RDDT 0.00%↑ stock was up 4% during today’s trading session and is currently above $50.
48% YoY top line growth is pretty impressive and Reddit is poised to generate $1B+ of revenue this year. Weekly Active Uniques (“WAUq”) also increased 40% year-over-year to 306.2 million. I am a big Reddit user. The app is a bit hard to monetize (compared to say Pinterest) so it’s impressive they are able to get to almost $1B annual revenue. Reddit has accumulated a huge knowledge base through community participation and the knowledge base is only getting bigger. This knowledge base could generate further monetization opportunities in the age of AI. They already have a licensing deal in place with Google. It will be interesting to see how content licensing evolves in the AI age. I imagine not only will Reddit get paid, the content creators themselves will also get some reward. But it’s still yet to be seen precisely how it is going to work though.