RDDT (Trans): We are not niche; advertisers are setting up dedicated Reddit teams. ---

Below is Dolphin Research's Trans of Reddit's Q4 2025 earnings call. For our earnings take, cf. 'Backed by Google, Reddit Keeps the Party Going'.

I. Key Takeaways

1. Ads biz performance

• Ad revenue was $690mn. Up 75% YoY.

• Active advertisers grew over 75% YoY. Broad-based expansion across cohorts.

• SMB revenue doubled YoY. Momentum accelerated.

• US ad revenue rose 68% YoY. Growth remained strong.

• Intl ad revenue rose 78% YoY. Intl outpaced the US.

2. Q1 2026 guide

• Revenue: $595–605mn (+52%–54% YoY). Range implies continued high growth.

• Adj. EBITDA: $210–220mn. Margin ~36%.

• SBC: high-teens % of revenue. High-teens level.

• Dilution target at the low end of the 1%–3% range. Low-end target.

II. Call Details

2.1 Mgmt highlights

1) Biz performance & milestones

2025 was a breakout year for Reddit. The company exceeded ambitious goals, built real momentum across the stack, and materially improved its unique community model at scale.

Revenue growth topped 60% for a sixth straight quarter, and GPM held at ~90% for the sixth consecutive quarter. Profitability inflected alongside scale.

2) Positioning & differentiation

Reddit sits at the center of a generational shift. In an internet defined by opaque algorithms, generative content, and rising distrust, more people come to Reddit not for endless scrolling but to connect, learn, and research.

It is the most human place online. In a world flooded with AI content, users seek real communities, lived experiences, and trusted opinions — Reddit's edge.

3) Authenticity & verification

It is getting harder in the AI era to tell human thoughts or recommendations from bots, eroding trust. Reddit is actively protecting authenticity and conversation quality.

In Q4 it launched verification labels for brands and individuals, with bot verification and labels coming soon. The goal is to distinguish certain pro users and automated agents.

4) Consumer product priorities

In 2026, focus is on making Reddit faster, more relevant, and easier to access for everyone, everywhere. Priority one is feed relevance, using AI/ML so Reddit feels personalized and useful from second one.

Two specific priorities: improve new-user onboarding and unify the search interface. Both aim to reduce friction and raise retention.

5) Search progress

Q4 made major strides unifying core Search with Reddit Answers, the AI-driven search feature. Weekly users searching directly on Reddit rose from ~60mn a year ago to 80mn+.

Answers rolled out in five new languages, with more coming. Pilots are underway for dynamic, multimodal results beyond text.

6) Ad tech stack strategy

The ad stack strategy centers on three pillars. First, drive full-funnel performance.

Second, improve advertiser usability and sales productivity via automation. Third, deliver Reddit-unique solutions and formats.

7) ML & optimization

• Mid-funnel clicks rose 60%+ YoY in Q4. Machine learning and relevance gains helped.

• Lower-funnel conversions doubled YoY. Performance improved meaningfully.

• Shopping ads ML upgrades lifted ROAS by 75%+. Advertisers saw better returns.

• Conversion revenue covered by CAPI tripled YoY. Broader CAPI adoption drove uplift.

• In Reddit Max tests, Avg. CPA fell 17% while conversions rose 27%. Efficiency and volume improved together.

8) Capital allocation & buyback

The BOD authorized up to $1bn in share repurchases with no expiry. Scale plus profitability inflection underscores attractive incremental margins.

Capital priorities: invest in the core, pursue M&A when meaningful, and repurchase shares when compelling. The plan is to maintain $1bn+ cash on the balance sheet.

9) User metrics disclosure change

Starting in 2H26, Reddit will stop reporting logged-in vs. logged-out user metrics. This change takes effect in 2H26.

The product strategy is shifting to help all users engage and find value immediately, regardless of login status. The logged-in/logged-out distinction is less of a management focus.

From Q3 2026, Reddit will continue to report US and Intl DAUQ and WAUQ but will no longer break out logged-in vs. logged-out. Reporting will align with product priorities.

III. Q&A

Q1: On product optimizations, what early benefits are you seeing from the new user onboarding? How does integrating Search with Answers affect UX?

How will Reddit Max simplify advertiser onboarding, and how is the channel mix evolving?

A: On consumer product, we shipped many features in Q4. Some worked and some did not, but we learned a lot.

The core thesis stands: simplifying flows improves retention. We are testing LLMs to infer user interests, and investing in ML to improve cold-start feeds so new users reach a quality feed faster.

On Search, we largely unified the search bar. Reddit Answers queries grew from ~1mn a year ago to ~15mn, and total search queries from ~60mn to ~80mn.

We will keep investing in Answers to handle more queries. Coverage and quality will expand over time.

On Reddit Max, we are focused on moving lower-funnel advertisers onto Max. The near-term focus is migrating existing clients, while onboarding net-new advertisers will take a few quarters.

Max should make onboarding easier while lifting productivity and performance. That is the path forward.

Q2: How do you view AI-generated content? Could it ultimately help engagement?

In a world closer to agent-driven commerce, how is Reddit positioned?

A: Machine translation is one form of AI-generated content, and AI can aid communication. But more people are writing with AI online, and we are living through that shift.

It can be concerning, though a human still sits behind the prompt. Fully automated bot behavior is not what we want on Reddit. Reddit is for people talking to people, and automated or generated content must be clearly labeled.

On agent commerce, Reddit is well positioned along the evolving consumer decision journey. It is a trusted source of recommendations where people allocate resources and decide.

Price comparison and last-click execution may commoditize under agents. But human decision points on what to buy live in recommendations, where Reddit has the best product and service recs.

Q3: On monetizing logged-out users, does dropping the disclosure imply monetization can move closer to parity with logged-in?

A: Both logged-in and logged-out users see ads. On an impression basis, the value of those impressions is essentially the same, with the real difference in engagement.

Strategy is to raise engagement and convert WAU to DAU. We do not want login to be the standard for a personalized, better Reddit experience.

That is why the login/logged-out metric will fade; it is about creating more engagement. As logged-out users get a more personalized experience and engage more, value rises via more impressions per engagement.

The opportunity is to lift engagement through the product improvements Steve discussed. That is where the leverage is.

Q4: On the AI deals with Google and OpenAI, how are they using the data? Do you see it becoming more important to their models?

On bots, do you expect any user impact? Is there a revenue opportunity in verification?

A: We can see Reddit's rising importance in AI. Reddit Profound is the most-cited source in AI answers.

Relationships with both companies are very healthy and are evolving from purely commercial to deeper product partnerships. We will help them build the best versions of their products, and they will help us build ours.

On bots, there is no user impact. We remove anything we deem bot content before sharing with anyone.

We do see more agents using Reddit, such as comments written with ChatGPT. Labeling bots has a culture on Reddit, and the default assumption should be that you are talking to a human because Reddit is for human conversation.

Q5: As more users engage with Answers and Search, what is the monetization impact? How much of revenue growth is pricing, and will pricing contribution stay low or rise?

A: Answers and Search are not yet monetized, though the market and opportunity are large. Search behavior, whether navigational or agentic, appears additive and complementary to existing engagement.

We do not split volume vs. pricing, but pricing is a growth driver. Strategy is to raise value per impression by delivering more hard outcomes per impression, lifting CTR and response rates.

When pricing rises, it reflects marketing success, but ROAS is what matters. Measurement is critical and has been a focus area to support that.

Q6: For Reddit Search, how will you make search more visually front-and-center on the home page?

On the Google/OpenAI integrations, how should citations look to draw users deeper into Reddit conversations?

A: You may be in one of several variants of the search bar. Another variant I see has a large bar at the top, and we are testing a lot there.

I prefer the larger one. On citations, there is a lot of iteration.

In a perfect world, when someone asks elsewhere for the best speakers, Reddit helps surface a short list of the best options. We also want users to realize they can go to the audiophile community and talk with fellow enthusiasts.

That is a key Reddit differentiator and should lift UX. Our relationships are healthy, and there is a lot evolving here.

Q7: On new ad solutions, brand and performance growth converged in 2025, after performance outgrew brand in 2024. With DPA and Max, do you expect performance to outgrow brand again?

A: We are a full-funnel solution. Reddit delivers value from top to bottom of the funnel.

Brand is part of the full-funnel mix, and we have been investing there. In 2026, we will keep investing in: Reddit-unique experiences such as the interactive ads we began testing in Q4, and video where we invested in deeper watch time and optimization last year.

We will also push core optimization and automation, seeking broad auto-bidding adoption and lower-funnel optimizations for brand experiences. Finally, measurement remains a top priority.

Q8: Update on hiring, training, sales, and support to meet ad demand that seems ahead of capacity. How long to catch up?

A: We keep investing in the sales org and in tools and tech to raise productivity. When we see opportunities with strong ROI, we invest in new verticals, geos, and channel expansion.

There is a process to bring products to market and drive adoption. The team balances building things like CAPI, which do not drive revenue immediately, with meeting marketers' needs on the platform.

We have posted six quarters at ~60% growth and are powering the business as much as we can. We keep looking for ways to do more.

Q9: For large advertiser categories, where are you on share of wallet? How much runway remains with these clients, and any Q1 context vs. the macro?

A: There is room to go deeper with large partners. Some start with us in the US and can become global partners, while others are mid-journey.

Some have portfolios with 100 brands, and we have not penetrated all of them. We usually start top-of-funnel with large clients, and the opportunity is to move lower in the funnel.

Our Q1 guide of +52%–54% YoY is similar to recent quarters. Q4 was strong from Oct to Dec, but we still have ~40%–50% of bookings to be closed in-quarter.

Q1 advertiser activity tends to start slow, and Mar is typically the strongest demand month in Q1. Seasonality remains typical.

Q10: How do you view ROI on user marketing, and plans to scale in 2026? On M&A, what might larger-scale deals look like?

A: Our ROI model is broadly consistent with peers. We assess the cost of a given campaign, analyze users acquired, and track retention curves.

Given Reddit's high GPM, our unit economics tend to be favorable over time. It is a fairly linear P&L-based model with direct payback in a relatively short window.

On M&A, we keep a wide aperture on opportunities. We focus on capabilities, companies, and technologies. We have successfully integrated multiple technologies, which has been key to revenue success.

The ad tech team advances the biz by integrating proven tech instead of always building, saving 6–12 months of time-to-market with validated products. We have integrated several solutions, especially in ad tech, which has supported profitability.

That is our main focus at this stage, though we are not excluding other options. Optionality remains.

Q11: For shopping ads, what tools or formats are needed to accelerate growth in this vertical?

On Search and GenAI, what experience is Reddit building?

A: On DPA, our product today is competitive versus Tier-2 peers for both prospecting and retargeting. Versus Tier-1, we want to do more in ML to make ROAS more competitive.

Shopping is a heavily quantitative ROI exercise. We also need core adoption: ingest product feeds and enable CAPI for real-time signals.

On Search, 2024 focused on unifying the two search experiences. We learned that for most queries, GenAI results are better.

Reddit shines when there is no single answer and the 'answer' is a set of diverse human viewpoints. Search WAU rose from ~60mn to ~80mn over the past year, while Answers WAU grew from ~1mn in Q1 to ~15mn this quarter.

Q12: Reddit is becoming a brand portal that wants consistent LLM exposure. Does this pave the way for more brands to advertise on-platform?

Any marketing or outreach to update the market and change the perception of Reddit as niche?

A: In conversations with brands, we have seen steady progress in understanding. It moved from 'What is Reddit and what is a community?' to 'I get it — how do I participate well?', and now to 'I have to be on Reddit, and I have to participate the right way.'

They want both paid and organic presence, better customer service, and quality content. They recognize that performing well in external search engines and LLMs requires showing up well on Reddit.

We are seeing a mindset shift. Multiple brands say they are restructuring social teams to create Reddit-dedicated squads. We support this via the Reddit Pro line: official profiles, verified accounts, labeled accounts, and upcoming app/bot labels so brands appear as first-class users with clear identity and purpose.

That should open doors for relationship-building. The opportunity on Reddit — where human conversations happen — is to reach this influential audience and engage through our marketing platform.

On the 'niche' perception, Reddit hosts ~100k communities across nearly every topic. In aggregate, we have 500mn+ MAU and 120mn DAU.

Together, that is a large audience. We will keep educating the market by tying community insights and tools more tightly into the ads manager so marketers can see audience insights, reachable scale, and platform opportunities in one place.

Bringing these elements together should make the scale more visible in insights. This integration is a key focus.

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