Reddit Turns Human Chatter Into Wall Street Gold With Blowout Q1

Reddit, Inc. (NYSE:RDDT) shares traded higher in Friday’s premarket session after the company delivered strong first-quarter growth and upbeat second-quarter guidance. The social platform pointed to rising ad demand, higher user monetization and growing interest in its human-generated data for artificial intelligence. Quarterly Details Reddit said first-quarter revenue jumped 69% year over year to $663 million. Advertising revenue climbed 74% to $625 million, driven by stronger demand across the funnel. The company posted net income of $204 million, or $1.01 per diluted share. Adjusted EBITDA margin reached 40%, while free cash flow margin came in at 47%. Reddit also reported gross margin of 91.5%, marking its seventh straight quarter above 90%. Capital spending remained light at $1 million. AI And Ads CEO Steve Huffman said Reddit benefits from more than two decades of human conversation. He said the platform now holds over 25 billion posts and comments. Huffman said Reddit’s content has become more valuable as AI tools seek authentic human perspectives. “There is no artificial intelligence without actual intelligence,” he said. COO Jennifer Wong said around 40% of Reddit conversations carry commercial intent. She added that active advertisers grew more than 75% from a year earlier. Reddit Max, the company’s automated ad product, helped advertisers reduce cost per action by 17% on average. It also lifted conversion outcomes by 25%. User Growth Focus Management said daily active users remain a top priority. “…when I came back to the company about 10 years ago, we were 12 million DAU. And over the last 10 years, we’ve 10x that to over 120 million DAU. Now we’ve got our sights set on 1 billion global DAU and 100 million in the U.S. specifically,” the CEO said. The company plans to improve onboarding, feeds, search, mobile speed and machine translation. Search weekly active users rose 30% year over year. Outlook For the second quarter, Reddit expects revenue of $715 million to $725 million. That implies growth of 43% to 45% year over year. The company also forecast adjusted EBITDA of $285 million to $295 million, with a 40% margin at the midpoint. RDDT Price Action: Reddit shares were up 12.55% at $165.71 during premarket trading on Friday, according to Benzinga Pro data. Photo by JarTee via Shutterstock