Reddit recently held its Q4 2025 earnings call. The company stated that its Answers and Search services are currently not monetized but represent a significant market and opportunity. The volume of Reddit Answers queries has grown from 1 million a year ago to 15 million, while overall search queries have increased from 60 million to 80 million. The company plans to continue investing in Answers to handle a growing number of queries.
Reddit described 2025 as a breakthrough year, exceeding ambitious targets and building strong momentum across its entire business. The company has significantly improved its unique community model at scale. It marked the sixth consecutive quarter of over 60% revenue growth and the sixth consecutive quarter with a 90% gross margin. This quarter's advertising revenue reached $690 million, a 75% year-over-year increase. For Q1 2026, the company provided guidance expecting revenue between $595 million and $605 million, representing year-over-year growth of 52% to 54%.
Starting from the second half of 2026, Reddit will cease reporting separate logged-in and non-logged-in user metrics, as both user types are shown advertisements. The platform boasts over 500 million monthly active users and 120 million daily active users. Several brands are reportedly restructuring their social media teams to create dedicated Reddit teams.
Regarding AI partnerships, Reddit noted that Reddit Profound is the most cited source in AI-generated answers. Relationships with both Google and OpenAI are described as very healthy, evolving from purely commercial transactions to more product-oriented partnerships.
During the Q&A session, management addressed various topics. On product optimization, the core finding is that simplifying user onboarding improves retention. The company is investing in machine learning to enhance the "cold start" feed for new users. Search and Answers experiences are being integrated, with significant query growth observed.
Concerning AI-generated content, Reddit acknowledged its role in improving communication but emphasized that the platform is for human-to-human conversation. Any automated or generated content must be clearly labeled. Reddit sees itself well-positioned in the evolving consumer decision journey as a trusted source for recommendations.
The decision to stop reporting separate logged-in/non-logged-in metrics reflects a strategy focused on increasing user engagement overall, as the value of ad impressions is similar for both user types; the key differentiator is engagement level.
The company's AI data licensing deals are seen as increasingly important, with the relationships shifting towards product collaboration. Reddit actively removes bot-generated content but acknowledges increasing use of AI tools like ChatGPT for creating comments, reinforcing the need for clear labeling.
For the monetization of Answers and Search, these are seen as substantial future opportunities. Current search behavior appears incremental to existing engagement. Pricing strategy focuses on increasing the value per impression for advertisers by delivering better marketing outcomes, which drives return on ad spend (ROAS).
On advertising, Reddit positions itself as a full-funnel solution. While brand and performance ad growth rates converged in 2025, the company continues to invest in both. Key areas of investment for 2026 include unique ad formats like interactive ads tested in Q4, video content, automation, and measurement capabilities.
The sales team is undergoing continuous investment and productivity enhancements to handle strong advertiser demand. There is significant growth potential with large advertisers, both in geographic expansion and deeper penetration into their brand portfolios.
User acquisition marketing ROI is evaluated similarly to industry standards, but Reddit's high gross margins provide an advantage. On mergers and acquisitions, the company focuses on acquiring capabilities and technologies, particularly in ad tech, to accelerate time-to-market.
For shopping ads, competitiveness with top-tier companies requires further investment in machine learning to improve ROAS. The primary focus for search and generative AI tools is unifying the search experience, as Gen AI often provides better results for most queries, while Reddit excels with subjective questions requiring multiple perspectives.
Reddit is evolving as a key portal for brand presence within large language models (LLMs), which is creating more advertising opportunities on the platform. The perception of Reddit as a niche platform is a misconception the company aims to correct, highlighting its scale of over 500 million monthly active users across 100,000 communities covering all topics. The company plans to better integrate community insights into its ad manager tools to make this scale more apparent to advertisers.
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