Reddit shares (RDDT) surged 14% in extended trading after ending Tuesday's session up 2.3%.
'All in all, a very solid quarter for us,' CFO says. 'The business fired on all cylinders.'
Reddit Inc. reported its first results as a public company Tuesday, with the social-media platform reporting better-than-expected revenue and a narrower-than-expected loss for the first quarter.
The company reported a first-quarter loss of $575.1 million, or $8.19 a share, after a loss of $60.9 million, or $1.05 a share, in the prior year's quarter. Analysts surveyed by FactSet expected a loss of $8.75 a share.
First-quarter revenue was $243 million, up from $163.7 million in the prior year's quarter, and well above the FactSet estimate of $214 million.
Daily active unique visitors were 82.7 million, up from 60.3 million in the prior year's quarter. Reddit defines a daily active unique as a user that the company can identify with a unique identifier who has visited a page on the Reddit website or opened a Reddit application at least once during a 24-hour period.
"The business fired on all cylinders," Reddit Chief Financial Officer Drew Vollero told MarketWatch. The CFO pointed to the company's 48% year-over-year revenue growth, its 37% year-over-year growth in daily active unique users, and sequential growth of 9.6 million daily active unique users.
Vollero also highlighted the company's margin expansion. Reddit's first-quarter gross margin was 88.6%, an improvement of 500 basis points from the same period last year.
Related: Reddit is bucking this big tech trend. Analysts view it as a positive.
Reddit's lack of profitability on an annual basis came under scrutiny in the run-up to the company's IPO earlier this year. During the first quarter, Reddit's adjusted Ebitda was $10 million, compared with a loss of $50.2 million in the same period last year. The company also generated positive free cash flow of $29.2 million.
"All in all, a very solid quarter for us," said Vollero. "We turned profitable and continue to be a business model that is capital light." Reddit's first-quarter capital expenditure was around $3 million, according to Vollero.
Related: Reddit poised for AI and user growth, analysts say, as they initiate coverage
Speaking during a conference call to discuss Reddit's results late Tuesday, Vollero said that Reddit's revenue grew over five times as fast as the company's total adjusted costs, which grew 9% year over year.
For the second quarter, Reddit expects revenue between $240 million and $255 million, above FactSet analysts' estimate of $227.5 million. Reddit also expects second-quarter adjusted Ebitda between $0 and $15 million.
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