Reddit reported its second quarterly results as a public company after market close Tuesday
Reddit reported its second quarterly results as a public company after market close Tuesday.
Reddit Inc. reported its second quarterly results as a public company Tuesday, with the social-media platform reporting better-than-expected revenue and a narrower-than-expected loss, and giving sales guidance that surpassed Wall Street’s expectations.
Reddit reported a second-quarter loss of $10.1 million, or 6 cents a share, after a loss of $41.1 million, or 70 cents a share, in the year-earlier quarter. Analysts surveyed by FactSet were forecasting a loss of 32 cents a share.
Second-quarter revenue was $281.2 million, growing 54% from $183.1 million in the same quarter last year and well above the FactSet estimate of $254 million.
The number of daily active unique visitors was 91.2 million, up from 60.4 million a year prior and well above the FactSet consensus of 84.06 million. 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 over a 24-hour period.
Reddit shares fell 4.5% in extended trading, after ending Tuesday’s regular session down 4.3%.
“I think Q2 was another strong quarter for us, our second as a public company — we’re growing above the market, both in users and revenue,” Jen Wong, Reddit’s chief operating officer, told MarketWatch. “Our strategy is working … we’re executing well against both our consumer and ad-platform roadmaps.”
“On the consumer side, our strategy has been to make Reddit better, make it easier and faster for people to find their communities, for people to find content, for moderators to scale their moderation,” she said. Wong also pointed to Reddit’s work in machine translation, noting that the Reddit corpus can now be accessed in French. “You can imagine that that could happen in Spanish and German, and many other languages — today we primarily operate in English.”
With regard to ads, Wong said Reddit has been “executing really well” in three areas — the usability of the platform; performance for advertisers; and Reddit’s unique formats, such as the company’s refresh of AMAs, or “Ask Me Anything,” during the second quarter.
Reddit ended the quarter with cash and equivalents of $1.699 billion.
Reddit’s lack of profitability on an annual basis came under scrutiny in the run-up to the company’s initial public offering earlier this year. During the second quarter, Reddit’s adjusted earnings before interest, taxes, depreciation and amortization was $39.5 million, compared with a loss of $35.4 million in the same period last year. The company also generated positive free cash flow of $27.2 million.
For the third quarter, Reddit expects revenue of $290 million to $310 million, above the FactSet consensus of $282 million and adjusted Ebitda of $40 million to $60 million.
Reddit has been busy forging partnerships. In May, Reddit announced a deal with OpenAI to bring Reddit content to ChatGPT and give OpenAI access to Reddit’s Data API, which lets developers harness Reddit data. OpenAI also became a Reddit advertising partner.
Last month, the social-media platform announced a partnership program with five major U.S. sports organizations. The deals with the NFL, NBA, MLB, PGA Tour and NASCAR mean Reddit users will get access to video highlights from games and tournaments, AMA sessions with players, and behind-the-scenes videos.
“What the partnerships do is allow us to get access to special content for our fan communities,” Wong told MarketWatch. “That also opens an opportunity for advertisers because they can participate alongside that content, a lot of it is video.”
“There are so many more sports globally where we can extend partnerships, so we do think about this as a program that can be global,” she added, and noted that fandom on Reddit is not limited to sports. “It’s early — we’re testing new ways to really engage our fan communities through special content. We’ll see how the program unfolds.”
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