Reddit (RDDT) Stock: Jumps 12% After Third Quarter Earnings Crush Estimates

TLDR

• Reddit reported earnings per share of $0.80, beating the $0.51 estimate by 57%
• Revenue climbed 68% year-over-year to $585 million, topping forecasts of $546 million
• The company posted net income of $163 million, up from $30 million in the same quarter last year
• Fourth quarter revenue guidance of $655-$665 million exceeded Wall Street’s $638 million projection
• Shares rose more than 12% in after-hours trading following the earnings release

Reddit reported third quarter results that beat analyst expectations across the board. The social media platform posted earnings per share of $0.80 compared to the $0.51 Wall Street estimate.

Revenue jumped 68% year-over-year to $585 million. Analysts had expected $546 million.

Net income reached $163 million, up from $30 million in the same quarter last year. Gross margin improved to 91%, showing the company’s growing profitability.

Reddit, Inc., RDDT

The stock climbed more than 12% in after-hours trading Thursday. This was Reddit’s seventh quarterly report since going public in 2024.

Search Product and AI Integration Show Results

CEO Steve Huffman pointed to improvements in search and global expansion as key drivers. The platform’s search product now has more than 75 million weekly users, up from 70 million in the second quarter.

Reddit has started rolling out Reddit Answers, an AI-powered feature that improves search accuracy. CFO Drew Vollero said the company’s AI tools help surface better content and boost ad relevance without requiring heavy infrastructure spending.

Vollero called Reddit “an AI winner without a lot of AI cost.” Capital expenditure for the quarter was just $2.1 million, representing 0.4% of revenue.

Global daily active users rose 19% to 116 million, beating analyst forecasts of 114 million. International users surged 31% to 64.4 million as Reddit expanded translation support to 30 languages.

In the United States, logged-in daily users grew 7% to 23.1 million. While slower than the second quarter’s 12% growth, the U.S. user base remains the most valuable for advertising revenue.

Advertising Growth and Data Licensing Revenue

COO Jen Wong said the total active advertiser count grew over 75% year-over-year. She said Reddit’s brand campaigns helped drive app installs and awareness in international markets.

Other revenue, which includes data licensing partnerships with Google and OpenAI, increased 7% to $36 million. Huffman noted these deals remain an important long-term revenue stream.

The company expects fourth quarter revenue between $655 million and $665 million. Wall Street had projected $638 million.

Adjusted earnings are forecast between $275 million and $285 million for the fourth quarter. This continues the company’s trend of improving profitability.

Huffman said Reddit will continue focusing on AI-driven personalization to boost user engagement. He emphasized that retention comes from helping users find relevant communities.

Shares have climbed 19% year-to-date in 2025, outperforming the S&P 500’s 16% gain. The company reported capital expenditure of just $2.1 million for the quarter, far below competitors like Google or Meta.

Reddit’s international user base grew 31% to 64.4 million as the platform expanded translation support to 30 languages. The company expects continued double-digit growth in the fourth quarter and improving profitability.

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