Reddit posted strong first-quarter results, surpassing Wall Street’s expectations. The company reported earnings of 13 cents per share, well above the 2-cent estimate, and revenue of $392 million, exceeding the $370 million forecast. This marked a 61% year-over-year increase from $243 million. Reddit’s net income of $26.2 million compared to a significant loss of $575.1 million in the same period last year due to IPO-related costs.
For the second quarter, Reddit projected sales between $410 million and $430 million, ahead of the $396 million expected by analysts. Despite uncertainties surrounding the ongoing trade dispute between the U.S. and China, Reddit’s executives expressed confidence, stating the company is well-positioned to navigate these challenges. CEO Steve Huffman highlighted that, despite ever-changing macroeconomic conditions, Reddit had previously thrived through uncertain times and would continue to meet user demands for connection and information.
Operating chief Jen Wong acknowledged the sluggish economy but noted that, overall, it was “mostly business as usual.” The company remained committed to staying close to its customers by providing insights on consumer trends from Reddit’s platform to inform advertisers’ strategies.
Reddit also reported impressive growth in its global daily active uniques (DAUq), which surged 31% year-over-year to 108.1 million, surpassing analysts’ expectations of 107.3 million. The company benefited from changes to Google’s search algorithm and site improvements, leading to increased traffic and user engagement. Reddit’s global logged-in DAUq rose 23% to 48.7 million, while logged-out DAUq grew 38% to 59.4 million.
Despite a slight dip in user growth due to a change in Google’s search algorithm in Q4, Reddit’s search-driven traffic rebounded in Q1. Huffman cautioned that search-related traffic may face temporary fluctuations as the search ecosystem evolves, but he reassured investors that these short-term challenges would not affect Reddit’s long-term strategy. Additionally, Reddit introduced its AI-powered service, Reddit Answers, which has already garnered 1 million weekly active users.
As other tech companies face similar challenges from shifting economic conditions, Reddit continues to emphasize its unique user-generated content to differentiate itself from competitors.
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