Reddit (RDDT) Stock: Surges After Earnings Beat and Strong Forecast

TLDR:

• Reddit $RDDT beat Q3 expectations with 68% sales growth.

• EPS hit $0.80 vs $0.51 forecast.

• Net income surged to $163M from $30M a year ago.

• Q4 guidance of $655–$665M topped Wall Street’s view.

• Shares jumped 12% in after-hours trading.

Reddit shares soared after the company posted blockbuster third-quarter results. The social media platform’s rapid revenue growth and upbeat guidance fueled investor optimism.

The stock rose more than 12% in after-hours trading Thursday. This marked Reddit’s seventh quarterly report since its IPO in 2024.

Reddit, Inc., RDDT

Earnings and Revenue Blow Past Estimates

Reddit reported earnings per share of $0.80, crushing the $0.51 Wall Street estimate. Revenue jumped 68% year over year to $585 million, beating expectations of $546 million.

Net income reached $163 million, up from $30 million last year. Gross margin improved to 91%, reflecting the company’s expanding profitability.

The firm now expects fourth-quarter revenue between $655 million and $665 million, topping forecasts of $638 million. Adjusted earnings are projected between $275 million and $285 million.

Search and AI Drive Growth

CEO Steve Huffman credited improvements in search and globalization for Reddit’s performance. He said the platform’s search product now has more than 75 million weekly users, up from 70 million in Q2.

Reddit has started integrating Reddit Answers, an AI-powered feature that enhances search accuracy and visibility. CFO Drew Vollero said the company’s AI tools help surface better content and improve ad relevance without high infrastructure costs.

Vollero described Reddit as “an AI winner without a lot of AI cost.” Capital expenditure for the quarter was just $2.1 million, or 0.4% of revenue — far below peers like Google or Meta.

User Growth and Global Expansion

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

In the U.S., logged-in daily users grew 7% to 23.1 million. While slower than Q2’s 12% growth, the user base remains Reddit’s most valuable audience for advertising.

COO Jen Wong said the total active advertiser count grew over 75% year over year. She added that Reddit’s brand campaigns helped boost app installs and awareness overseas.

Other revenue — mainly from data licensing partnerships with Google and OpenAI — increased 7% to $36 million. Huffman noted these deals remain an important long-term opportunity.

Outlook and Market Reaction

Reddit expects continued double-digit growth in Q4 and improving profitability. Huffman said the company will keep focusing on AI-driven personalization and removing barriers to user engagement.

Shares have climbed 19% in 2025, outperforming the S&P 500’s 16% gain. Investors appear confident Reddit can sustain its momentum through international expansion and AI integration.

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