With record user growth, Reddit looks ahead to another strong year

Overview

Reddit delivered strong financial results in Q4 and full-year 2024, driven by rapid user growth, increased ad revenue, and expanding international presence. The company’s Daily Active Uniques (DAUq) surged 39% YoY to 101.7m, and Q4 revenue jumped 71% YoY.

CEO Steve Huffman emphasized Reddit’s continued growth and innovation, stating: “It was another strong quarter as we accomplished exciting milestones across revenue and international growth. However, what’s most exciting is still ahead. We’re focused on providing a best-in-class experience for finding community and trusted information, proving that Reddit is for everyone, everywhere.”

Q4 2024 vs. Q4 2023:

Total revenue recorded a value of $427.7m (+71% YoY), fueled by strong advertising demand and increasing international monetization.
- U.S. revenue increased to $347.7m (+70% vs. 2023), while International revenue rose to $80.0m (+76% vs. 2023).
- Ad revenue was $394.5m (+60% vs. 2023), benefiting from better ad targeting and engagement.
Gross margin was 92.6% (+420 basis points vs. 2023), supported by better cost efficiencies.
Net income experienced impressive growth, reaching a value of $71.0m (16.6% net margin), a significant increase from $18.5m in Q4 2023.
Diluted EPS remained relatively constant at a value of $0.36 (flat YoY).
Adjusted EBITDA was $154.3m (36.1% margin), reflecting a $131.2m improvement from the prior year.
Operating cash flow became positive, reaching $90.0m, an increase of $107.4m YoY, reinforcing Reddit’s improving financial discipline.
Total Daily Active Uniques (DAUq) grew to 101.7m (+39% YoY), marking a new all-time high.
- U.S. DAUq was 48.0m (+32% YoY), driven by higher engagement from premium communities, while International DAUq increased to 53.7m (+46% YoY), reflecting rapid expansion in key global markets.
- ARPU (Average Revenue Per Unique) was $4.21 for Global segment (+23% vs. 2023), reflecting higher ad efficiency and engagement, with U.S. ARPU of $7.04 (+28% vs. 2023), driven by premium advertising and brand partnerships and International ARPU of $1.67 (+25% vs. 2023), showing growing monetization potential outside North America.

Full-Year 2024 highlights:

Total revenue was on an upward trend, reaching the value of $1.3bn (+62% YoY), driven by ad revenue expansion and growing subscription offerings.
- U.S. revenue rose to $1.06bn (+63% vs. 2023), while International revenue increased to $236.6m (+55% vs. 2023), highlighting successful expansion efforts in non-U.S. markets.
- Ad revenue recorded a value of $1.2bn (+50% vs. 2023), supported by stronger demand from advertisers leveraging Reddit’s unique audience engagement.
Gross margin was 90.5% (+430 basis points YoY), due to better cost control and operational scaling.
Net loss increased compared to last year to a value of ($484.3m) compared to ($90.8m) in 2023, as a result of higher R&D and stock-based compensation expenses.
Diluted EPS was on the same trend, recording a value of ($3.33), compared to ($1.54) for FY2023.
Adjusted EBITDA was $298.0m, a $367.3m improvement YoY, reflecting stronger monetization and cost discipline.
Free cash flow reached the value of $215.8m, reversing a ($84.8m) outflow in 2023, positioning Reddit for future investments.

For 2025, Reddit anticipates continued growth, with a strategic focus on expanding its ad business, enhancing community engagement, and improving profitability. Q1 2025 revenue is forecasted to range between $360m and $370m, reflecting ongoing ad growth and seasonal trends. Adjusted EBITDA for Q1 is expected to be between $80m and $90m, highlighting disciplined cost management and operational efficiency. Reddit will continue to scale its global reach, investing in high-growth international markets to drive further monetization. Additionally, the company remains committed to product innovation and AI-driven advancements, with a focus on enhancing content discovery, improving ad relevance, and delivering personalized user experiences.

Although the reported results surprised with their expansion, the main estimates on Wall Street seem to have not been reached, so the RDDT share price even fell by 18% in after-hours, after the publication of the report.