Reddit said it expects to deliver third-quarter revenue above Wall Street expectations, citing momentum from newly deployed AI advertising capabilities that the company says are helping marketers improve campaign outcomes.
The company provided a forecast for third-quarter revenue in a range of $860 million to $870 million, which exceeds the LSEG-compiled analysts' average estimate of $829.1 million. For the second quarter, Reddit reported revenue of $805 million, up 61% from a year earlier and ahead of the $730.4 million that analysts had been expecting.
Reddit described its advertiser-facing product set as a suite of AI-powered tools intended to improve campaign performance. Those tools include a library of top-performing ads, the ability to generate ad copy tailored for Reddit, measurement of visitor behavior after exposure to ads, and targeting that leverages both user interests and community context within subreddit conversations.
Management said the approach is resonating with advertisers. "The company’s advertiser growth in the second quarter was 70% year-over-year. So, we continue to onboard a lot more new advertisers onto Reddit," Chief Operating Officer Jen Wong said. She added that the expansion was particularly pronounced among mid-market and small- and medium-sized businesses as well as international advertisers.
While commercial momentum was emphasized, Reddit acknowledged audience and traffic challenges. Global U.S.-adjusted daily active unique visitors, or DAUq, rose 18% year-over-year to 130.3 million, a modest improvement versus the prior quarter. However, growth in U.S. DAUq slowed sequentially during the second quarter.
"Search referrals were choppy in the quarter, and traffic was more volatile later in the quarter, but the bigger picture is unchanged: the commercial business is strong," co-founder and CEO Steve Huffman wrote in the shareholders' letter.
Wong also pointed to algorithm changes at search providers as a notable headwind for Reddit's user acquisition efforts. She said "SEO headwinds" caused by those changes "more than offset" the company’s acquisition initiatives during the quarter. Despite that, management indicated product improvements are helping to convert lower-engagement visitors originating from search into more loyal app users.
On profitability metrics, Reddit forecast adjusted earnings before interest, taxes, depreciation and amortization for the third quarter in a band of $385 million to $395 million, above analysts' estimates of $369 million.
Taken together, Reddit's results and guidance reflect a company leaning on product-led improvements - notably AI features aimed at advertisers - to deepen monetization and broaden its advertiser base even as traffic patterns remain uneven. The company specifically identified traction with mid-market, SMB and international advertisers, and it highlighted the ability to convert search-led visitors into repeat users through product upgrades.