Reddit said it expects second-quarter revenue to top Wall Street estimates, pointing to recent AI-powered advertising tools as a catalyst for higher ad spending on the platform. The company’s after-hours stock reaction reflected investor enthusiasm, with shares rising 8% in extended trading.
Management provided a revenue outlook of $715 million to $725 million for the second quarter, above the LSEG-compiled analysts' mean estimate of $711.6 million. Adjusted earnings before interest, taxes, depreciation and amortization were forecast in a range of $285 million to $295 million, higher than the analysts' consensus of $277.1 million.
Reddit highlighted a suite of AI-focused features that advertisers can use to better reach users by interests and by communities within subreddit discussion threads. The company described its ad platform as employing AI to streamline campaign creation and campaign management. Examples cited include an AI copywriter tailored to Reddit-specific adverts and an automatic creative asset cropper designed to optimise images for different ad placements.
"Our active advertiser count grew 75% year-over-year, which I think is the third consecutive quarter that we’ve had really strong active advertiser count," Reddit Chief Operating Officer Jen Wong said, noting sustained momentum in advertiser engagement.
The company’s recent operating results reinforce that momentum. For the first quarter, revenue rose 69% to $663 million, above estimates of $610.9 million. User engagement metrics also strengthened: daily active unique visitors increased 17% to 126.8 million in the quarter, while global average revenue per user was up 44%.
Reddit framed these outcomes as validation of its strategy to capture a larger share of ad dollars amid intense competition from other platforms. The company competes for advertising budgets with larger entrants such as TikTok and Meta’s Instagram and Facebook in what it described as a crowded market.
On the strategic partnership front, Reddit last month entered a tie-up with Shopify to enable merchants to advertise products directly on the platform, an effort the company said is intended to turn user discussions into shopping activity.
Management also touched on workforce strategy. While Meta disclosed plans for layoffs following its earnings call and provided a second-quarter revenue outlook of $58 billion to $61 billion in line with expectations, Reddit said it is "still hiring and adding to our talent base." Wong acknowledged the broader corporate consideration of how AI could influence workforce composition.
Contextual notes - The company’s Q2 revenue and adjusted EBITDA ranges, its Q1 revenue and user metrics, its advertiser growth percentage, and its partnership with Shopify were provided by Reddit in its outlook and results. The company’s stock move in extended trading reflected market reaction to that announcement.