In This Article:
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Revenue: $392 million, up 61% year-over-year.
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Advertising Revenue: $359 million, up 61% year-over-year.
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Net Income: $26 million.
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Adjusted EBITDA: $115 million, with a margin of 29%.
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Gross Margin: 90.5%, up 190 basis points year-over-year.
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Operating Cash Flow: $128 million, with a margin of 33% of revenue.
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Free Cash Flow: $127 million, 32% of revenue.
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International Revenue Growth: 83% year-over-year, fastest in three years.
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Active Advertisers Growth: Over 50% year-over-year.
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Headcount: Slightly more than 2,300, up 3% sequentially.
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Cash and Investments: $1.95 billion, up over $110 million sequentially.
Release Date: May 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Reddit Inc (NYSE:RDDT) reported a 61% year-over-year increase in revenue, reaching $392 million for Q1 2025.
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The company achieved a 31% year-over-year growth in both weekly and daily active users, with 401 million weekly and 108 million daily users.
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Reddit's advertising business grew by 61% year-over-year, driven by broad-based strength across objectives, channels, verticals, and geographies.
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International ad revenue grew 83% year-over-year, marking the fastest growth rate in three years.
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Reddit's adjusted EBITDA margin reached 29%, with a net income margin of 7%, showcasing strong profitability and financial health.
Negative Points
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The macroeconomic environment remains uncertain, which could impact advertising revenue and user engagement.
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Reddit faces challenges with variability in traffic from external sources, such as search engines, which can affect user growth.
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There is a need to evolve account creation processes to combat fake accounts and bots, which could impact user experience.
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The company is still in the early stages of testing and integrating new ad formats like Dynamic Product Ads, which may take time to scale.
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Reddit's international revenue, while growing, still represents only 20% of the business despite more than half of the audience being outside the US.
Q & A Highlights
Q: Can you discuss the current state of the advertising market and how macroeconomic factors might impact Reddit's business? A: Jennifer Wong, COO, noted that despite market uncertainties, Reddit is well-positioned with its roadmap and go-to-market strategy. The platform continues to deliver profitable outcomes for advertisers and remains a valuable resource for users seeking advice during uncertain times. Reddit's unique insights into consumer trends help brands navigate market volatility.