Reddit (RDDT) beat first-quarter estimates on the top and bottom line in the social media platform's first earnings report since going public in March. Reddit CEO Steve Huffman joins Yahoo Finance Executive Editor Brian Sozzi to talk the website's earnings figures, its CapEx (capital expenditure) spending, and Reddit's plans to revamp its user interface.

"The thing about Reddit is its communities, and those communities represent every interest and hobby and passion imaginable. Which means in addition to being fun for users, basically every company's customers are on Reddit somewhere. and our ads technology is getting better and better," Huffman states. "And so if you're a company trying to reach your customers and know that 30% of our users are not on Instagram or Facebook or TikTok, other big advertising platforms, as a company, you can find your customers uniquely on Reddit, often in a moment where they're talking about your product or brand or vertical."

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This post was written by Luke Carberry Mogan.

Video Transcript

Redd's first results as a public company surprised a lot of people.

The company hit profitability for the first time, execs teased new products on the way.

And you got the sense that Reddit the platform is growing up very, very fast.

Steve Huffman, Reddit co founder and CEO joins me now.

Good to see you again.

It feels like it was just yesterday with the company with your IP O.

Let's start on, on growing up fast.

You know, I've read the earnings release several times the earnings call and I really came away.

This is a lot different platform than I think investors have come to think about it as Hey, Brian, good morning.

Um Look, I think a lot of things are starting to click right now.

So like in the first quarter, we grew revenue 48% users, 37% all time highs and, and as you mentioned, uh profitable and because Reddit is such a simple business, high margin, if you combine that with uh discipline on costs, you can see how quickly we can get the profitability.

And so it's, it's I think, not just a fun platform, but it's a, it's a, a simple and scalable business as well.

Yeah, we have a lot to get to here, Steve, but real quick.

Are you spending enough?

Uh your cap X was so low and we hear about, you know, meta out there spending billions of dollars.

Are you, are you investing enough in the platform to support some of the growth we saw in that quarter?

You know, IIII I told my team, I was like, you know, the economy is getting better and when people start asking us to spend more again, um like at, at the moment, uh we're trying to do a couple of things, there's a lot of stuff uh that I'm very excited about building.

So beyond the core product, we've got our user economy, we've got developer platform, we've got search a lot of uh I think, interesting and fun stuff coming, but we're also working towards uh profitability.

So right now we're there on an adjusted I be a basis.

Uh The next milestone for us is gap profitability.

And so I think we're in a good spot.

We're basically building everything that I'm very excited about building, but also getting closer and closer to those business milestones is just given the strength of the, the first quarter, Steve is gap profitability this year.

Look hard to say.

Um We grew revenue uh five times faster than costs.

Uh In this past quarter, the commitment we've made as a management team is about uh revenue twice as fast as costs.

So it's just a matter of time, right, a high margin.

So 80 8% in Q one and uh cost discipline, that's the path to profitability.

Um The exact timing we'll see.

But uh I think we're on the right track and then the advertising business uh was strong.

How sustainable is that and how, you know, why is that growth happening?

Look, uh I think the, the thing about Reddit is it's communities and those communities represent every interest and hobby and passion imaginable, which means in addition to being fun for users, basically, every company's customers are on Reddit somewhere and our ads technology is getting better and better.

And so if you're a company trying to reach your customers and know that 30% of our users are not on Instagram or Facebook or tiktok, other big advertising platforms.

Uh you can find as a company, you can find your customers uniquely on Reddit uh often in a moment where they're talking about your product or brand or vertical.

And so I think that creates pretty incredible opportunities earlier this week.

Uh Steve, I caught up with uh Pinterest, Ceo, Bill Reddy and a lot of conversation about making that platform shop.

Now, that's a number that's a word you mentioned on your call.

Do you wanna make it where I'm directly buying things from reddit?

Well, uh I, I think in many cases, one of the things I joke about, but it's not really a joke.

The most fun part about picking up a new hobby is buying all the new gear.

And so every hobby, every purchasing decision, whatever you're into or going through is on Reddit.

And so I think it's only natural to, uh, to be able to connect the dots like that.

So, uh, you know, first step is, is, is get the right customers on Reddit.

Um, our advertising customers and then we just continue to chip away at our road map of making it easier and easier to find what you're looking for or even transact.

Like you suggest, what could you tell us about the new user interface coming this year?

So one of the most important things we've been doing and I think what's really driving the user growth that we've been seeing is we've just been focused on making Reddit easier to use.

I've long said everybody has a home on Reddit.

That is your home.

What you're interested in is on Reddit.

The challenge to us from a product point of view is, are we helping users be successful in finding that home?

And over the last year, we've gotten much better at that.

And as we look forward, uh our day to day work is really making Reddit easier to use easier on their eyes more effective at at finding your home on Reddit.

So if you've been using reddit a long time, I think you should be excited at all of the quality of life improvements that are coming.

Is there another Google like deal for, for A I for Reddit to be had?

And just in terms of I guess notoriety and dollar amount, I think the potential is there.

So uh Reddit's public content is really valuable and we are in a situation right now where we're basically the only platform that is still open, everybody else has closed off and we believe in an open and interconnected internet.

Um But we also need to be considered about where our content goes and what it's used for.

But Reddit has two decades of human conversation about pretty much any interest and topic imaginable and it's up to date and it's relevant.

And so I think if you are in the search business or you are in the A I business, which I think of as like search 2.0 then you, I think basically can't be competitive without uh access to Reddit content.

Lastly, Steve, I like how you ran the earnings call.

You took some uh I look like user questions, but tell me if I have this right, you did eight practice earnings calls before you went public.

I mean, it seems like you're just a really well prepared management team even though this was your first quarter as a public company.

You know, that was one of those things that, that worked out.

So we thought we were gonna go public way back in 22 almost two years to the day from when we actually went out.

And so we did one practice earnings call with the analysts from our like syndicate banks.

Uh and then we just delayed our IP O for two years.

And so we ended up doing eight calls and did the whole um kind of public company cycle, right board meeting, close the books board meeting, earnings follow ups, all of that.

Uh, and that was really great practice.

Uh, and, and so I'm actually really thankful for how that worked out.

And my suggestion would be for any company that's thinking about going out, try to get ahead of these processes or get a few reps under your belt sooner rather than later.

Because I think it really helped us, you know, you and I Steve, we both look, I don't know, let's say early thirties, but the bottom line is this, uh, we're veterans of the battles despite what we look like on cameras.

Uh, Steve Hoffman, Reddick, co founder and CEO.

Always good to see you.

We'll talk to you soon, Brian.

Thank you.

Be.

Well, everybody.

You bet you.