Reddit filed its first earnings post-IPO, reporting that
revenue reached $243 million, up 48% year-over-year (YoY), in the quarter that ended March 31, 2024.
The company attributed the increase primarily to ads' revenue growth -- 39% YoY -- and
revenue from data licensing agreements, up more than 450% YoY.
“It was a strong start to the year and a milestone quarter for Reddit and our communities as we debuted as a public
company,” stated Steve Huffman, co-founder and CEO of Reddit. “We see this as the beginning of a new chapter as we work toward building the next generation of Reddit.”
Huffman alluded to search becoming the next focus for Reddit. Upgrading search functions with improve back-end performance, autocomplete, and better user interface--all scheduled for later this
year.
“There are no ads today on search result pages," he said. "But that’s a very high-performing product elsewhere on the internet."
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There's no reason to believe it
wouldn’t be for Reddit because the intention is so explicit when users search, he said.
Advertising revenue growth was mainly driven by increased impressions from ad-inventory
optimizations and logged-in DAUq growth of about 27%, compared with the year-ago quarter. Daily Active Uniques DAUq averaged an all-time high of 82.7 million, up 37%.
Verticals such
as financial services, pharma, and CPG grew more than 50% YoY, demonstrating continued growth and diversification of the company's advertising business.
Reddit also said it doubled its
ad-click volume and click-through-rates by more than over 40%.
The net loss was $575.1 million, compared to $60.9 million in the prior year. Stock-based compensation expense and related
taxes were $595.5 million, as compared to $13.2 million in the prior year, driven by IPO charges.
Huffman told CNBC that the company has begun to attract what he called “ 'emerging
adults," or users in their late teenage years,” and they manage to grow old together.
“Where somebody might age out of social media, they age into Reddit,” he told CNBC.
“Whatever you’re into or going through on Reddit, like all of life’s ups and downs and big decisions, they’re on Reddit somewhere, and so we build really deep relationships
with our users.”
New Street Research in a note published Tuesday wrote that “2Q24 guidance was touch lighter than our Street-high estimates, but the anticipated revenue range of
$240M to $255M nicely beat consensus. After producing positive adjusted EBITDA in the seasonally slowest quarter, we view the 2Q24 adjusted EBITDA guidance range of $0 to $15M as likely conservative.
Management will be giving next-quarter revenue and adjusted EBITDA guidance ranges each quarter, and we found the anecdotal color for the rest of the year to be helpful.”