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Reddit, the social media platform known for its devoted online communities and raucous debates, surprised Wall Street by turning a profit for the first time just months after going public, sending shares up 25 per cent to a record high.
On a call with analysts, Reddit’s executives said that investments in its ad tech, designed to improve the performance of ads, were bearing fruit, as was its move to use “machine translation” to automatically translate its content into languages to boost its audience. It now has nearly 100mn daily active users, up 47 per cent year-on-year in the quarter.
Net income for the company, which floated on the New York Stock Exchange in March, was $29.9mn in the third quarter, up from a net loss of $7.4mn in the same period last year, and well above Wall Street estimates of $10mn in losses.
“Continuing to look to 2025 and beyond, we’ll seek opportunities to accelerate our road map, whether through new product development, global expansion or growing our ads business,” Steve Huffman, Reddit chief executive said, “all while maintaining our commitment to scaling profitably and ensuring that Reddit is to be the go to place for conversations and community on the internet.”
Reddit’s third-quarter revenues were up 68 per cent to $348.4mn, compared to Wall Street consensus of a rise to $314.8mn. It also forecast revenues for the current quarter of between $385mn and $400mn, above Wall Street’s forecasts.
Huffman said the company would invest in modernising its search capabilities, including developing “beautiful results pages” and integrating large language models into its results data.
Huffman also said that the company was looking to support businesses, brands and creators having an official presence on Reddit, marking a new direction for a platform that was once known to host edgy, anonymous conversations and take a more hands-off approach to moderation.
The White House now has an official account with its new Reddit Pro business offering, he added, and had used this to share critical information with local communities during the recent hurricanes in the US.
However, Huffman appeared more cautious when talking about the licensing deals — to sell its data to tech and AI companies to train their models — that it had been touting ahead of its listing.
In particular, the company had generated enthusiasm by citing this as a potential revenue driver when it struck deals with Google and, later, OpenAI.
However on Tuesday, Huffman said that while the company was still in conversation about future deals, these were “limited” in number and mainly with smaller players.
“The story here is Reddit data is extremely valuable for a lot of players on the market,” Huffman said. “So we’re open for business and finding the right balance between making this information accessible and building our own products on top of it.”
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