The social media platform beat analyst expectations Tuesday when it reported revenue of $243 million, up 48% from the same period last year. The company also boasted a record 82.7 million daily active users, up 37% from the year before.
“It was a strong start to the year and a milestone quarter for Reddit and our communities as we debuted as a public company,” co-founder and Reddit CEO Steve Huffman said in a statement. “We see this as the beginning of a new chapter as we work towards building the next generation of Reddit.”
While still not yet profitable, the net loss of $8.19 a share was below the $8.75 a share loss that investors were bracing for.
“On a non-GAAP basis, adjusted EBITDA was approximately $10 million in the first quarter,” CFO Drew Vollero told investors on the company’s earnings call. “This marks our first profitable Q1 on adjusted EBITDA basis, which in digital advertising is traditionally the slowest quarter of the year.”
Meanwhile, research and development costs soared by 300% year-over-year as the company beefed up its AI partnerships and advertising strategy. The company said its performance advertising segment drove more than half of the revenue growth for the quarter.
“The real money printer here is Reddit’s AI data licensing deals, like the $60 million per year agreement with Google,” said Jeremy Goldman, an analyst at Emarketer, a sister company to Business Insider. “With its distributed human moderation, Reddit is well-positioned to detect and prevent AI-generated spam, giving it an edge over rivals.”
On the earnings call, Huffman said the company’s near-term priorities are improving retention, search performance, and translating the site’s content into languages other than English, which would help tap into international markets.
Huffman also said when it comes to third parties training their AI models on Reddit content for free, the days are numbered.
“I don’t think companies that have taken or continue to take our data can expect to continue to do so with no repercussions,” he said.
