Reddit shares soared more than 14% on Friday after the company delivered a blowout third-quarter report that handily beat Wall Street’s expectations and signaled continued momentum in digital advertising.
Revenue for the quarter surged 68% year-over-year to $585 million, surpassing the LSEG consensus estimate of $546 million, while earnings per share came in at $0.80, topping expectations of $0.51. The results mark Reddit’s strongest growth since going public earlier this year, underscoring the platform’s deepening appeal to advertisers and users.
The company also projected a bullish outlook for the fourth quarter, forecasting revenue between $655 million and $665 million, ahead of Wall Street’s $638 million estimate. The upbeat guidance fueled optimism that Reddit’s ad recovery is accelerating as more brands look to target its highly engaged user communities.
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“These results speak to the company’s continued progress across its ad and platform initiatives,” Morgan Stanley analyst Brian Nowak wrote in a client note, adding that Reddit’s growth trajectory remains strong. “We see a long runway for growth across both active advertisers (+75% year-over-year in 3Q) as well as greater penetration within existing advertisers.”
Reddit said that nine of its top 15 advertiser verticals expanded by more than 50% during the quarter, reflecting growing confidence from brands. Analysts credited Reddit’s ongoing push into ad automation tools and AI-driven performance optimization, which have helped advertisers achieve higher returns on spending and improved targeting precision across its communities.
Daily active users on the platform climbed 19% from a year ago to 116 million, surpassing analysts’ expectations of 114 million. The company said engagement rose across key categories, from gaming and entertainment to finance and sports, with logged-in users driving higher ad revenue per user.
Reddit’s daily active unique users rose 7% to 23.1 million, though the growth pace moderated from the 12% jump recorded in the second quarter. Globally, logged-in users increased 14% year-over-year to 50.2 million, reinforcing the company’s broader international appeal.
CEO Steve Huffman said Reddit has seen an influx of new users coming from Google search, noting that the company continues to attract high-value audiences that convert into registered accounts — a key driver of ad revenue.
“I’m looking forward to continuing to work on these things with these partners, but they’re not a major traffic driver today. I think there’s plenty of opportunity there as we continue to work together,” Huffman said during the earnings call.
The CEO’s comments come amid industry concerns that the rise of AI chatbots, including ChatGPT and Google’s AI Overview, could impact organic traffic to online communities by providing users with instant answers rather than links to forums. Reddit has sought to mitigate this risk through data licensing agreements with AI firms, ensuring it benefits financially from its vast repository of human-generated content.
Revenue from data licensing partnerships, including deals with Google and OpenAI, rose 7% year-over-year to $36 million. Analysts say such partnerships are becoming an increasingly important revenue stream as AI companies train large language models on real-world conversations.
Reddit’s performance points to how the company has evolved from a niche discussion site into a significant player in the digital advertising market. With a blend of community-driven content, transparency tools, and data partnerships, Reddit is positioning itself to compete more effectively with larger rivals like Meta and X (formerly Twitter).
The company’s advertising turnaround comes as major social platforms reorient their business models toward AI and personalized ad delivery. Reddit’s strategy — emphasizing authentic engagement and advertiser access to interest-based communities — appears to be paying off.
Despite concerns about slowing user growth in some categories, analysts said Reddit’s ability to attract more advertisers and boost ad yields per user bodes well for its long-term profitability. With the holiday quarter ahead, many expect Reddit’s momentum to continue as brands ramp up digital ad campaigns targeting niche communities and product enthusiasts.
Shares of Reddit have now gained more than 45% since the start of the year, reflecting renewed investor confidence in the company’s post-IPO performance and its growing relevance in the broader digital ad ecosystem.