Reddit Q1 Earnings: Revenue Surges 61% to $392M, Achieves First Profitable Quarter

Rhea-AI Summary

Reddit (RDDT) reported strong Q1 2025 financial results, marking significant growth across key metrics. Revenue surged 61% year-over-year to $392.4 million, with ad revenue reaching $358.6 million. The platform achieved profitability with net income of $26.2 million, a remarkable turnaround from a $575.1 million loss in the previous year. Daily Active Uniques increased 31% to 108.1 million users, while gross margin expanded to 90.5%. The company demonstrated robust cash generation with operating cash flow of $127.6 million and Free Cash Flow of $126.6 million. For Q2 2025, Reddit projects revenue between $410-430 million and Adjusted EBITDA of $110-130 million. The company's international segment showed particularly strong growth at 82% year-over-year.

Positive

• Net income of $26.2M, turning profitable from previous year's $575.1M loss
• Revenue grew 61% YoY to $392.4M, with strong ad revenue growth
• International revenue surged 82% YoY to $78.5M
• Daily Active Uniques increased 31% YoY to 108.1M users
• Gross margin improved to 90.5%, up 190 basis points
• Strong cash generation with $127.6M operating cash flow
• Healthy Q2 2025 guidance suggesting continued growth

Negative

• None.

Insights

Financial Analyst

Reddit delivered exceptional Q1 results with 61% revenue growth, achieved profitability with $26.2M net income, and expanded EBITDA margins dramatically year-over-year.

Reddit's Q1 2025 financial results showcase exceptional performance across all key metrics. Revenue surged 61% year-over-year to $392.4 million, significantly outpacing user growth as measured by Daily Active Uniques (DAUq), which increased 31% to 108.1 million.

The most striking achievement is Reddit's transition to profitability, reporting $26.2 million in net income (6.7% of revenue) compared to a substantial loss of $575.1 million in Q1 2024. This transformation is reflected in the positive EPS of $0.13 per share.

Reddit's gross margin expanded by 190 basis points year-over-year to 90.5%, showcasing the platform's operational efficiency and scalability. Adjusted EBITDA reached $115.3 million, representing a remarkable margin expansion from just 4.1% to 29.4% year-over-year.

The company demonstrated strong cash generation with operating cash flow of $127.6 million and free cash flow of $126.6 million. Capital expenditures were notably low at just $1.0 million (less than 1% of revenue).

Revenue growth was geographically diversified, with international markets growing 82% year-over-year to $78.5 million, outpacing the still impressive U.S. growth of 57% to $313.9 million. This suggests significant global expansion opportunities.

Reddit's revenue composition shows advertising revenue of $358.6 million growing at 61% year-over-year, while "other revenue" contributed $33.7 million growing at 66%.

The Q2 guidance of $410-430 million in revenue indicates continued strong performance with modest sequential growth. With $1.95 billion in cash and marketable securities, Reddit maintains substantial financial flexibility for future investments.

Reddit Reports Strong Q1 2025 Results with 61% Revenue Growth and Shift to Profitability

Reddit, Inc. (NYSE: RDDT) announced financial results for the first quarter of 2025 on May 1, showing substantial revenue growth and a notable shift to profitability. The social media platform reported $392.4 million in revenue, representing a 61% increase compared to the same period last year, while turning last year's significant loss into a $26.2 million profit.

The company's daily active users grew to 108.1 million, a 31% year-over-year increase, as Reddit continues to strengthen its position as a major social platform. The results mark a significant milestone in Reddit's financial journey, with the company achieving a 6.7% net margin compared to a negative 236.7% margin in the same quarter last year.

Financial Performance Highlights

Reddit's Q1 2025 financial results show multiple areas of improvement over the previous year:

• Revenue reached $392.4 million, up 61% from $243.0 million in Q1 2024
• Advertising revenue, which comprises the bulk of the company's income, grew 61% to $358.6 million
• Other revenue streams increased 66% to $33.7 million
• Gross margin expanded to 90.5%, an improvement of 190 basis points year-over-year
• Net income was $26.2 million, compared to a net loss of $575.1 million in the prior year
• Diluted earnings per share (EPS) reached $0.13, a significant improvement from the -$8.19 reported in Q1 2024

The company's Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) was $115.3 million, representing 29.4% of revenue and showing substantial growth from $10.0 million in the first quarter of 2024. This non-GAAP financial measure, which excludes stock-based compensation and other items, indicates the underlying operational strength of the business.

User Growth and Engagement

Reddit's user metrics showed robust growth across all geographic regions:

Daily Active Uniques (DAUq) reached 108.1 million, representing a 31% increase year-over-year. International DAUq grew at a faster rate than U.S. users, with international users increasing 41% to 58.0 million, while U.S. users grew 21% to 50.1 million.

The company reported that 401.3 million people now visit Reddit weekly, a 31% increase from the prior year. This growth in audience has been accompanied by improved monetization, with average revenue per unique user (ARPU) increasing 23% to $3.63 globally.

Geographic Performance

While the United States remains Reddit's largest market, international expansion is showing accelerated growth. U.S. revenue grew 57% year-over-year to $313.9 million, while international revenue surged 82% to $78.5 million. The company's U.S. ARPU of $6.27 is significantly higher than the international ARPU of $1.34, suggesting room for further monetization of international users.

Cash Position and Operations

Reddit reported strong cash generation with operating cash flow of $127.6 million, an improvement of $95.5 million from the prior year. Free Cash Flow, defined as operating cash flow minus capital expenditures, reached $126.6 million for the quarter.

The company ended the quarter with a robust cash position, reporting $1.95 billion in cash, cash equivalents, and marketable securities. Capital expenditures remained low at $1.0 million, less than 1% of revenue, reflecting the asset-light nature of Reddit's business model.

Future Outlook

Looking ahead to the second quarter of 2025, Reddit expects revenue to be between $410 million and $430 million, while Adjusted EBITDA is projected to range from $110 million to $130 million, according to the company's guidance.

"Over 400 million people now come to Reddit each week—because when you want real opinions, you turn to real people," said Steve Huffman, Co-Founder and CEO of Reddit, in the release. "20 years in, I have never been more excited about Reddit's future than I am now. We're growing and building a more valuable platform for community and human perspective."

Earnings Conference Call

Reddit will host a conference call to discuss the first quarter 2025 results on Thursday, May 1, 2025, at 2:00 p.m. PT / 5:00 p.m. ET. The company noted that it will also solicit questions from the community through its investor relations subreddit, r/RDDT, and post responses following the earnings call.

This article is based solely on information provided in Reddit, Inc.'s press release dated May 1, 2025. The content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. Stock Titan and its writers make no representations as to the accuracy, completeness, or timeliness of the information. Investors should conduct their own due diligence before making any investment decisions.

Source: Reddit

FAQ

What was Reddit's (RDDT) revenue in Q1 2025?

Reddit reported total revenue of $392.4 million in Q1 2025, representing a 61% increase year-over-year.

How much profit did Reddit (RDDT) make in Q1 2025?

Reddit achieved net income of $26.2 million in Q1 2025, compared to a net loss of $575.1 million in the previous year.

What is Reddit's (RDDT) user growth in Q1 2025?

Reddit's Daily Active Uniques (DAUq) grew 31% year-over-year to 108.1 million users.

What is Reddit's (RDDT) guidance for Q2 2025?

Reddit expects Q2 2025 revenue between $410-430 million and Adjusted EBITDA between $110-130 million.

How much was Reddit's (RDDT) international revenue growth in Q1 2025?

Reddit's international revenue grew 82% year-over-year to $78.5 million in Q1 2025.