- The Reddit share price is climbing thanks to the news of the company’s maiden profits.
- Third-quarter revenue compared to the year prior is now up 68% to US$348.4 million
- Advertising also increased by 56% to US$315 million, while daily active unique users increased by 47% to 97.2 million this quarter.
Reddit’s share price has enjoyed a tidy 42% bump after the “Front Page of the Internet” defied expectations and posted its first quarterly profit since publicly listing in March.
The company reported a net income of US$29.9 million from its total Q3 revenue of US$348.54 million (or 16 cents per share). For reference, it had faced a net loss of US$7.4 million during the same quarter a year ago; while the most recent quarterly revenue was only forecasted to reach US$312.8 million.
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As a result, the stock (NYSE: RDDT) is currently sitting at around US$116, up from yesterday’s US$80 benchmark. Which is certainly quite a significant “upvote” from the market.
“It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability,” Co-Founder & CEO Steve Huffman said in a press release.
So how exactly has an operation that’s traditionally struggled to monetise turned the corner?
Aside from a bump in digital advertising spend, Reddit has emerged as an unlikely winner in the ongoing artificial intelligence arms race thanks to content licensing deals with Google and OpenAI. The latter two have been granted access to the former’s Data API for the purposes of training their respective AI models.
Huffman added: “This year, we started using AI to translate Reddit’s corpus into other languages, making it more accessible for non-English speakers to enjoy in their native languages.
“This quarter, machine translation drove four times more users than last quarter, and based on the success we’ve seen so far, we plan to expand machine translation to over 30 countries through 2025.”
Currently, English posts are being translated into French, Spanish, Italian, German, as well as Portuguese.
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Reddit has noted Q4 revenue will be between US$385 million and US$400 million, above the average analyst estimate of US$357.9 million as per CNBC.
“As we look to 2025 and beyond, we’ll seek opportunities to accelerate our roadmap, whether through new product developments, global expansion, or growing our ads business,” said Steve Huffman.
