Reddit, Inc. (RDDT) has reported a remarkable 61% year-over-year increase in revenue for the first quarter of 2025, reaching $392.4 million. This robust performance was driven by strong growth in advertising revenue, which rose by 61% to $359 million.
The company also saw a significant increase in other revenue streams, such as data licensing, which grew by 66% to $34 million. Following this announcement, Reddit’s stock experienced a 3% increase in after-hours trading, reflecting positive investor sentiment.
The surge in revenue was accompanied by a notable improvement in profitability. Reddit swung to a net income of $26.2 million, marking a significant turnaround from the previous year’s net loss of $575.1 million, which was largely due to expenses related to its initial public offering in March 2024.
The company’s earnings per share (EPS) came in at $0.13, far exceeding analyst expectations of $0.01.
Reddit’s user base also saw substantial growth, with daily active unique users (DAUq) increasing by 31% to 108.1 million. This rise was partly attributed to enhancements in the platform and changes in Google’s search algorithms, which have driven more traffic to Reddit.
The company has focused on converting logged-out users into logged-in users, who are more valuable to advertisers.
Looking ahead, Reddit has provided optimistic guidance for the second quarter, projecting revenue between $410 million and $430 million.
This represents a potential increase of 46% to 53% year-over-year, driven by growing digital ad spend and the company’s strategic focus on product improvements and international expansion.
Despite uncertainties in the macroeconomic environment, Reddit’s strong execution and growth drivers have positioned it well to capitalize on emerging opportunities in the digital advertising sector.