Reddit (NYSE:RDDT) Posts Earnings Results, Beats Estimates By $0.30 EPS

Reddit (NYSE:RDDT) issued its quarterly earnings data on Thursday. The company reported $1.25 earnings per share for the quarter, topping analysts’ consensus estimates of $0.95 by $0.30, Zacks reports. Reddit had a return on equity of 25.48% and a net margin of 28.60%.The firm had revenue of $804.91 million during the quarter, compared to analysts’ expectations of $731.00 million. During the same period in the prior year, the business posted $0.45 EPS. The firm’s quarterly revenue was up 61.0% on a year-over-year basis.

Here are the key takeaways from Reddit’s conference call:

• Strong financial performance: Q2 revenue rose 61% year over year to $805 million, advertising revenue increased 64% to $762 million, and adjusted EBITDA margin reached 43%. Operating cash flow more than doubled to $262 million, with last-twelve-month operating cash flow surpassing $1 billion.
• Advertising momentum remained broad-based. Active advertisers grew more than 70%, scaled-channel revenue doubled, conversion volume increased over 100%, and Reddit Max revenue rose more than 150% sequentially as automation and lower-funnel products gained adoption.
• User growth faced search-referral headwinds. Product-driven gains in daily active users were offset by declining and volatile search traffic, particularly late in the quarter; management acknowledged that user retention remains below industry peers and that direct-user growth will take time.
• Management guided to continued growth in Q3, forecasting revenue of $860 million to $870 million and adjusted EBITDA of $385 million to $395 million, or a 45% margin at the midpoint. Reddit also lowered its full-year stock-based compensation outlook and repurchased approximately $235 million of stock, with $760 million remaining under its authorization.
• Reddit is investing heavily in its product roadmap, including improved feed technology, app onboarding, video, search, shopping ads, and SMB automation. Executives also said data-licensing outcomes with major AI companies remain uncertain and will depend on maximizing value across multiple potential uses.

Reddit Trading Up 0.3%

Shares of RDDT stock traded up $0.54 during trading hours on Thursday, reaching $178.53. 11,460,494 shares of the company’s stock were exchanged, compared to its average volume of 3,769,186. Reddit has a 1 year low of $119.27 and a 1 year high of $282.95. The stock has a market cap of $34.37 billion, a PE ratio of 50.85 and a beta of 1.93. The stock’s fifty day moving average price is $176.74 and its two-hundred day moving average price is $165.09.

Insider Activity at Reddit

In other Reddit news, CAO Michelle Marie Reynolds sold 808 shares of the company’s stock in a transaction that occurred on Wednesday, July 1st. The shares were sold at an average price of $200.00, for a total transaction of $161,600.00. Following the transaction, the chief accounting officer owned 15,060 shares in the company, valued at approximately $3,012,000. This represents a 5.09% decrease in their position. The sale was disclosed in a document filed with the SEC, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Steve Ladd Huffman sold 18,000 shares of the firm’s stock in a transaction on Monday, June 15th. The stock was sold at an average price of $178.26, for a total transaction of $3,208,680.00. Following the completion of the transaction, the chief executive officer directly owned 373,814 shares of the company’s stock, valued at approximately $66,636,083.64. This represents a 4.59% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 169,141 shares of company stock valued at $28,680,845 in the last three months. 28.48% of the stock is owned by insiders.

Institutional Investors Weigh In On Reddit

A number of large investors have recently made changes to their positions in the stock. Geneos Wealth Management Inc. raised its stake in Reddit by 344.6% in the 1st quarter. Geneos Wealth Management Inc. now owns 369 shares of the company’s stock worth $39,000 after acquiring an additional 286 shares during the last quarter. Summit Securities Group LLC acquired a new stake in Reddit during the 4th quarter worth about $46,000. Towarzystwo Funduszy Inwestycyjnych PZU SA grew its stake in Reddit by 214.3% during the 4th quarter. Towarzystwo Funduszy Inwestycyjnych PZU SA now owns 220 shares of the company’s stock valued at $51,000 after purchasing an additional 150 shares during the last quarter. GW&K Investment Management LLC grew its stake in Reddit by 76.2% during the 4th quarter. GW&K Investment Management LLC now owns 229 shares of the company’s stock valued at $53,000 after purchasing an additional 99 shares during the last quarter. Finally, Itau Unibanco Holding S.A. acquired a new position in shares of Reddit in the fourth quarter valued at about $66,000.

Wall Street Analysts Forecast Growth

Several equities analysts have issued reports on RDDT shares. Weiss Ratings reiterated a “hold (c)” rating on shares of Reddit in a report on Friday, May 8th. Bank of America reduced their price objective on shares of Reddit from $205.00 to $175.00 and set a “neutral” rating for the company in a research note on Thursday, April 2nd. Rothschild & Co Redburn set a $110.00 target price on shares of Reddit in a research report on Monday, April 27th. Wall Street Zen downgraded shares of Reddit from a “buy” rating to a “hold” rating in a research note on Sunday, May 10th. Finally, Wells Fargo & Company upped their price target on Reddit from $176.00 to $187.00 and gave the stock an “equal weight” rating in a research report on Tuesday, July 7th. Two analysts have rated the stock with a Strong Buy rating, nineteen have issued a Buy rating and eleven have issued a Hold rating to the stock. According to data from MarketBeat.com, the stock presently has a consensus rating of “Moderate Buy” and an average price target of $232.23.

Key Stories Impacting Reddit

Here are the key news stories impacting Reddit this week:

• Positive Sentiment: Q2 revenue rose 61% year over year to $804.9 million, exceeding the $731 million consensus estimate, while adjusted earnings of $1.25 per share surpassed expectations of approximately $0.95. Net profit reached $253 million, compared with $0.45 per share a year earlier. Reddit Q2 earnings report
• Positive Sentiment: Reddit forecast third-quarter revenue of $860 million to $870 million, above the $829.7 million analyst consensus. Management said AI-powered advertising tools are helping attract marketers and support commercial momentum. Reuters report on Reddit guidance
• Positive Sentiment: KeyCorp upgraded Reddit to “Strong Buy,” adding to recent bullish analyst coverage ahead of the earnings release. KeyCorp upgrade report
• Neutral Sentiment: CEO Steve Huffman argued that Google’s AI Overviews cannot yet replace the value of traditional “10 blue links,” but acknowledged that changes to search are affecting the broader web ecosystem. Reddit CEO comments on Google AI Overviews
• Negative Sentiment: Investors remain worried that Google’s AI search summaries are reducing referrals to Reddit. Management described search traffic as “choppy,” and reports suggested Reddit could reconsider its roughly $60 million-a-year Google content deal if AI-driven search continues to divert traffic. Reddit search referral report
• Negative Sentiment: U.S. user growth showed signs of slowing, increasing uncertainty about future engagement, advertising reach and the sustainability of Reddit’s elevated valuation. Consequently, the strong earnings “beat” did not prevent shares from retreating as AI-search risks dominated investor sentiment. TechCrunch analysis of Reddit earnings

About Reddit

Reddit is an online social news aggregation, discussion and content-sharing platform organized around user-created communities called “subreddits,” each focused on a particular topic or interest. Registered users submit links, text posts, images and video, and community members vote and comment to surface popular content. The site is accessed via its web platform and mobile apps for iOS and Android, and it supports live events such as Ask Me Anything (AMA) sessions and community-driven discussions.

Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit is headquartered in San Francisco and serves a global audience with particularly large user bases in the United States and other English-speaking markets.