Reddit shares surge 16% as AI-driven ad growth delivers 69% revenue jump to $663 million
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Reddit rallies as AI‑driven ad growth fuels strong revenue outlook
May 1 (Reuters) - Reddit (RDDT.N), opens new tab shares jumped 16% in premarket trading on Friday after an upbeat quarterly revenue forecast underscored growing returns from the social media company's AI-driven advertising tools. The company's AI-optimized ad platform helps advertisers place
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Reddit's CEO calls his company 'the fuel' for artificial intelligence
Reddit CEO Steve Huffman said his company may be one of the most underappreciated winners of the artificial intelligence boom. "There's no artificial intelligence without actual intelligence," he said on "Mad Money." "The knowledge has to come from somewhere, and Reddit is one of the primary
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Reddit expects revenue above estimates as AI tools fuel ad growth
April 30 (Reuters) - Reddit (RDDT.N), opens new tab forecast second-quarter revenue above analysts' estimates on Thursday betting on its AI-powered tools to boost advertising on the platform. Shares of the company rose around 3% in volatile extended trading. They have fallen around 35% so far this
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Reddit rallies as AI‑driven ad growth fuels strong revenue outlook
The strong results signal that the company's strategy is paying off as Reddit takes on bigger ad rivals such as Meta's Instagram and Facebook. Its daily active unique visitors grew 17% to 126.8 million in the quarter, while global average revenue per user increased by 44%. Reddit shares jumped
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Reddit CEO Steve Huffman Calls Platform 'Fuel' For AI Growth - Reddit (NYSE:RDDT)
Reddit's Unique Role In AI Development Huffman highlighted Reddit's "lightweight" operating model as a key differentiator in the AI landscape. Unlike major cloud and AI infrastructure providers, the company does not invest heavily in data centers or compute capacity. Capital expenditures were
[6]
Reddit expects revenue above estimates as AI tools fuel ad growth
April 30 (Reuters) - Reddit forecast second-quarter revenue above analysts' estimates on Thursday betting on its AI-powered tools to boost advertising on the platform and sending its shares up 11% in extended trading. The social media company offers AI-focused features that allow advertisers to
[7]
Reddit rallies as AI-driven ad growth fuels strong revenue outlook
May 1 (Reuters) - Reddit shares jumped 16% in premarket trading on Friday after an upbeat quarterly revenue forecast underscored growing returns from the social media company's AI-driven advertising tools. The company's AI-optimized ad platform helps advertisers place targeted ads directly within
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Reddit rallied in premarket trading after reporting a strong revenue forecast powered by artificial intelligence advertising tools. The social media company's AI-optimized ad platform helped deliver 69% revenue growth while daily active users climbed 17% to 126.8 million. CEO Steve Huffman positioned Reddit as essential fuel for AI development through its vast user-generated content library.
Reddit Delivers Strong Revenue Forecast Powered by AI Tools
Reddit shares jumped 16% in premarket trading on Friday after the social media company delivered a strong revenue forecast that exceeded analyst expectations, driven largely by its AI-powered advertising tools
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. The company reported first-quarter revenue of $663 million, marking a 69% increase year over year and beating estimates of $610.9 million3
. For the second quarter, Reddit forecast revenue between $715 million and $725 million, surpassing the analyst average estimate of $711.6 million3
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Source: ET
The results signal that artificial intelligence is transforming how Reddit competes for ad dollars against dominant platforms like Meta's Instagram and Facebook. Daily active users growth reached 17%, bringing the total to 126.8 million in the quarter, while global average revenue per user increased by 44%
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. Despite the strong performance, Reddit's stock has had a turbulent year, sliding roughly 36% year-to-date4
.How AI-Optimized Ad Platform Drives Campaign Creation
Reddit's ad platform uses artificial intelligence to improve campaign creation and management through several key features. The platform includes an AI copywriter that generates Reddit-specific advertisements tailored to the platform's unique community culture
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. An automatic creative asset cropper optimizes images for various ad placements, helping advertisers place targeted ads directly within relevant discussion threads across interest-based communities called subreddits1
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Source: Benzinga
Chief Operating Officer Jen Wong told Reuters that the company's active advertiser count grew 75% year over year, marking the third consecutive quarter of strong advertiser growth
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. Last month, Reddit partnered with Shopify to help merchants advertise products directly on the platform, aiming to convert user discussions into shopping activity3
.Reddit CEO Steve Huffman Positions Platform as Fuel for AI
Reddit CEO Steve Huffman called his company one of the most underappreciated winners of the AI boom, emphasizing Reddit's role as a critical data source for training large language models
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. "There's no artificial intelligence without actual intelligence," Huffman said on "Mad Money." "The knowledge has to come from somewhere, and Reddit is one of the primary sources for that sort of information that AI's crave, but also that people crave"2
.Huffman highlighted Reddit's lightweight operating model as a key advantage. The company's capital expenditures were roughly $1 million for the quarter, a fraction of what hyperscalers invest in compute and data centers
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. "We're a lightweight company," he said. "We're not building data centers ... we're building a consumer product for people"2
. This model allowed Reddit to deliver free cash flow of $311 million in the March quarter, more than doubling from a year ago2
.Related Stories
Valuable Content Library Attracts Google and OpenAI Partnerships
Reddit's vast archive of user-generated content has become a prized asset as AI companies hunt for data to train their large language models, the technology behind chatbots such as ChatGPT
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. Steve Huffman pointed to partnerships with Google and OpenAI as evidence of that demand, stating "People want what Reddit has"5
.Gross margins exceeded 90% for the quarter, a level that stands out even among top-performing tech companies
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. Huffman noted this marks the seventh consecutive quarter with revenue growth over 60%, with industry-leading gross margins over 90%, an adjusted EBITDA margin of 40%, and record cash flow of more than $300 million5
.Reddit Continues Hiring While Meta Announces Layoffs
Jen Wong said Reddit is "still hiring and adding to our talent base," positioning the company as an outlier in the tech industry
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. Companies such as Meta, Snap, and Pinterest have cut thousands of jobs over the past year to streamline operations and refocus spending on artificial intelligence4
. Wong acknowledged that "every company is thinking" about how AI could reshape the workforce3
.Morgan Stanley analysts noted that "execution across these areas (U.S. user growth) remains key to driving multiple expansion for Reddit...as it will showcase its growing importance, even in a future GenAI-enabled and agentic landscape"
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. Reddit has a 12-month forward price-to-earnings ratio of 30.40, compared with Snap's 9.93, Pinterest's 10.27, and Meta's 19.054
. The company expects adjusted earnings before interest, taxes, depreciation and amortization of $285 million to $295 million for the second quarter, above estimates of $277.1 million3
.References
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