Reddit shares surge 16% as AI-driven ad growth delivers 69% revenue jump to $663 million

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 targeted ads directly within relevant discussion threads across its interest-based communities called subreddits. The strong results signal that the company's strategy is paying off as Reddit takes on bigger ad rivals such as Meta's (META.O), opens new tab Instagram and Facebook. Reddit is "still hiring and adding to our talent ⁠base," Chief Operating Officer Jen Wong told Reuters on Thursday. The remarks paint Reddit as an outlier, as companies such as Meta, Snap and Pinterest (PINS.N), opens new tab have cut thousands of jobs over the past year to streamline operations and refocus spending on artificial intelligence. Reddit's stock has had a turbulent year, sliding roughly 36% year-to-date, while Snap and Pinterest have dropped about 24% each. Its daily active unique visitors grew 17% to 126.8 million in the quarter, ⁠while global average revenue per user increased by 44%. "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," said analysts at ⁠Morgan Stanley. Its ad platform uses AI to improve campaign creation and management through features including an AI copywriter for Reddit-specific advertisements and an automatic creative asset cropper ⁠that optimizes images for various ad placements. Its vast content library has also become a prized asset as AI companies hunt for data to ⁠train their large language models, the technology behind chatbots such as ChatGPT. Reddit has a 12-month forward price-to-earnings ratio of 30.40, compared with Snap's (SNAP.N), opens new tab 9.93, Pinterest's (PINS.N), opens new tab 10.27 and Meta's 19.05. Reporting by Joel Jose in Bengaluru Our Standards: The Thomson Reuters Trust Principles., opens new tab

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 sources for that sort of information that AI's crave, but also that people crave." The comments come after Reddit delivered a standout quarter on Thursday evening, sending shares about 9% higher in extended trading. Revenue jumped 69% year over year to $663 million, most of which comes from advertising, and daily active users climbed 17% to 126.8 million. Gross margins exceeded 90%, a level that stands out even among top-performing tech companies. "We're a lightweight company," he said. "We're not building data centers ... we're building a consumer product for people." That model allows Reddit to benefit from the AI boom without the massive capital outlays required by competitors. The company's capital expenditures were roughly $1 million for the quarter, a fraction of what hyperscalers are investing in compute and data centers. That helped Reddit deliver free cash flow of $311 million in the March quarter, more than doubling from a year ago. At the same time, Reddit's vast archive of user-generated conversations is becoming increasingly valuable to the biggest players in AI. Huffman pointed to partnerships with Google and OpenAI as evidence of that demand. "People want what Reddit has," he said, emphasizing how AI systems rely heavily on authentic, real-world data. "What we've seen over the last couple of years with the rise of AI is that the whole market now is learning that Reddit is the fuel for it."

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 year. The social media company offers AI-focused features that allow advertisers to target users based on interests and communities within ⁠subreddit discussion threads. Its ad platform uses AI to improve campaign creation and management through features including an AI copywriter for Reddit-specific advertisements and an automatic creative asset cropper that optimizes images for various ad placements. "Our active advertiser count grew 75% year-over-year, which I think is the third consecutive quarter that we've had really strong active advertiser count," Reddit Chief Operating Officer Jen Wong told Reuters. Reddit's quarterly revenue forecast of $715 million to $725 million exceeded the LSEG-compiled analysts' average estimate of $711.6 million. It expects adjusted earnings before interest, taxes, depreciation and amortization of $285 million ⁠to $295 million, above estimates of $277.1 million. A day earlier, bigger rival Meta (META.O), opens new tab projected second-quarter revenue of $58 billion to $61 billion, in-line with estimates. Meta also confirmed its plans for layoffs during its post-earnings call. Wong said Reddit is "still hiring and adding to our talent base." She acknowledged that "every company is thinking" about how AI ⁠could reshape the workforce. Reddit said its first quarter revenue rose 69% to $663 million, beating estimates of $610.9 million. Daily active unique visitors grew 17% to 126.8 million in the quarter, while global average revenue per user increased ⁠by 44%. Strong results from Reddit show its strategy is paying off as it jostles with dominant platforms such as TikTok and Meta's Instagram and Facebook for ad dollars in ⁠a crowded market. Last month, Reddit partnered with Shopify (SHOP.TO), opens new tab to help merchants advertise products directly on the social media platform, aiming to convert user discussions into shopping activity. Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid Our Standards: The Thomson Reuters Trust Principles., opens new tab

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 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 relevant discussion threads across its interest-based communities called subreddits. 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. Reddit is "still hiring and adding to our talent base," Chief Operating Officer Jen Wong told Reuters on Thursday. The remarks paint Reddit as an outlier, as companies such as Meta, Snap and Pinterest have cut thousands ⁠of jobs over the past year to streamline operations and refocus spending on artificial intelligence. Reddit's stock has had a ⁠turbulent year, sliding roughly 36% year-to-date, while Snap and Pinterest have dropped about 24% each. Its daily active unique visitors grew 17% to 126.8 million in the quarter, while global average revenue per user increased by 44%. "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," said analysts at Morgan Stanley. Its ad platform uses AI to improve campaign creation and management through ⁠features including an AI copywriter for Reddit-specific advertisements and an automatic creative asset cropper that optimises images for various ad placements. Its vast content library has also become a prized asset as AI companies hunt for data to train their large language models, the technology behind chatbots such as ChatGPT. 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 19.05.

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 about $1 million for the first quarter, far below what major cloud and AI infrastructure companies typically commit. "We're a lightweight company," he said. "We're not building data centers ... we're building a consumer product for people." He argued that structure lets Reddit participate in AI-driven demand without the same scale of spending on compute. Underappreciated AI Winner Huffman called Reddit one of the most underappreciated winners of the artificial intelligence boom. "People want what Reddit has," he said, "What we've seen over the last couple of years with the rise of AI is that the whole market now is learning that Reddit is the fuel for it." Can Reddit Outpace Tech Giants In AI? Reddit reported strong first-quarter results, with revenue rising 69% from a year earlier to $663 million and daily active users increasing 17% to 126.8 million. Huffman said, "This marks our 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 million." Benzinga Edge Stock Rankings indicate that RDDT maintains a strong price trend in the short term, with a solid Growth score in the 98th percentile. Price Action: Reddit shares are up 12.5% after hours on Thursday to $165.62. Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Photo courtesy: Ink Drop On Shutterstock Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

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 target users based on interests and communities within subreddit discussion threads. Its ad platform uses AI to improve campaign creation and management through features including an AI copywriter for Reddit-specific advertisements and an automatic creative asset cropper that optimizes images for various ad placements. "Our active advertiser count grew 75% year-over-year, which I think is the third consecutive quarter that we've had really strong active advertiser count," Reddit Chief Operating Officer Jen Wong told Reuters. Reddit shares have fallen around 35% so far this year. The company's quarterly revenue forecast of $715 million to $725 million exceeded the LSEG-compiled analysts' average estimate of $711.6 million. Reddit expects adjusted earnings before interest, taxes, depreciation and amortization of $285 million to $295 million, above estimates of $277.1 million. A day earlier, bigger rival Meta projected second-quarter revenue of $58 billion to $61 billion, in line with estimates. Meta also confirmed its plans for layoffs during its post-earnings call. Wong said Reddit is "still hiring and adding to our talent base." She acknowledged that "every company is thinking" about how AI could reshape the workforce. Reddit said its first quarter revenue rose 69% to $663 million, beating estimates of $610.9 million. Performance advertising, which focuses on driving measurable actions such as purchases, installs or sign-ups, represented over 60% of total ad revenue, Wong said on the post-earnings call. Daily active unique visitors grew 17% to 126.8 million in the quarter, while global average revenue per user increased by 44%. Strong results from Reddit show its strategy is paying off as it jostles with dominant platforms such as TikTok and Meta's Instagram and Facebook for ads amid geopolitical uncertainty. Wong said, "what we have heard from our partners is that...they're planning month to month," due to the volatility in the backdrop, but there is no material change in their commitments. (Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)

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 relevant discussion threads across its interest-based communities called subreddits. 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. Reddit is "still hiring and adding to our talent base," Chief Operating Officer Jen Wong told Reuters on Thursday. The remarks paint Reddit as an outlier, as companies such as Meta, Snap and Pinterest have cut thousands of jobs over the past year to streamline operations and refocus spending on artificial intelligence. Reddit's stock has had a turbulent year, sliding roughly 36% year-to-date, while Snap and Pinterest have dropped about 24% each. Its daily active unique visitors grew 17% to 126.8 million in the quarter, while global average revenue per user increased by 44%. "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," said analysts at Morgan Stanley. Its ad platform uses AI to improve campaign creation and management through features including an AI copywriter for Reddit-specific advertisements and an automatic creative asset cropper that optimizes images for various ad placements. Its vast content library has also become a prized asset as AI companies hunt for data to train their large language models, the technology behind chatbots such as ChatGPT. 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 19.05.