Reddit AI ad sales drive revenue forecast above Wall Street estimates as platform attracts marketers
3 Sources
3 Sources
[1]
Reddit forecasts revenue above estimates as AI fuels ad sales
Feb 5 (Reuters) - Reddit (RDDT.N), opens new tab forecast first-quarter revenue above analysts' estimates on Thursday, as artificial intelligence-powered enhancements to its ad platform help the social media platform draw more marketers. Shares of the company rose around 2% in extended trading after it also announced its first share repurchase program of up to $1 billion, citing strong profitability and cash generation. Reddit allows ad placement directly within subreddit discussion threads, driving advertiser spending on the platform as brands aim to reach highly engaged and niche communities that discuss topics relevant to their products and services. Its ad platform uses AI to enhance campaign creation and management, with features including an AI copywriter that generates Reddit-specific ad copy and an image auto-crop tool for required aspect ratios on the platform. The first-quarter revenue is expected to be between $595 million and $605 million, above analysts' average estimate of $577.2 million, according to data compiled by LSEG. Its forecast of adjusted earnings before interest, taxes, depreciation and amortization of $210 million to $220 million was above estimates of $202.9 million. "Expectations were already high coming into the quarter, but the results still surprised by showing how tightly product momentum, advertiser demand, and user engagement are now reinforcing one another," said Emarketer senior director Jeremy Goldman. Reddit is ratcheting up competition with Meta (META.O), opens new tab by rolling out AI-powered Max campaigns in beta, which automate ad campaigns by adjusting bids to hit target cost-per-result as well as dynamically selecting headlines and creatives. Facebook-owner Meta and Snapchat-parent Snap also reported upbeat fourth-quarter revenue. Reddit's fourth-quarter revenue rose 70% to $726 million, beating estimates of $665.4 million. Its earnings per share of $1.24 also exceeded estimates of 94 cents. Daily active unique visitors rose 19%, to 121.4 million in the quarter ended December 31, while its global average revenue per user increased by 42%. Reporting by Jaspreet Singh in Bengaluru; Editing by Vijay Kishore Our Standards: The Thomson Reuters Trust Principles., opens new tab
[2]
Reddit forecasts revenue above estimates as AI fuels ad sales
The company announced its first share repurchase program of up to $1 billion, citing strong profitability and cash generation that give it the flexibility to return capital to shareholders while continuing product investments. Reddit forecast first-quarter revenue above Wall Street estimates on Thursday, as artificial intelligence-powered enhancements to its ad platform help the social media platform draw more marketers, sending its shares up 10% in extended trading. The company announced its first share repurchase program of up to $1 billion, citing strong profitability and cash generation that give it the flexibility to return capital to shareholders while continuing product investments. Reddit allows ad placement directly within subreddit discussion threads, driving advertiser spending on the platform as brands aim to reach highly engaged and niche communities that discuss topics relevant to their products and services. Its ad platform uses AI to enhance campaign creation and management, with features including an AI copywriter that generates Reddit-specific ad copy and an image auto-crop tool for required aspect ratios on the platform. The first-quarter revenue is expected to be between $595 million and $605 million, above analysts' average estimate of $577.2 million, according to data compiled by LSEG. Its forecast of adjusted earnings before interest, taxes, depreciation and amortization of $210 million to $220 million was above estimates of $202.9 million. Reddit is ratcheting up competition with Meta by rolling out AI-powered Max campaigns in beta, which automate ad campaigns by adjusting bids to hit target cost-per-result as well as dynamically selecting headlines and creatives. Facebook-owner Meta and Snapchat-parent Snap also reported upbeat fourth-quarter revenue. Reddit's fourth-quarter revenue rose 70% to $726 million, beating estimates of $665.4 million. The company's daily active unique visitors rose 19%, to 121.4 million in the quarter ended December 31, while its global average revenue per user increased by 42%.
[3]
Reddit forecasts revenue above estimates as AI fuels ad sales
Feb 5 (Reuters) - Reddit forecast first-quarter revenue above analysts' estimates on Thursday, as artificial intelligence-powered enhancements to its ad platform help the social media platform draw more marketers. Shares of the company rose around 2% in extended trading after it also announced its first share repurchase program of up to $1 billion, citing strong profitability and cash generation. Reddit allows ad placement directly within subreddit discussion threads, driving advertiser spending on the platform as brands aim to reach highly engaged and niche communities that discuss topics relevant to their products and services. Its ad platform uses AI to enhance campaign creation and management, with features including an AI copywriter that generates Reddit-specific ad copy and an image auto-crop tool for required aspect ratios on the platform. The first-quarter revenue is expected to be between $595 million and $605 million, above analysts' average estimate of $577.2 million, according to data compiled by LSEG. Its forecast of adjusted earnings before interest, taxes, depreciation and amortization of $210 million to $220 million was above estimates of $202.9 million. "Expectations were already high coming into the quarter, but the results still surprised by showing how tightly product momentum, advertiser demand, and user engagement are now reinforcing one another," said Emarketer senior director Jeremy Goldman. Reddit is ratcheting up competition with Meta by rolling out AI-powered Max campaigns in beta, which automate ad campaigns by adjusting bids to hit target cost-per-result as well as dynamically selecting headlines and creatives. Facebook-owner Meta and Snapchat-parent Snap also reported upbeat fourth-quarter revenue. Reddit's fourth-quarter revenue rose 70% to $726 million, beating estimates of $665.4 million. Its earnings per share of $1.24 also exceeded estimates of 94 cents. Daily active unique visitors rose 19%, to 121.4 million in the quarter ended December 31, while its global average revenue per user increased by 42%. (Reporting by Jaspreet Singh in Bengaluru; Editing by Vijay Kishore)
Share
Share
Copy Link
Reddit forecast first-quarter revenue between $595 million and $605 million, surpassing analyst expectations of $577.2 million. The social media platform credits AI-powered enhancements to its advertising platform for attracting more marketers. The company also announced its first share repurchase program of up to $1 billion while reporting fourth-quarter revenue of $726 million, up 70% year-over-year.
Reddit Forecasts Revenue Above Estimates With AI-Powered Advertising Platform
Reddit projected first-quarter revenue between $595 million and $605 million, exceeding analysts' average estimate of $577.2 million
1
. The social media platform attributes this strong performance to AI-powered enhancements that are transforming how marketers engage with its highly targeted communities. Following the announcement, shares rose approximately 2% in extended trading, though one source reported a 10% increase2
. The company simultaneously unveiled its first share repurchase program of up to $1 billion, signaling confidence in its profitability and cash generation capabilities1
.
Source: Market Screener
How AI Fuels Ad Sales Growth on Reddit
The platform's success stems from strategic AI integration across its advertising infrastructure. Reddit deploys an AI copywriter that generates Reddit-specific ad copy tailored to the platform's unique voice and community standards
2
. An image auto-crop tool automatically adjusts creative assets to meet required aspect ratios, streamlining campaign creation for advertisers3
. These features allow brands to place ads directly within subreddit discussion threads, reaching niche communities discussing topics directly relevant to their products and services.AI-Powered Max Campaigns Challenge Meta's Dominance
Reddit is intensifying competition with Meta by rolling out AI-powered Max campaigns in beta testing
3
. These automated campaigns adjust bids to hit target cost-per-result while dynamically selecting headlines and creatives, mirroring capabilities offered by larger competitors. This positions Reddit to compete more directly with Facebook-owner Meta and Snapchat-parent Snap, both of which also reported strong fourth-quarter revenue. The move signals Reddit's ambition to capture a larger share of digital advertising budgets by offering sophisticated automation tools previously associated with bigger platforms.Related Stories
Strong Fourth-Quarter Performance Drives Optimism
Reddit delivered impressive fourth-quarter results, with revenue rising 70% to $726 million, beating Wall Street estimates of $665.4 million
3
. Earnings per share reached $1.24, surpassing expectations of 94 cents. Daily active unique visitors grew 19% to 121.4 million in the quarter ended December 31, while global average revenue per user increased by 42%3
. The forecast for adjusted earnings before interest, taxes, depreciation and amortization stands between $210 million and $220 million, above estimates of $202.9 million2
.What Industry Experts Are Watching
Emarketer senior director Jeremy Goldman noted that "expectations were already high coming into the quarter, but the results still surprised by showing how tightly product momentum, advertiser demand, and user engagement are now reinforcing one another". This interconnected growth suggests Reddit has found a sustainable model where AI improvements drive better ad performance, which attracts more advertisers, which in turn funds further platform enhancements. For AI professionals and marketers, Reddit's trajectory demonstrates how specialized AI tools designed for specific platform contexts can outperform generic solutions, particularly when targeting engaged niche communities rather than broad audiences.
References
Summarized by
Navi
[3]
Related Stories
Recent Highlights
1
ByteDance's Seedance 2.0 AI video generator triggers copyright infringement battle with Hollywood
Policy and Regulation
2
Demis Hassabis predicts AGI in 5-8 years, sees new golden era transforming medicine and science
Technology
3
Nvidia and Meta forge massive chip deal as computing power demands reshape AI infrastructure
Technology
Recent Highlights
Today's Top Stories
Your Daily Dose of Curated AI News
Don’t drown in AI news. We cut through the noise - filtering, ranking and summarizing the most important AI news, breakthroughs and research daily. Spend less time searching for the latest in AI and get straight to action.
