Reddit's AI-Driven Strategy Boosts Revenue and User Engagement

Reddit revenue soars as it bets on AI and advertising | TechCrunch

Reddit reported its second-quarter earnings on Thursday, and it's clear that the company's focus on AI has ramped up significantly. One significant area of investment is growing its advertising business, supported by its AI-powered marketing tools. The results revealed that the majority of Reddit's revenue continues to come from ads, which brought in $465 million, representing 93% of Reddit's total revenue. Last month, the company launched two new features for advertisers: Reddit Insights, a tool that leverages the billions of posts and comments on the platform to spot trends and offer real-time insights for campaign strategies, and Conversation Summary Add-ons, which let advertisers include Reddit user discussions directly in ads, showing public opinions about products or brands. The company also saw growth in its "other revenue" category, which includes its data licensing business -- meaning its deals with AI providers for access to its data. Reddit said the category jumped 24% year-over-year to $35 million, up from $28.1 million in the same period a year prior. Reddit has already established content licensing agreements with major players in AI, including Google and OpenAI. Although these deals are still new, the results from the second quarter point out a steady income stream that has significant potential for the long haul. Another key AI-powered feature is the Reddit Answers tool, which launched in December. This tool, which offers answers in a conversational interface, has attracted 6 million weekly users, a considerable jump from 1 million users in the previous quarter. In a letter to shareholders, Reddit CEO Steve Huffman said the platform is working to integrate the tool "more deeply into the core search experience" to make "search a central feature across Reddit."

Reddit surges as AI-driven ad strategy wins praise from Wall Street

Aug 1 (Reuters) - Reddit's (RDDT.N), opens new tab shares jumped 15% before the bell on Friday after it reported quarterly results that exceeded Street expectations, boosting investor confidence in the platform's AI-based advertising tools and strong user engagement. The company's rosy outlook comes on the heels of similarly upbeat results from ad industry leaders such as Meta (META.O), opens new tab and Alphabet (GOOGL.O), opens new tab, underscoring a broader sector shift as advertisers gravitate towards platforms that provide artificial-intelligence tools to create more personalized campaigns. The company expects third-quarter revenue of between $535 million and $545 million, well above analysts' average estimate of $473 million, according to data compiled by LSEG. Reddit's focus on understanding user intent through authentic community conversations positions it to unlock new monetization opportunities, said Danni Hewson, head of financial analysis at AJ Bell. "Being able to home in on exactly the kind of consumer who might be open to splurge on what a seller is offering has made sites like Reddit hugely popular with advertisers," Hewson said. Reddit's results, along with those of Google and Meta, signal the ad industry's resilience in the face of growing economic uncertainty brought on by shifting U.S. trade policy. The company's diverse ad offerings, including ads inserting brands directly within conversations on its subreddit discussions, remain attractive to marketers. Reddit's daily active unique visitors increased 21%, with analysts saying stabilizing daily active user trends are bolstering investor confidence in the platform's "long-term growth narrative". Despite variable Google-driven traffic posing a headwind in the second quarter, Reddit's U.S. daily active users held steady, expressing confidence that the company's unique content was valuable to both Google and searchers, analysts at Piper Sandler said. The company has been investing in new products, search capabilities and international expansion to offset inconsistent user traffic. Reddit is currently valued at a premium compared to its peers, trading at 74.57 times its projected earnings over the next 12 months, well above Pinterest's (PINS.N), opens new tab 19.39 and Snap's (SNAP.N), opens new tab 27.54. If premarket gains hold, Reddit is set to add about $4 billion to its market cap. Reporting by Kritika Lamba and Rashika Singh in Bengaluru; Editing by Pooja Desai Our Standards: The Thomson Reuters Trust Principles., opens new tab

Reddit earns $35M from AI licensing deals in Q2

Reddit Insights and Conversation Summary Add-ons help advertisers tap into real-time user sentiment. Reddit released its second-quarter earnings, highlighting an increased emphasis on artificial intelligence. This strategic pivot accompanies the company's ongoing efforts to enhance its advertising capabilities through AI-driven marketing solutions. Advertising remains a central revenue source. The company reported $465 million in advertising revenue, accounting for 93% of Reddit's total revenue. Supporting this revenue stream, Reddit introduced new features for advertisers last month. These include Reddit Insights, designed to identify trends from the platform's extensive user-generated content. This tool provides real-time data intended to improve campaign strategies. Additionally, Conversation Summary Add-ons now enable advertisers to integrate Reddit user discussions into ad campaigns, showcasing public sentiments towards products or brands. Beyond advertising, Reddit's "other revenue" category, encompassing data licensing agreements with AI providers, experienced growth. This segment increased by 24% year-over-year, reaching $35 million. The previous year's figure for the same period was $28.1 million. The company has content licensing agreements with entities like Google and OpenAI. While these arrangements are relatively new, the second-quarter results suggest a consistent revenue stream with long-term potential. These agreements provide AI developers access to Reddit's vast repository of user-generated content. Reddit is also developing AI-powered features for its user base. Reddit Answers, launched in December, offers answers through a conversational interface. This tool has seen a notable increase in user engagement, attracting 6 million weekly users. This figure represents a rise from 1 million users in the prior quarter. According to a letter to shareholders from Reddit CEO Steve Huffman, the platform plans to further integrate Reddit Answers into its core search functionality. This integration aims to establish search as a primary feature across the Reddit platform, enhancing user experience and utility.

Reddit's A.I. Tools Drive 78% Revenue Surge in Best Quarter Since IPO

Reddit's A.I. tools and Google deal are accelerating its path to monetization. Reddit's recently launched A.I. marketing tools are already fueling strong advertising growth. In the latest quarter ended June, the social media company reported a 78 percent year-over-year revenue increase to $500 million, with 93 percent coming from advertising, the company reported yesterday (July 31). Touting the momentum, CEO Steve Huffman told analysts on an earnings call that one major advertiser plans to feature Reddit's A.I. tools in a Super Bowl ad next year and another client said the tools uncovered a previously untapped customer segment. Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters Introduced in June, the new products -- Reddit Insights, which tracks user engagement across posts and comments, and Conversation Summary Add-ons, which incorporate real user commentary into ads -- have been warmly received. "We've just gotten them out the door and I think they've been very well received," Reddit chief operating officer Jen Wong rang an optimistic bell on yesterday's earnings call. "We're really excited to see more broad based adoption and impact from them." Wong added that Reddit's number of advertising accounts grew by 50 percent in the April-June quarter. Beyond advertising, Reddit brought in $35 million primarily from A.I. licensing deals, including a partnership with Google. The agreement, signed last year, allows Google to train its Gemini A.I. models using Reddit's vast archive of human-generated content. In return, Reddit gains access to Google's Vertex AI platform, which has boosted the visibility of Reddit posts in Google Search results. Reddit has also been building its own A.I.-driven tools. Last year it rolled out Reddit Answers, a search assistant that uses Vertex AI to summarize community discussions in response to user questions. As of the end of June, Reddit Answers had grown to six million weekly users -- five times more than a year earlier. That growth has also helped Reddit better understand the depth of its content and the opportunity it presents. "On our own product, we're seeing that the corpus is deeper and broader, that I think even we realized before we built Reddit Answers," Huffman said. "There's a huge opportunity to provide users with broad and varied viewpoints on subjective questions, which I think is an important category of questions that users have on the internet." To make Reddit Answers more central to the user experience, the company plans to replace its existing interest boxes with a dedicated Reddit Answers search bar on the app's homepage. "What we're building towards this year is to have a product that starts personalizing instantly, removing as many barriers as we can for a new user to start finding their home on Reddit," Huffman said. While Reddit's A.I. tools and ad business are driving short-term success, some analysts remain cautious. Redburn Atlantic warned that Reddit's reliance on Google could eventually limit its growth potential, including its ability to attract new users. For now, the platform's user base continues to grow. At the end of June, Reddit had 110 million daily active users, up 21 percent from the same period last year.

Reddit surges as AI-driven ad strategy wins praise from Wall Street - The Economic Times

The company has also posted a rosy forecast that comes on the heels of similarly upbeat results from ad industry leaders such as Meta and Alphabet, underscoring a broader sector shift as advertisers gravitate towards platforms that provide artificial-intelligence tools to create more personalized campaigns.Reddit's shares surged 15% on Friday after it reported quarterly results that exceeded Street expectations, boosting investor confidence in the platform's AI-based advertising tools and strong user engagement. The company has also posted a rosy forecast that comes on the heels of similarly upbeat results from ad industry leaders such as Meta and Alphabet, underscoring a broader sector shift as advertisers gravitate towards platforms that provide artificial-intelligence tools to create more personalized campaigns. The company expects third-quarter revenue of between $535 million and $545 million, well above analysts' average estimate of $473 million, according to data compiled by LSEG. Reddit's focus on understanding user intent through authentic community conversations positions it to unlock new monetization opportunities, said Danni Hewson, head of financial analysis at AJ Bell. "Being able to home in on exactly the kind of consumer who might be open to splurge on what a seller is offering has made sites like Reddit hugely popular with advertisers," Hewson said. Reddit's results, along with those of Google and Meta, signal the ad industry's resilience in the face of growing economic uncertainty brought on by shifting U.S. trade policy. The company's diverse ad offerings, including ads inserting brands directly within conversations on its subreddit discussions, remain attractive to marketers. Reddit's daily active unique visitors increased 21%, with analysts saying stabilizing daily active user trends are bolstering investor confidence in the platform's "long-term growth narrative". Despite variable Google-driven traffic posing a headwind in the second quarter, Reddit's U.S. daily active users held steady, expressing confidence that the company's unique content was valuable to both Google and searchers, analysts at Piper Sandler said. The company has been investing in new products, search capabilities and international expansion to offset inconsistent user traffic. Reddit is currently valued at a premium compared to its peers, trading at 74.57 times its projected earnings over the next 12 months, well above Pinterest's 19.39 and Snap's 27.54. If gains hold, Reddit is set to add more than $4 billion to its market cap.

Reddit surges as AI-driven ad strategy wins praise from Wall Street

Reddit's shares surged 15 per cent on Friday after it reported quarterly results that exceeded Street expectations, boosting investor confidence in the platform's AI-based advertising tools and strong user engagement. The company has also posted a rosy forecast that comes on the heels of similarly upbeat results from ad industry leaders such as Meta and Alphabet, underscoring a broader sector shift as advertisers gravitate towards platforms that provide artificial-intelligence tools to create more personalized campaigns. The company expects third-quarter revenue of between US$535 million and $545 million, well above analysts' average estimate of $473 million, according to data compiled by LSEG. Reddit's focus on understanding user intent through authentic community conversations positions it to unlock new monetization opportunities, said Danni Hewson, head of financial analysis at AJ Bell. "Being able to home in on exactly the kind of consumer who might be open to splurge on what a seller is offering has made sites like Reddit hugely popular with advertisers," Hewson said. Reddit's results, along with those of Google and Meta, signal the ad industry's resilience in the face of growing economic uncertainty brought on by shifting U.S. trade policy. The company's diverse ad offerings, including ads inserting brands directly within conversations on its subreddit discussions, remain attractive to marketers. Reddit's daily active unique visitors increased 21 per cent, with analysts saying stabilizing daily active user trends are bolstering investor confidence in the platform's "long-term growth narrative." Despite variable Google-driven traffic posing a headwind in the second quarter, Reddit's U.S. daily active users held steady, expressing confidence that the company's unique content was valuable to both Google and searchers, analysts at Piper Sandler said. The company has been investing in new products, search capabilities and international expansion to offset inconsistent user traffic. Reddit is currently valued at a premium compared to its peers, trading at 74.57 times its projected earnings over the next 12 months, well above Pinterest's 19.39 and Snap's 27.54. If gains hold, Reddit is set to add more than $4 billion to its market cap.

Reddit surges as AI-driven ad strategy wins praise from Wall Street

(Reuters) -Reddit's shares surged 15% on Friday after it reported quarterly results that exceeded Street expectations, boosting investor confidence in the platform's AI-based advertising tools and strong user engagement. The company has also posted a rosy forecast that comes on the heels of similarly upbeat results from ad industry leaders such as Meta and Alphabet, underscoring a broader sector shift as advertisers gravitate towards platforms that provide artificial-intelligence tools to create more personalized campaigns. The company expects third-quarter revenue of between $535 million and $545 million, well above analysts' average estimate of $473 million, according to data compiled by LSEG. Reddit's focus on understanding user intent through authentic community conversations positions it to unlock new monetization opportunities, said Danni Hewson, head of financial analysis at AJ Bell. "Being able to home in on exactly the kind of consumer who might be open to splurge on what a seller is offering has made sites like Reddit hugely popular with advertisers," Hewson said. Reddit's results, along with those of Google and Meta, signal the ad industry's resilience in the face of growing economic uncertainty brought on by shifting U.S. trade policy. The company's diverse ad offerings, including ads inserting brands directly within conversations on its subreddit discussions, remain attractive to marketers. Reddit's daily active unique visitors increased 21%, with analysts saying stabilizing daily active user trends are bolstering investor confidence in the platform's "long-term growth narrative". Despite variable Google-driven traffic posing a headwind in the second quarter, Reddit's U.S. daily active users held steady, expressing confidence that the company's unique content was valuable to both Google and searchers, analysts at Piper Sandler said. The company has been investing in new products, search capabilities and international expansion to offset inconsistent user traffic. Reddit is currently valued at a premium compared to its peers, trading at 74.57 times its projected earnings over the next 12 months, well above Pinterest's 19.39 and Snap's 27.54. If gains hold, Reddit is set to add more than $4 billion to its market cap. (Reporting by Kritika Lamba and Rashika Singh in Bengaluru; Editing by Pooja Desai) By Kritika Lamba and Rashika Singh