Reddit (RDDT) reported third quarter revenue ahead of Wall Street’s forecasts on Thursday and said that its user growth slowed less than analysts expected.
The social media platform said its revenue for the three months ending Sept. 30 came in at $585 million, ahead of the $549 million expected by Wall Street analysts tracked by Bloomberg. That marked a 68% increase from the year-ago period.
Reddit’s daily active users (DAUs) rose 19% to 116 million during the third quarter from the same period last year. That was ahead of the 114 million expected by analysts, according to Bloomberg data. But it also represented a continued deceleration in user growth — a pattern that has concerned some on Wall Street. Reddit has reported five straight quarters of slowing growth in daily active users since its user figures jumped more than 50% in the second quarter of 2024.
The stock seesawed, jumping as much as 15% in after-hours trading before reversing direction to fall below the flat line.
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The social media platform helped spawn the meme stock craze four years ago and went public in a blockbuster IPO in early 2024. The DAU metric is key for Reddit because it dictates how effectively the company can monetize its advertising business, which is its largest revenue driver.
The company’s better-than-expected traffic in Q3 was driven by international users. Reddit reported 64.4 million international daily active users for the period, ahead of the anticipated 62.2 million, per Bloomberg data. Meanwhile, its 51.6 million US users were slightly below the expected 51.9 million.
Reddit’s daily active user numbers fell below expectations earlier this year due to changes in Google’s algorithm that affected the platform’s traffic. CEO Steve Huffman said in May that “the near term could be more bumpy than usual.”
Huffman wrote in a letter to shareholders on Thursday that the company was “encouraged by the mix of growth” in its DAUs in the third quarter, noting that Reddit’s internal products and marketing efforts played a role in driving traffic.
Reddit reported earnings per share of $0.80 during the quarter, up from $0.16 in the year-ago period, when the company reported its first profit as a publicly traded company.
The social media platform also gave a more optimistic fourth quarter revenue and earnings outlook than analysts anticipated. Reddit expects fourth quarter revenue of $660 million at the midpoint of its guidance range, ahead of Wall Street’s expectation for $636 million.
