Why did RDDT's earnings outperform in 2024?

Reddit's earnings outperformed in 2024 due to several key factors:

1. Strong Revenue Growth: Reddit experienced a substantial increase in revenues, with a surge of 71% to $427.7 million. This growth was primarily driven by advertising revenue, which contributed significantly to the company's financial performance.
2. Advertising Growth: The advertising business grew by 60% year-over-year to $395 million in the fourth quarter of 2024. This growth was fueled by higher impressions, more efficient ad placements, and expanded conversation placement ads. Reddit's introduction of new advertising products, such as the AI-powered Headline Generator and Reddit Pro Trends, helped businesses uncover real-time insights and grow organically on the platform.
3. User Growth: Reddit saw considerable user growth, with daily active users reaching 101.7 million, growing 39% year-over-year. This includes a 46% rise in international users and a 27% increase in logged-in users. User growth is a critical driver for advertising revenue, as it provides advertisers with a larger audience to target.
4. Efficient Ad Tools: Reddit's focus on diversifying its advertising solutions and enhancing ad efficiency has emerged as a critical growth driver for its business. The company's investments in AI-driven tools and machine translation to enhance its global reach and ad solutions have paid off, attracting customers and retaining existing ones.

In summary, Reddit's earnings outperformance in 2024 can be attributed to strong revenue growth, driven by advertising, user growth, and the introduction of efficient ad tools.