Reddit Exceeds Q2 Estimates, Posts 78% Revenue Growth, $500 Million Revenue, and $0.45 Diluted EPS.

Reddit reported Q2 revenue of $500 million, a 78% increase YoY, beating estimates by $74.33 million or 17.5%. Diluted EPS reached $0.45, surpassing expectations and marking a sharp swing into profitability. Daily active uniques grew 21% YoY, with international users up 32% and global average revenue per user up 47%. The company also reported GAAP net income of $89 million, a sharp improvement from a net loss in the year-ago period.

Reddit Inc. (NASDAQ: RDDT) reported its second-quarter (Q2) 2025 earnings on Friday, delivering impressive results that sent its stock soaring. The social media platform reported a 78% year-over-year (YoY) increase in revenue to $500 million, surpassing Wall Street's expectations by $74.33 million or 17.5% [1]. This marks the fastest revenue growth for Reddit in three years.

The company's adjusted earnings per share (EPS) reached $0.92, exceeding the estimated $0.72 and signaling a sharp swing into profitability. Additionally, Reddit's daily active users (DAUs) grew by 21% YoY to 110.4 million, with international users up by 32% and global average revenue per user (ARPU) increasing by 47%. The company also reported GAAP net income of $89 million, a significant improvement from a net loss in the year-ago period [3].

Reddit's CEO, Steve Huffman, attributed the growth to better traction in attracting US users to the site and the success of its AI-powered search tool, Reddit Answers, which had 6 million weekly active users in the second quarter. The feature launched in December 2024 and has seen a significant increase in usage since then [1].

The company's "other revenue," which includes data licensing deals, grew by 24% year-over-year to $35 million. Reddit has inked deals with major tech companies like Google and OpenAI, underscoring its potential in the data licensing space [1].

Reddit's financial outlook for the third quarter also surpassed expectations. The company expects revenue to fall between $535 million and $545 million, ahead of Wall Street's estimate of $473 million. The platform expects adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) in the quarter to hit between $185 million and $195 million, above the projected $159.5 million [1].

The stock market's reaction to Reddit's earnings marks a reversal from the prior two quarters. Reddit shares had been volatile following its reports in February and May, despite earnings and revenue beating Wall Street's expectations. However, the company's stock has partly recovered losses from earlier in the year, climbing roughly 110% from the stock's low of about $87 in early April [1].

Reddit's stock spiked in June after the company launched new AI ad tools for marketers at the Cannes Lions Festival. The stock price jumped 18% to $198.18 following the announcement, reflecting renewed investor optimism and a bullish trend [3].

References:
[1] https://finance.yahoo.com/news/reddit-stock-soars-as-company-posts-fastest-quarterly-revenue-growth-in-3-years-205631477.html
[2] https://www.reddit.com/r/technology/comments/1mf24lq/reddit_turns_a_profit_as_user_gains_boost_revenue/
[3] https://www.fxleaders.com/news/2025/08/01/reddit-stock-rockets-25-weekly-toward-200-on-record-earnings-and-outlook/