Reddit's Q2 Revenue Soars 78% to $500M, Eyes AI-Powered Search for Growth

Reddit's Q2 report shows revenue up 78% YoY to $500mln and net income at $89mln. The company plans to merge its search products and market its search tools more actively, aiming to position itself as a go-to source for information. Its user base has grown, with daily unique visitors up 21% to 110.4mln and logged-in daily users up 27%. However, some analysts are concerned about Reddit's reliance on Google for traffic and revenue.

Reddit (RDDT) stock soared more than 15% before the bell on Friday after the social media platform reported second-quarter revenue that surpassed Wall Street's expectations. The company's revenue grew 78% to $500 million, its fastest revenue growth in three years [1]. This figure was ahead of the $425 million projected by Wall Street analysts tracked by Bloomberg.

In its results released late Thursday, Reddit also reported adjusted earnings per share of $0.92, ahead of the estimated $0.72. The company said global daily active users hit 110.4 million in the three months ended June 30, just above the 110 million expected by analysts, according to Bloomberg consensus data [1]. Meanwhile, US daily active users hit 50.3 million, slightly below the 50.5 million expected.

Reddit's CEO, Steve Huffman, said in a call with analysts following the firm's earnings report that "Traffic from Google varies from week to week, but overall it was a headwind in Q2." He added that Reddit saw “better traction” in attracting US users to the site “as the quarter played out.”

The company highlighted growing interest in its AI-powered search tool, Reddit Answers, which launched in December 2024. The feature had 6 million weekly active users in the second quarter, a jump from 1 million in the prior period [1]. Huffman wrote in a letter to investors that "Reddit is one of the few platforms positioned to become a true search destination."

While the majority of Reddit’s revenue comes from marketers who pay to run ads on its platform, the company’s “other revenue,” a segment that includes data licensing deals, grew 24% year over year to $35 million [1]. Reddit has inked deals to license users’ content on its site to train companies' AI models, including two separate agreements with Google and ChatGPT-maker OpenAI that are each worth $60 million.

Reddit's financial outlook for the third quarter also surpassed expectations. The company said it expects third-quarter revenue to fall between $535 million and $545 million, ahead of Wall Street's estimate of $473 million, according to Bloomberg data [1]. 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.

The market's reaction to Reddit's earnings marks a reversal from the prior two quarters. Reddit shares sank following its reports in February and May, despite earnings and revenue in those periods beating Wall Street's expectations, as US daily active users fell below expectations amid changes to Google's Search algorithm [1]. However, Reddit shares have partly recovered losses from earlier in the year, climbing roughly 110% from the stock's low of about $87 in early April [2].

Reddit's stock spiked in June after the company launched new AI ad tools for marketers at the Cannes Lions Festival [1]. The stock trades far below the highs above $220 seen in February before its fourth quarter earnings report, and shares are down around 2% in 2025 [2].

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.investors.com/news/technology/redddit-stock-q2-2025-earnings-rddt-news/