MW Reddit's stock is soaring after earnings. This is why.

By James Rogers

The social-media platform's second-quarter revenue and earnings blow past Wall Street's expectations

Shares of Reddit Inc. were up more than 11% in extended trading Thursday after the social-media platform's second-quarter results blew past Wall Street's expectations for revenue and earnings, boosted by surging ad revenue and robust user growth.

Reddit's (RDDT) daily active users topped Wall Street's expectations for the second straight quarter, growing 21% on a year-over-year basis to 110.4 million. Analysts surveyed by FactSet were looking for 109.02 million daily active users.

International daily active users rose 32% to 60.1 million, while U.S. daily active users rose 11% to 50.3 million.

San Francisco-based Reddit defines a daily active unique user as one the company can identify with a unique identifier and who has visited a page on the Reddit website or opened a Reddit application at least once over a 24-hour period.

Reddit's quarterly profit was its fourth on a GAAP basis since the company went public in March 2024. The company reported net income of $89 million, or 45 cents a share, after a net loss of $10 million, or a loss of 6 cents a share, in the prior year's quarter. Analysts surveyed by FactSet were expecting earnings of 19 cents a share. Reddit's net income was 18% of revenue.

The company's revenue rose 78% to $500 million, well above the FactSet consensus estimate of $426 million. Ad revenue rose 84% to $465 million.

For the third quarter, Reddit expects revenue between $535 million and $545 million, above the FactSet consensus estimate of $473 million. The company also expects adjusted Ebitda in the range of $185 million to $195 million.

Gross margin was 90.8%, up from 89.5% in the prior year's quarter.

In May, Seaport Research Partners upgraded Reddit to buy from neutral, saying that fears about the impact of changes to Google's search engine were overblown.

Reddit recently joined the Russell 3000 and 1000 indexes, and there has been speculation that it could become an addition to the S&P 500 index SPX.

Reddit shares are up around 250% since the company's IPO last year.

-James Rogers

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

July 31, 2025 16:25 ET (20:25 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.