By Angela Palumbo

Reddit stock was climbing after earnings greatly beat expectations and the company provided better-than-expected revenue estimates for its third quarter on Thursday.

Reddit reported second-quarter adjusted earnings of 45 cents a share on revenue of $500 million. Analysts surveyed by FactSet were expecting earnings of 19 cents a share on revenue of $426 million.

In the same period last year, Reddit posted a loss of 6 cents a share on revenue of $281 million.

"In a world where connection is increasingly rare, our communities show how valuable human conversation and knowledge really are," CEO Steve Huffman said in the earnings release.

Shares of Reddit were up 11% in after-hours trading following the results.

Reddit makes most of its money from advertising, and the ad space has been changing to increasingly favor digital, or the kind of ads that allow clients to promote themselves through online and social media channels. That's been a bonus for Reddit, which reported ad revenue of $465 million for the quarter, which jumped 84% from the prior year.

The social media platform used to get human answers to search queries also said that daily active uniques -- daily active users on the platform -- increased by 21% in the quarter from the prior year, which beat analyst estimates for 19% growth. That was a slower rate of growth than the 31% reported in the first quarter.

Reddit CFO Drew Vollero told Barron's that much of the DAU growth is coming internationally as the company continues to translate content to other languages. International DAUq grew 32% from a year ago as Reddit offers machine translation in 23 languages.

Daily user growth is something investors have been paying attention to as the search landscape continues to change with the introduction of large language models. Google's AI Overviews, ChatGPT, and more have lessened the need for people to click on traditional blue links to get answers to search queries.

Reddit, however, offers responses directly from humans. That sets itself apart from AI generated answers. Investors hope that's enough to give the stock a boost.

Reddit also said it expects third-quarter revenue to be between $535 million to $545 million, which is better than Wall Street estimates of $473 million.

Write to Angela Palumbo at angela.palumbo@dowjones.com

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

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July 31, 2025 16:17 ET (20:17 GMT)

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