Reddit (RDDT) reported "better-than-expected" results in fiscal Q4, though investor concerns around slowing logged-in US user growth continued to weigh on sentiment, RBC Capital markets said in a report Friday.

Advertising revenue surged 75% year-over-year, topping Street estimates by about 10%, as higher impressions, stronger ad performance and new formats such as Reddit Answers, Reddit Max and shopping ads lifted monetization and boosted average revenue per user, the report said.

User growth was mixed, with total daily active users rising 19% year-over-year, with international DAUs up 28% and US DAUs advancing 9%. However, "logged-in" US DAUs grew just 5%, decelerating from prior quarters and reinforcing a "bear case" that large language models could pose a longer-term "secular headwind" to traffic, according to the report.

The investment bank also highlighted continued product expansion, including "LLM-powered" onboarding, enhancements to search through Reddit Answers, "verified profiles" for brands and creators, and broader use of machine learning to improve ad performance.

RBC raised fiscal 2026 forecasts for revenue, EBITDA, DAUs and ARPU, reflecting expectations for an acceleration in logged-in US user growth supported by early traction from new ad formats and products.

RBC has a sector perform rating on Reddit, with a price target of $250.

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