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

By James Rogers

Social-media platform's shares are climbing 18% in extended trading

Reddit Inc. shares skyrocketed 18% in extended trading after the social-media platform's first-quarter daily active users, revenue and profit topped Wall Street's expectations.

The San Francisco-based company's (RDDT) daily active unique users rose 31% year over year to 108.1 million. Analysts surveyed by FactSet were looking for 107.3 million daily active users.

This is a stark contrast to last quarter, when the company's stock fell after the daily active unique users number missed Wall Street's expectations.

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.

International daily active unique users grew 41% to 58 million in the quarter, outpacing the U.S., where daily active unique users grew 21% to 50.1 million.

Reddit CFO Drew Vollero told MarketWatch there is ample opportunity for the company to grow its U.S. user base, citing the example of major platforms like Meta Platforms Inc.'s $(META)$ Facebook that have over 100 million U.S. daily active unique users.

"There's certainly headwind in the U.S, for sure," he said. "How we're attacking it is things like onboarding, making it simple, new products like search or Reddit answers."

Internationally, he cited the company's extension of Machine Translation, or translating content for global audiences, to 13 languages, up from eight last quarter.

"Historically, international has been the fastest grower for use over the last couple of quarters - there's a nice tailwind with Machine Translation," he said, adding that Reddit has added Polish, Thai, Vietnamese and a variation of Latin American Spanish.

Reddit's quarterly profit was its third on a GAAP basis since its initial public offering in March 2024. The company reported net income of $26.2 million, or 13 cents a share, after a net loss of $575.1 million, or $8.19 a share, in the year-ago quarter. Analysts surveyed by FactSet were expecting earnings of 2 cents a share.

The company's revenue rose 61% to $392.4 million, above the FactSet consensus estimate of $370 million. Ad revenue also increased 61% to $358.6 million.

Gross margin expanded to 90.5% from 88.6% in the same period last year.

For the second quarter, Reddit expects revenue between $410 million and $430 million, above the FactSet consensus estimate of $392 million. The company also expects adjusted earnings before interest, taxes, depreciation and amortization in the range of $110 million to $130 million.

Reddit shares have risen 153.4% since the company's IPO last year.

-James Rogers

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May 01, 2025 17:03 ET (21:03 GMT)

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