Reddit, Inc. Q3 FY2024 earnings call

• DAU: Averaged over 97 million, up 47% YOY, with Q3 exceeding 100 million DAU a few times. - Revenue: Q3 revenue grew 68% YOY, achieving GAAP profitability. - International: DAU grew 44% YOY, led by 53% growth in focus markets like France, India, and the Philippines. Machine translation expanded to multiple languages, driving four times more users than the previous quarter. - Ad Revenue: Driven by vertical diversification, mid- and lower-funnel performance, and international growth. Investments in ad tech and go-to-market strategies contributed to growth. - Product Improvements: Conversation page views exceeded 90 billion (40% YOY growth), AMA product refreshed with fivefold increase in new format, and better posting tools increased posts and reduced moderator removals.

In Q3 2024, Reddit's total revenue was $348.4 million, growing 68% year-over-year. The advertising business was the key segment, generating $315.1 million in revenue, a 56% year-over-year growth. Other revenue, driven by data licensing partnerships, was $33.2 million. The advertising segment saw strong growth in impressions due to higher user growth, more efficient ad load, and expansion of conversation placement ads. Performance revenue from mid- and lower funnel objectives accounted for about 60% of total advertising revenue.

• Q4 Revenue: Estimated in the range of $385 million to $400 million, representing 54% to 60% year-over-year growth with a midpoint of 57%. - Adjusted EBITDA: Expected to be in the range of $110 million to $125 million, with a midpoint adjusted EBITDA margin of 30%.

• Volatility in traffic due to algorithm changes from search engines like Google. - Uncertainties in the timing and outcomes of data licensing partnerships. - Potential impacts from upcoming elections on advertising demand and delivery timing.

Q: Can you talk about if conversation adds are still putting pressure on CPMs?

A: Conversation placements are newer, so initially have less demand, but multi-placement optimization helps increase demand by fluidly optimizing across inventory and taking friction out for advertisers. There's still great opportunity on the conversation page due to high intent and conversion rates.

Q: What's the status of search improvement efforts?

A: Search is a key investment area for 2025. It's a multistep process involving modernizing search products, integrating LLMs, and improving retrieval and ranking. Monetization will follow product stability, with progress expected throughout 2025.