Reddit, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights:

• Steve Huffman highlighted Reddit's 20 years of operation, noting over 100,000 communities and strong Q1 results with revenue at $392 million, up 61% YOY, and weekly users at 401 million and dailies at 108 million, both up 31% YOY. Focus on product improvements including search upgrades, global expansion with machine translation in 13 languages, and tools to simplify contribution.
• Jen Wong discussed ad revenue growth of 61% YOY to $359 million, with broad-based strength across objectives, channels, verticals, and geographies. Progress on ad stack including driving performance, improving usability for advertisers, and launching unique ad formats.
• Drew Vollero outlined financial highlights: revenue of $392 million, adjusted EBITDA of $115 million, GAAP net income of $26 million, operating cash flow of $128 million, and guidance for Q2 2025 revenue $410M-$430M and adjusted EBITDA $110M-$130M.

Segment Performance: Advertising revenue was $359 million, up 61% year-over-year, accounting for the majority of the $392 million total revenue. Other revenue, including from the data license business, reached $34 million, growing 66% year-over-year. Regionally, U.S. revenue grew 57% year-over-year and international revenue grew 82% year-over-year, with international revenue growth accelerating to the fastest in over three years.

Guidance: Management provided forward-looking guidance for Q2 2025, estimating revenue in the range of $410 million to $430 million, representing 46% to 53% year-over-year growth with a midpoint of about 50%. Adjusted EBITDA is expected to be in the range of $110 million to $130 million, representing approximately 180% to 230% year-over-year growth.

Risks: Discussion of risks included protecting data quality from fake accounts or bots, and potential impacts from Google algorithm changes on user traffic and visibility.

Q: Ron Josey of Citi asked about macro perspective on ad market and user growth.

A: Jennifer Wong noted Reddit is well-positioned with its road map despite market uncertainty, and Steve Huffman discussed user growth driven by product improvements but expected short-term bumps from Google algorithm changes.

Q: Andrew Boone of JMP Securities asked about pricing drivers and Reddit Answers.

A: Jennifer Wong spoke on pricing as an output of supply and demand with focus on delivering outcomes, and Steve Huffman discussed integrating Reddit Answers with search and its growth to 1 million weekly users.

Q: Benjamin Black of Deutsche Bank asked about contribution rates and data licensing.

A: Steve Huffman talked about improving contribution success with post guidance and data licensing being in early stages with positive partner appetite.

Q: Tom Champion of Piper Sandler asked about Google and index treatment of machine-translated content and cost growth.

A: Steve Huffman discussed machine translation being sanctioned by Google, and Andrew Vollero talked about cost growth being disciplined with focus on revenue growth twice as fast as costs.

Q: Ken Gawrelski of Wells Fargo asked about U.S. vs international DAU and disruptions.

A: Steve Huffman noted focus on product and expected more details next quarter.

Q: John Colantuoni of Jefferies asked about ad revenue growth drivers and dynamic product ads.

A: Jennifer Wong discussed growth drivers in scale channel, performance objectives, and international, and spoke on early stages of dynamic product ads.

Q: Eric Sheridan of Goldman Sachs asked about Reddit's opportunity set and richer media formats.

A: Steve Huffman talked about addressing scroller and seeker use cases, and Jennifer Wong discussed work on richer media formats and ad stack optimization.

Q: Jason Helfstein of Oppenheimer asked about U.S. logged-in users and Meta campaign import tool.

A: Steve Huffman spoke on user conversion and retention efforts, and Jennifer Wong discussed adoption of Meta campaign import tool.

Q: Alan Gould of Loop Capital asked about per user engagement and moderator management.

A: Steve Huffman talked about home feed improvements for engagement and moderator management through reducing burden and growing moderator numbers.

Q: Dan Salmon of New Street Research asked about conversation ad placements.

A: Jennifer Wong discussed high engagement of ads in comments and their performance as a highly contextual and high-intent space.