Reddit, Inc. Q2 FY2025 earnings call

• Strong revenue growth: Revenue grew 78% y-o-y to $500 million, fastest quarterly growth since 2022. - Profitable quarter: Most profitable quarter yet with adjusted EBITDA hitting $167 million and GAAP net income $89 million. - Product strategy focus: Deprioritizing user economy to focus on core product improvements (intuitive onboarding, search, international expansion), search (core search has 70M weekly users, Reddit Answers grew to 6M), and internationalization (machine translation live in 23 languages). - Ad platform improvements: Advertising business grew 84% y-o-y, active advertiser count up over 50% y-o-y. New ad formats like Reddit Community Intelligence, Dynamic Product Ads (DPA) with strong performance, and Conversation Summary Add-Ons with higher click-through rates. - Marketing initiatives: Testing full-funnel consumer marketing to grow user awareness and consideration.

Revenue grew 78% year-over-year to $500 million. Advertising revenue grew 84% year-over-year to $465 million. Other revenue, including data licensing, reached $35 million, growing 24% year-over-year. Daily active users grew to 110 million, up 21% year-over-year. Average Revenue Per User (ARPU) grew 47% year-over-year to $4.53. Regionally, revenue grew 79% in the U.S. and 71% internationally.

• Q3 2025 revenue expected in range of $535 million to $545 million, representing 54%-56% y-o-y growth. - Adjusted EBITDA expected in range of $185 million to $195 million, representing 100%-110% y-o-y growth. - Adjusted EBITDA margin at midpoint of 35%.

Q: What is one memorable discussion you had at the Cannes Lions festival?

A: Demoed Community Insights product, advertiser got idea for Super Bowl ad, sat next to ad agency person raving about team, chatted with Rick Astley.

Q: What projects are you deprioritizing the user economy for?

A: Focus on improving core app for user engagement, diversifying top of funnel traffic sources, and making product relevant for new users in every geo.

Q: On U.S. user trends throughout 2Q and into 3Q?

A: Slower start in April, better traction as quarter progressed, Q2 exit DAU higher than average, July saw growth in U.S. and international.

Q: Innovations in ad business for back half?

A: DPA adoption, automation like auto bidding, Memorable AI integration for creative, and broader adoption of Community Intelligence products like Reddit Insights and Conversation Summary Add-Ons.

Q: Thoughts on search as Reddit becomes LLM search engine?

A: Focus on unifying Reddit search and Reddit Answers into single experience, integrating search throughout app to capture seeker and scroller use cases.

Q: Evolution of advertiser relationships?

A: Created global accounts team for larger customers, plugged into third-party ecosystems like Smartlead partnership, and advertisers working across funnel with multiple objectives.

Q: Learnings from marketing efforts?

A: Need to build awareness and consideration outside English markets, progress with brand campaign in France, and invest in creating new search behavior by integrating Reddit Search throughout products.

Q: Engagement and time spent?

A: Relevance equals retention, focus on personalizing experience to make new users find home on Reddit, integrating Reddit Answers capability throughout app.

Q: Early learnings from Reddit Lite testing?

A: UI improvements like simpler post view and unified post view are good initiatives, focus on incorporating into core app.

Q: International progress towards self-sustaining markets?

A: Machine translation helps, focus on local community creation via moderator outreach, easier moderation, and better community discovery through personalization.

Q: Growth compared to other social channels and budget source?

A: Competitive with ROAS, budget comes from both new and existing advertisers shifting spend, Reddit Pro helps convert profiles to ad customers.