 "Reddit profitable for the first time, shares jump 25% after Q3 results, strong revenue forecast")
For the first time in its nearly 20-year history, Reddit has reported a profit. In its third-quarter earnings released on Tuesday, the company announced a net profit of $29.9 million, alongside revenue totalling $348.4 million. This marks a significant 68 per cent increase in revenue compared to the same period last year, signalling Reddit’s steady climb toward financial stability.
Since going public, Reddit has struggled to find its financial footing, losing $575 million in its first quarter on the stock market. However, the company made steady progress, trimming that loss to $10 million last quarter. Now, it has finally reached profitability, showing promising signs of long-term growth.
Reddit also reported a surge in daily users, hitting 97.2 million active users during the past few months, representing a 47 per cent jump year-over-year. On some days, the platform even crossed the 100 million user mark, suggesting that the platform’s reach is expanding rapidly.
Boost in ad revenue and data licensing
The majority of Reddit’s revenue came from advertising, which grew to $315.1 million. An additional $33.2 million was generated through other income streams, thanks largely to data licensing deals. Both Google and OpenAI have signed agreements with Reddit to use its content to train their AI models, contributing to this new revenue channel.
Reddit has also taken strategic steps to diversify its revenue streams since going public, including signing ad deals with professional sports leagues and revamping its popular “ask me anything” posts. Additionally, the platform has started to crack down on web crawlers that scrape its content for free, potentially laying the groundwork for future monetisation efforts.
Impact Shorts
More ShortsAI-powered growth and future plans
Reddit’s leadership attributes much of its recent growth to the introduction of AI-powered translation tools. Initially, the platform allowed users to translate posts into French before rolling the feature out to Spanish, Portuguese, Italian, and German. CEO Steve Huffman stated that Reddit plans to expand this translation feature to more than 30 languages by 2025, with the goal of enhancing accessibility and growing its user base worldwide.
Huffman also emphasised Reddit’s increasing influence across the web. He noted that “Reddit” ranked as the sixth most searched term on Google in the US this year, highlighting the platform’s role as a go-to destination for answers, advice, and community engagement.
As part of its efforts to keep the platform sustainable, Reddit is exploring new ways to generate revenue. These plans include potential paid subreddits and stricter measures to prevent sitewide protests, as the company aims to maintain a balance between user engagement and profitability.
With its first profitable quarter now under its belt, Reddit appears well-positioned to build on this momentum, continuing its transformation into a more sustainable business while expanding its influence across the internet.
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