Reddit Announces Fourth Quarter and Full Year 2024 Results

SAN FRANCISCO--(BUSINESS WIRE)--Reddit, Inc. (NYSE: RDDT) today announced financial results for the quarter and full year ended December 31, 2024. Reddit’s complete financial results and management commentary can be found in its shareholder letter on Reddit’s Investor Relations website at https://investor.redditinc.com. “It was another strong quarter as we accomplished exciting milestones across revenue and international growth,” said Steve Huffman, Co-Founder and CEO of Reddit. “However, what’s most exciting is still ahead. We’re focused on providing a best-in-class experience for finding community and trusted information, proving that Reddit is for everyone, everywhere.” Fourth quarter 2024 Total revenue increased 71% year-over-year to $427.7 million, Ad revenue increased 60% year-over-year to $394.5 million, and Other revenue reached $33.2 million Gross margin was 92.6%, an improvement of 420 basis points from the prior year Net income was $71.0 million, as compared to net income of $18.5 million in the prior year Adjusted EBITDA1 was $154.3 million, an improvement of $131.2 million from the prior year Operating cash flow was $90.0 million, an improvement of $107.4 million from the prior year Free Cash Flow1 was $89.2 million and capital expenditures were $0.8 million, less than 1% of revenue Basic and diluted earnings per share (“EPS”) were $0.40 and $0.36, respectively Total fully diluted shares outstanding were 206.2 million as of December 31, 2024, down 0.1% from the prior quarter Full year 2024 Total revenue increased 62% year-over-year to $1.3 billion, Ad revenue increased 50% year-over-year to $1.2 billion, and Other revenue reached $114.7 million Gross margin was 90.5%, an improvement of 430 basis points from the prior year Net loss was $484.3 million, as compared to net loss of $90.8 million in the prior year Adjusted EBITDA1 was $298.0 million, an improvement of $367.3 million from the prior year Operating cash flow was $222.1 million, an improvement of $297.2 million from the prior year Free Cash Flow1 was $215.8 million and capital expenditures were $6.2 million, less than 1% of revenue Fourth Quarter and Full Year 2024 Financial Highlights Three months ended December 31, Twelve months ended December 31, (in millions, except percentages; unaudited) 2024 2023 % Change 2024 2023 % Change Revenue $ 427.7 $ 249.8 71 % $ 1,300.2 $ 804.0 62 % U.S. $ 347.7 $ 204.4 70 % $ 1,063.6 $ 651.4 63 % International $ 80.0 $ 45.4 76 % $ 236.6 $ 152.6 55 % GAAP gross margin 92.6 % 88.4 % 90.5 % 86.2 % Net income (loss) $ 71.0 $ 18.5 $ (484.3 ) $ (90.8 ) Net margin 16.6 % 7.4 % (37.2 )% (11.3 )% Net income (loss) per share Basic $ 0.40 $ 0.30 $ (3.33 ) $ (1.54 ) Diluted $ 0.36 $ — $ (3.33 ) $ (1.54 ) Adjusted EBITDA* $ 154.3 $ 23.2 $ 298.0 $ (69.3 ) Adjusted EBITDA margin* 36.1 % 9.3 % 22.9 % (8.6 )% Net cash provided by (used in) operating activities $ 90.0 $ (17.4 ) $ 222.1 $ (75.1 ) Free Cash Flow* $ 89.2 $ (22.0 ) $ 215.8 $ (84.8 ) Cash, cash equivalents, and marketable securities $ 1,840.8 *The definitions of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow can be found in the Use of Non-GAAP Financial Measures section of this release. A reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP measure can be found on pages 10-11. Financial Outlook The guidance provided below is based on Reddit’s current estimates and is not a guarantee of future performance. This guidance is subject to significant risks and uncertainties that could cause actual results to differ materially, including the risk factors discussed in Reddit’s reports on file with the Securities and Exchange Commission. Reddit undertakes no duty to update any forward-looking statements or estimates, except as required by applicable law. As we look ahead, we will share our internal thoughts on revenue and Adjusted EBITDA for the first quarter. In the first quarter of 2025, we estimate: Revenue in the range of $360 million to $370 million Adjusted EBITDA2 in the range of $80 million to $90 million Earnings Conference Call Information and Community Update Reddit will host a conference call to discuss the results for the fourth quarter of 2024 on Wednesday, February 12, 2025, at 2:00 p.m. PT / 5:00 p.m. ET. A live webcast of the call can be accessed on Reddit’s Investor Relations website at https://investor.redditinc.com and investor relations subreddit, r/RDDT, at https://www.reddit.com/r/RDDT/. A replay of the webcast and transcript will be available following the conclusion of the conference call on the same websites. Reddit will solicit questions from the community in the investor relations subreddit, r/RDDT, at https://www.reddit.com/r/RDDT/ on Wednesday, February 12, 2025, after market closes, and post responses following the earnings call at Reddit’s Investor Relations website at https://investor.redditinc.com and r/RDDT at https://www.reddit.com/r/RDDT/. Reddit uses the investor relations page on its website https://investor.redditinc.com, as well as the subreddits r/RDDT and r/reddit, available at https://www.reddit.com/r/RDDT/ and https://www.reddit.com/r/reddit/, respectively, as means of disclosing material non-public information and for complying with its disclosure obligation under Regulation FD. Notes 1 The definitions of Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow can be found in the Use of Non-GAAP Financial Measures section of this release. A reconciliation of non-GAAP financial measures to the most directly comparable U.S. GAAP measure can be found on pages 10-11. 2 We have not provided a reconciliation to the forward-looking U.S. GAAP equivalent measures for our non-GAAP guidance due to uncertainty regarding, and the potential variability of, reconciling items. Therefore, a reconciliation of these non-GAAP guidance measures to their corresponding U.S. GAAP guidance measures is not available without unreasonable effort. About Reddit Reddit is a community of communities. It’s built on shared interests, passion, and trust and is home to the most open and authentic conversations on the internet. Every day, Reddit users submit, vote, and comment on the topics they care most about. With 100,000+ active communities and approximately 101+ million daily active unique visitors, Reddit is one of the internet’s largest sources of information. For more information, visit www.redditinc.com. Forward Looking Statements This press release contains forward-looking statements within the meaning of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or Reddit's future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "going to," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions that concern Reddit's expectations, strategy, priorities, plans or intentions. Forward-looking statements in this release include, but are not limited to, statements regarding Reddit’s future financial and operating performance and GAAP and non-GAAP guidance. Reddit's expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected, including those more fully described under the caption “Risk Factors” and elsewhere in documents that Reddit files with the Securities and Exchange Commission (the “SEC”) from time to time, including Reddit’s Annual Report on Form 10-K for the year ended December 31, 2024, which is being filed with the SEC at or around the date hereof. The forward-looking statements in this release are based on information available to Reddit as of the date hereof, and Reddit undertakes no obligation to update any forward-looking statements, except as required by law. A Note About Metrics We define a daily active unique (“DAUq”) as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a 24-hour period. Average DAUq for a particular period is calculated by adding the number of DAUq on each day of that period and dividing that sum by the number of days in that period. We define a weekly active unique (“WAUq”) as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a trailing seven-day period. Average quarterly WAUq for a particular period is calculated by adding the number of WAUq on each day of that period and dividing that sum by the number of days in that period. We define average revenue per unique (“ARPU”) as quarterly revenue in a given geography divided by the average DAUq in that geography. For the purposes of calculating ARPU, advertising revenue in a given geography is based on the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity, while other revenue in a given geography is based on the billing address of the customer. Use of Non-GAAP Financial Measures We use certain non-GAAP financial measures to supplement our consolidated financial statements, which are presented in accordance with U.S. GAAP, to evaluate our core operating performance. These non-GAAP financial measures include Adjusted EBITDA, Adjusted EBITDA margin, and Free Cash Flow. We use these non-GAAP financial measures to facilitate reviews of our operational performance and as a basis for strategic planning. By excluding certain items that are non-recurring or not reflective of the performance of our normal course of business, we believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow investors to supplement their understanding of our financial trends and evaluate our ongoing and future performance in the same manner as management. However, there are a number of limitations related to the use of non-GAAP financial measures as they reflect the exercise of judgment by our management about which expenses are included or excluded in determining these non-GAAP measures. These non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures. A reconciliation is provided below for each historical non-GAAP financial measure to the most directly comparable financial measure stated in accordance with U.S. GAAP. Reddit encourages investors to review the related U.S. GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable U.S. GAAP financial measures, and not to rely on any single financial measure to evaluate Reddit’s business. We have not provided a reconciliation to the forward-looking GAAP equivalent measures for our non-GAAP guidance due to uncertainty regarding, and the potential variability of, reconciling items. Therefore, a reconciliation of these non-GAAP guidance measures to their corresponding GAAP guidance measures is not available without unreasonable effort. Adjusted EBITDA is defined as net income (loss) excluding interest (income) expense, net, income tax expense (benefit), depreciation and amortization, stock-based compensation expense and related taxes, other (income) expense, net, and certain other non-recurring or non-cash items impacting net income (loss) that we do not consider indicative of our ongoing business performance. Other (income) expense, net consists primarily of realized gains and losses on sales of marketable securities, foreign currency transaction gains and losses, and other income and expense that are not indicative of our core operating performance. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue. We consider the exclusion of certain non-recurring or non-cash items in calculating Adjusted EBITDA and Adjusted EBITDA margin to provide a useful measure for investors and others to evaluate our operating results in the same manner as management. Free Cash Flow represents net cash provided by (used in) operating activities less purchases of property and equipment. We believe that Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. Additionally, we believe that Free Cash Flow is an important measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to support revenue generating activities. Reddit, Inc. Key Operating Metrics by Geography (in millions, except percentages and ARPU) (unaudited) Three months ended December 31, Year ended December 31, 2024 2023 % Change 2024 2023 % Change Revenue: Global $ 427.7 $ 249.8 71 % $ 1,300.2 $ 804.0 62 % Revenue: U.S. $ 347.7 $ 204.4 70 % $ 1,063.6 $ 651.4 63 % Revenue: International $ 80.0 $ 45.4 76 % $ 236.6 $ 152.6 55 % Three months ended December 31, 2024 2023 % Change DAUq: Global 101.7 73.1 39 % DAUq: U.S. 48.0 36.4 32 % DAUq: International 53.7 36.7 46 % Logged-in DAUq: Global 46.1 36.4 27 % Logged-in DAUq: U.S. 21.9 17.7 24 % Logged-in DAUq: International 24.2 18.7 29 % Logged-out DAUq: Global 55.6 36.7 51 % Logged-out DAUq: U.S. 26.1 18.7 40 % Logged-out DAUq: International 29.5 18.0 64 % WAUq: Global 379.4 267.5 42 % WAUq: U.S. 172.2 131.1 31 % WAUq: International 207.2 136.4 52 % ARPU: Global $ 4.21 $ 3.42 23 % ARPU: U.S. $ 7.04 $ 5.51 28 % ARPU: International $ 1.67 $ 1.34 25 % Reddit, Inc. Consolidated Balance Sheets (in thousands) (unaudited) December 31, 2024 2023 Assets Current assets Cash and cash equivalents $ 562,092 $ 401,176 Marketable securities 1,278,717 811,946 Accounts receivable, net 349,534 245,279 Prepaid expenses and other current assets 33,058 21,286 Total current assets 2,223,401 1,479,687 Property and equipment, net 12,652 14,946 Operating lease right-of-use assets, net 23,249 24,008 Intangible assets, net 25,424 32,147 Goodwill 42,174 26,299 Other noncurrent assets 9,695 19,380 Total assets $ 2,336,595 $ 1,596,467 Liabilities, convertible preferred stock, and stockholders’ equity (deficit) Current liabilities Accounts payable $ 45,423 $ 46,514 Operating lease liabilities 6,137 3,707 Accrued expenses and other current liabilities 124,464 83,349 Total current liabilities 176,024 133,570 Operating lease liabilities, noncurrent 20,565 22,040 Other noncurrent liabilities 9,257 287 Total liabilities 205,846 155,897 Commitments and contingencies Convertible preferred stock — 1,853,492 Stockholders’ equity (deficit): Preferred stock — — Class A common stock 12 — Class B common stock 5 6 Class C common stock — — Additional paid-in capital 3,331,546 302,820 Accumulated other comprehensive income (loss) 24 814 Accumulated deficit (1,200,838 ) (716,562 ) Total stockholders’ equity (deficit) 2,130,749 (412,922 ) Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) $ 2,336,595 $ 1,596,467 Reddit, Inc. Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited) Three months ended December 31, Year ended December 31, 2024 2023 2024 2023 Revenue $ 427,707 $ 249,750 $ 1,300,205 $ 804,029 Costs and expenses: Cost of revenue 31,845 28,917 123,595 111,011 Research and development 188,644 111,568 935,152 438,346 Sales and marketing 80,516 57,925 350,579 230,175 General and administrative 73,830 48,325 451,447 164,658 Total costs and expenses 374,835 246,735 1,860,773 944,190 Income (loss) from operations 52,872 3,015 (560,568 ) (140,161 ) Other income (expense), net 17,115 16,461 75,361 53,138 Income (loss) before income taxes 69,987 19,476 (485,207 ) (87,023 ) Income tax expense (benefit) (1,049 ) 942 (931 ) 3,801 Net income (loss) $ 71,036 $ 18,534 $ (484,276 ) $ (90,824 ) Net income (loss) per share attributable to Class A and Class B common stock Basic $ 0.40 $ 0.30 $ (3.33 ) $ (1.54 ) Diluted $ 0.36 $ — $ (3.33 ) $ (1.54 ) Weighted-average shares used to compute net income (loss) per share attributable to common stockholders Basic 177,484,215 61,044,757 145,472,389 59,138,086 Diluted 199,057,762 61,044,757 145,472,389 59,138,086 Reddit, Inc. Consolidated Statements of Cash Flows (in thousands) (unaudited) Three months ended December 31, Year ended December 31, 2024 2023 2024 2023 Cash flows from operating activities Net income (loss) $ 71,036 $ 18,534 $ (484,276 ) $ (90,824 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 4,161 3,755 15,643 13,702 Non-cash operating lease cost 69 1,247 4,110 11,359 Amortization of premium (accretion of discount) on marketable securities, net (11,516 ) (8,547 ) (43,400 ) (27,442 ) Stock-based compensation expense 85,114 15,623 801,646 47,598 Other adjustments (148 ) 119 (4,187 ) 484 Changes in operating assets and liabilities: Accounts receivable (65,366 ) (52,601 ) (104,280 ) (53,318 ) Prepaid expenses and other assets (7,719 ) 1,777 (19,485 ) 3,878 Operating lease right-of-use assets and liabilities 291 (508 ) (2,397 ) (5,758 ) Accounts payable (17,054 ) 10,077 (570 ) 12,470 Accrued expenses and other liabilities 31,129 (6,909 ) 59,264 12,737 Net cash provided by (used in) operating activities $ 89,997 $ (17,433 ) $ 222,068 $ (75,114 ) Cash flows from investing activities Purchases of property and equipment (842 ) (4,602 ) (6,248 ) (9,724 ) Proceeds from sale of cryptocurrency — — 6,869 — Purchases of marketable securities (570,988 ) (331,819 ) (1,996,725 ) (1,259,854 ) Maturities of marketable securities 530,241 317,945 1,573,602 1,273,159 Proceeds from sale of marketable securities — — — 37,538 Cash paid for acquisitions, net of cash acquired — — (17,137 ) — Other investing activities (1,508 ) 63 (1,048 ) 172 Net cash provided by (used in) investing activities $ (43,097 ) $ (18,413 ) $ (440,687 ) $ 41,291 Cash flows from financing activities Proceeds from issuance of Class A common stock in initial public offering, net of underwriting discounts and commissions — — 600,022 — Proceeds from exercise of employee stock options 26,039 5,843 88,972 8,428 Taxes paid related to net share settlement of restricted stock units (26,467 ) (91 ) (294,573 ) (4,320 ) Payments of initial public offering costs (275 ) (545 ) (8,775 ) (1,441 ) Payments of deferred consideration and holdbacks for acquisitions — (2,499 ) (6,111 ) (3,478 ) Net cash provided by (used in) financing activities $ (703 ) $ 2,708 $ 379,535 $ (811 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 46,197 (33,138 ) 160,916 (34,634 ) Cash, cash equivalents, and restricted cash at the beginning of the period 515,945 434,364 401,226 435,860 Cash, cash equivalents, and restricted cash at the end of the period $ 562,142 $ 401,226 $ 562,142 $ 401,226 Cash and cash equivalents 562,092 401,176 562,092 401,176 Restricted cash 50 50 50 50 Total cash, cash equivalents, and restricted cash $ 562,142 $ 401,226 $ 562,142 $ 401,226 Reddit, Inc. Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin (in thousands, except percentages) (unaudited) Three months ended December 31, Year ended December 31, 2024 2023 2024 2023 Net income (loss) $ 71,036 $ 18,534 $ (484,276 ) $ (90,824 ) Add (deduct): Interest (income) expense, net (20,578 ) (15,316 ) (78,121 ) (53,281 ) Income tax expense (benefit) (1,049 ) 942 (931 ) 3,801 Depreciation and amortization 4,161 3,755 15,643 13,702 Stock-based compensation expense and related taxes 97,297 16,380 842,932 49,086 Restructuring costs(1) — — — 8,098 Other (income) expense, net 3,463 (1,145 ) 2,760 143 Adjusted EBITDA $ 154,330 $ 23,150 $ 298,007 $ (69,275 ) Net margin 16.6 % 7.4 % (37.2 )% (11.3 )% Adjusted EBITDA margin 36.1 % 9.3 % 22.9 % (8.6 )% (1) During the year ended December 31, 2023, we incurred restructuring costs of $8.1 million, primarily composed of severance and benefits expense. These charges are non-recurring and are not reflective of underlying trends in our business. Reddit, Inc. Reconciliation of Free Cash Flow (in thousands) (unaudited) Three months ended December 31, Year ended December 31, 2024 2023 2024 2023 Net cash provided by (used in) operating activities $ 89,997 $ (17,433 ) $ 222,068 $ (75,114 ) Less: Purchases of property and equipment (842 ) (4,602 ) (6,248 ) (9,724 ) Free Cash Flow $ 89,155 $ (22,035 ) $ 215,820 $ (84,838 )

Reddit Announces Fourth Quarter and Full Year 2024 Results

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