Reddit Surpasses Q1 Estimates, Forecasts Strong Q2 Amid Ad Growth and AI Push

Last Updated May - 02 - 2025, 04:35 PM | Source : Fela News

Reddit projects higher Q2 revenue as ad investments pay off, despite Google search changes. Q1 revenue rose 61% to $392.4M with 108.1M daily users and growing A

Reddit projected higher-than-expected revenue for the second quarter, signaling confidence in its growing digital advertising business despite broader uncertainty in marketing budgets. Following the earnings release, Reddit shares surged up to 20% in after-hours trading before settling at a 7% gain. CEO Steve Huffman acknowledged potential disruptions in daily user activity due to ongoing changes in Google’s search algorithms, which have already caused traffic volatility. This follows Google's increased focus on AI-generated summaries in search results.

Despite these challenges, Reddit’s investments in ad technology appear to be delivering results. The platform is attracting advertisers even as global trade tensions and the end of a duty-free import loophole tighten ad spending elsewhere. Unlike smaller rivals like Snap, which withheld forecasts due to economic instability, Reddit joins larger platforms like Meta in outperforming revenue expectations.

The company expects Q2 revenue to be between $410 million and $430 million, ahead of analysts’ forecast of $395.5 million. Adjusted EBITDA is projected at $110–130 million, exceeding estimates. In Q1, revenue rose 61% to $392.4 million, and profit reached 13 cents per share—both surpassing projections. Daily active unique visitors grew 31% to 108.1 million, while average revenue per user increased 23% to $3.63. Reddit continues leveraging AI to enhance engagement.