Reddit shares fell over 14% on February 12 after market hours even after the company reported an impressive Q4, with total revenue jumping by 71% year-on-year (YoY) to $427.7 million, driven primarily by a 60% increase in ad revenue. The company maintained a strong gross margin of 92.6%, showing improved efficiency.
Reddit's net income also saw a significant boost, rising nearly fourfold to $71 million. According to reports, the share price fall despite strong results reflected investor concerns over the company's future growth prospects as some key metrics missed Wall Street estimates.
Reddit Q4 Results Snapshot
| Metric | Q4 Numbers | YoY Change |
| Total Revenue | $427.7M | ↑ 71% |
| Net Income | $71M | ↑ 17% |
| Gross Margin | 92.6% | ↑ 420 bps |
| Daily Active Uniques (DAUq) | 101.7M | ↑ 39% |
Source: Company filing
Reddit's global daily active uniques, or DAUq, rose 39% from a year earlier to an average of 101.7 million for the fourth quarter. That trailed Wall Street estimates of 103.1 million. Reddit counts a "daily active unique" as any user with a unique identifier who visits a Reddit page or opens the app at least once within a 24-hour period. In its earnings call, Reddit attributed the miss to Google algorithm change.
But traffic from search has recovered in Q1, said Reddit CEO Steve Huffman in a letter to shareholders. “What happened wasn’t unusual — referrals from search fluctuate from time to time, and they primarily affect logged-out users,” he wrote, adding “Our teams have navigated numerous algorithm updates and did an excellent job adapting to these latest changes effectively.”
Reddit has seen a big boost in new and returning users, thanks to Google search updates and improvements to its own site, the company said. Many of these users browse without logging in, but Reddit is focused on getting them to create accounts since logged-in users are more valuable for the business, it added.
Reddit's logged-in users grew 27% for the third time in the last four quarters and have maintained a steady upward trend over the last two years, the company said in a statement.
Reddit earnings strong despite some misses
Despite missing on user numbers, Reddit otherwise reported a strong quarter and provided optimistic guidance. The company sales jumped 71% in Q1 from $250 million a year earlier, the fastest growth rate for any quarter since 2022. The company said first-quarter (Q1 2025) sales will be between $360 million and $370 million, ahead of the average analyst estimates of $358 million.
Reddit's net income in Q4 almost quadrupled to $71 million, or 36 cents a share, from $18.5 million, or breakeven on a per-share basis, a year earlier. A year ago, Reddit reported a net loss of $484.3 million. In Q4 2024, it significantly narrowed that loss to $90.8 million, showing progress.
Reddit's Ad revenue vs Google, Meta, Amazon and other giants
Reddit's ad revenue increased 60% year-over-year to $394.5 million in Q4. Ahead of Reddit's earnings report, several other tech giants including Microsoft, Google saw strong growth in their advertising businesses in the fourth quarter. Amazon reported $17.29 billion in online ad revenue, an 18% increase from the previous year. Pinterest also saw an 18% rise in sales, reaching $1.15 billion during the period.
Google’s advertising business also continued to expand, with total ad sales growing 11% YoY to $72.46 billion. YouTube ads performed even better, jumping 14% to $10.47 billion. Snapchat parent Snap also posted a 14% revenue increase, bringing in $1.56 billion in the fourth quarter.
Meta outpaced many of its peers, reporting $48.39 billion in revenue, up 21% from the previous year. Microsoft saw a similar 21% growth in its news advertising sales, though it did not disclose exact revenue figures. The strong performance across these companies highlights the continued momentum in digital advertising.
| Company | Q4 Ad Revenue (Mn) | YoY Growth |
| $394.5M | 60% | |
| Amazon | $17.3B | 18% |
| $72.46B | 11% | |
| Meta | $48.4B | 21% |
| Microsoft | NA | 21% |
Source: Company filings
Reddit’s growth since IPO
As of December 31, 2024, Reddit had over 101 million daily active users and more than 379 million people engaging with the platform each week. The site is home to over 100,000 active communities, where users contribute to a massive flow of content, with more than 22 billion posts and comments shared, according to company data.
Reddit went public in March last year at $34 a share and has since seen its market cap jump over 440% to $38 billion as on February 13, 2025, according to CompaniesMarketCap data.
Even after the recent fall, Reddit’s market capitalization is ahead of social media rivals Pinterest and Snapchat parent Snap. That's despite both those companies having significantly larger projected annual revenue than Reddit.
Reddit m-cap growth
Source: CompaniesMarketCap
Reddit has been gaining momentum from AI partnerships with Google and Microsoft-backed OpenAI, along with its innovative conversation placement ads, which allow brands to advertise directly within discussion threads in subreddits which are interest-based communities on the platform.
Reddit’s strong revenue growth, rising profitability, and expanding user base highlight its momentum. While some user metrics fell short in Q4, the company remains confident, focusing on AI partnerships and ad innovations. With a unique community-driven model and increasing advertiser interest, Reddit looks well-positioned for long-term growth even amid market saturation concerns, according to analysts. Reddit will be among the US stocks that will be on investors' radar for a while.
Disclaimer
The content is meant for education and general information purposes only. Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Past performance is not indicative of future returns. The securities are quoted as an example and not as a recommendation. This in no way is to be construed as financial advice or a recommendation to invest in any specific stock or financial instrument. The Company strongly encourages its users / viewers to conduct their own research, consult with a registered financial advisor before making any investment decisions. All disputes in relation to the content would not have access to exchange investor redressal forum or arbitration mechanism. INDmoney Global (IFSC) Private Limited, Unit No. GA-02, Seat No. 1-4, Ground Floor, Pragya Accelerator Block-15 T, Road 11, Zone-1, Processing Area, GIFT SEZ, Gift City, Gandhinagar, Gujarat, India, 382355 IFSCA Broker Dealer Registration No. IFSC/BD/2023-24/0016, IFSCA DP Reg No: IFSC/DP/2023-24/010.