Reddit shares jumped more than 12% on Friday after the social media company posted third-quarter results that exceeded Wall Street estimates and delivered an upbeat outlook for the current quarter.
The company’s revenue surged 68% from a year earlier to $585 million, topping the LSEG consensus estimate of $546 million.
Earnings per share came in at 80 cents, well ahead of analysts’ expectations of 51 cents.
The strong performance was driven by broad-based advertising growth and continued expansion in Reddit’s active advertiser base.
The company reported that nine of its top 15 advertiser verticals grew more than 50% year-over-year, underscoring strong momentum across key markets.
Reddit’s outlook for the fourth quarter also exceeded forecasts.
The company projects revenue between $655 million and $665 million, higher than Wall Street’s consensus estimate of $638 million.
Management expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to range from $275 million to $285 million in the December quarter.
According to Morgan Stanley analyst Brian Nowak, the results reflect Reddit’s “continued progress across its ad and platform initiatives,” with a “long runway for growth” in both attracting new advertisers—up 75% year-over-year in the third quarter—and expanding ad spending from existing clients.
User growth and engagement trends
Reddit’s daily active users climbed 19% year-over-year to 116 million, surpassing Wall Street’s projection of 114 million.
The company attributed the growth in part to new users arriving from Google searches and increased engagement among logged-in users, who tend to generate higher advertising revenue.
Globally, logged-in users rose 14% to 50.2 million.
However, user growth showed signs of moderation compared with the previous quarter.
Daily active unique users increased 7% to 23.1 million from a year earlier, below the 12% growth recorded in the second quarter.
The company acknowledged the potential impact of AI-powered search tools, such as ChatGPT and Google’s AI Overview, on user acquisition but noted that the effect so far has been limited.
“I’m looking forward to continuing to work on these things with these partners, but they’re not a major traffic driver today,” said CEO Steve Huffman during the earnings call.
“But I think there’s plenty of opportunity there as we continue to work together.”
AI partnerships and market performance
While advertising remains Reddit’s main source of revenue, the company has been expanding its data licensing business.
“Other revenue,” which includes licensing deals with Google and OpenAI to train their generative AI models, rose 7% year-over-year to $36 million.
Reddit has also introduced its own generative AI feature, Reddit Answers, which uses content from its vast communities to provide contextualized responses to user queries.
Following the strong results, Reddit’s stock climbed as much as 18.7% on Friday to $230.97.
The stock is now up around 33% in 2025, far outperforming the S&P 500’s 16% gain.
Despite the recent rally, shares remain about 23% below their all-time high of $282.95 reached in mid-September.
Overall, Reddit’s better-than-expected quarterly performance and improved advertising metrics suggest that the company is gaining traction with marketers while continuing to strengthen user engagement and diversify revenue through AI-related partnerships.
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