Reddit's Q2 Earnings Beat Estimates, Revenues Up Y/Y, Shares Rise

Reddit RDDT reported second-quarter 2025 earnings of 45 cents per share, which beat the Zacks Consensus Estimate by 25 cents. The company had incurred a loss of 6 cents per share in the year-ago quarter.

Revenues of $499.63 million surpassed the Zacks Consensus Estimate by 16.9%. The reported figure surged 77.9% year over year.

RDDT shares jumped 14.07% in the pre-market trading to $183.8 after the company delivered impressive second-quarter results.

Reddit Inc. Price, Consensus and EPS Surprise

Reddit Inc. price-consensus-eps-surprise-chart | Reddit Inc. Quote

RDDT’s Q2 Top-Line & Metrics in Detail

For the reported quarter, U.S. revenues (contributing 82% to revenues) surged 79.4% year over year to $409 million. International revenues (18% of revenues) soared 71.7% year over year to $91 million.

Advertising revenues surged 84% year over year to $465 million, and Other revenues increased 24% year over year to $35 million.

Daily Active Uniques (DAUq) jumped 21% year over year to 110.4 million. U.S. DAUq increased 11% year over year to 50.3 million, whereas International DAUq grew 32% to 60.1 million.

Weekly Active Uniques (WAUq) rose 22% year over year to 416.4 million. U.S. WAUq increased 8% year over year to 181 million, whereas International WAUq climbed 35% to 235.4 million.

Average revenue per unique (ARPU) moved up 47% year over year to $4.53. U.S. ARPU increased 59% to $7.87, whereas International ARPU climbed 40% on a year-over-year basis to $1.73.

RDDT's Operating Details

Non-GAAP sales and marketing expenses increased 68.8% year over year to $120.6 million. Research and development expenses rose 37.7% year over year to $196.6 million, while general and administrative expenses increased 0.4% year over year to $68.8 million.

Second-quarter 2025 adjusted EBITDA was $167 million, up from $40 million reported in the year-ago quarter.

RDDT’s Balance Sheet & Cash Flow

As of June 30, 2025, Reddit had cash and cash equivalents, including marketable securities, of $2.06 billion compared with $1.95 billion as of March 31, 2025.

In the second quarter, the company generated $111 million in cash from operating activities compared with $127.6 million in the previous quarter. Reddit reported a free cash flow of $111 million compared with $126.6 million in the previous quarter.

Reddit Initiates Q3 Guidance

For the third quarter of 2025, RDDT expects revenues between $535 million and $545 million. The Zacks Consensus Estimate for third-quarter revenues is pegged at $472.41 million, indicating a 35.61% increase year over year.

The consensus mark for earnings is pinned at 32 cents per share, which has remained unchanged over the past 60 days. The figure indicates a 100% year-over-year increase.

Adjusted EBITDA is expected by RDDT to be between $185 million and $195 million for the third quarter.

Zacks Rank & Stocks to Consider

Currently, Reddit carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Arista Networks ANET, Bumble BMBL and Lumentum LITE, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Arista Networks have gained 11.5% year to date. Arista Networks is set to report second-quarter 2025 results on Aug. 5.

Shares of Bumble have lost 4.5% year to date. Bumble is slated to report second-quarter 2025 results on Aug. 6.

Shares of Lumentum have jumped 31.1% year to date. Lumentum is set to report fourth-quarter fiscal 2025 results on Aug. 12.

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This article originally published on Zacks Investment Research (zacks.com).

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