Reddit (NYSE:RDDT) Beats Expectations in Strong Q4 CY2025

Online community and discussion platform Reddit (NYSE:RDDT) reported revenue ahead of Wall Street’s expectations in Q4 CY2025, with sales up 69.7% year on year to $725.6 million. On top of that, next quarter’s revenue guidance ($600 million at the midpoint) was surprisingly good and 4.3% above what analysts were expecting. Its GAAP profit of $1.24 per share was 33.1% above analysts’ consensus estimates.

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“We’re entering the next era of Reddit—defined by sharper execution, global expansion, and product innovation that puts real people and conversations at the center,” said Steve Huffman, Reddit Co-Founder and CEO.

Company Overview

Founded in 2005 by two University of Virginia roommates, Reddit (NYSE:RDDT) facilitates user-generated content across niche communities (called subreddits) that discuss anything from stocks to dating and memes.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, Reddit’s sales grew at an incredible 48.9% compounded annual growth rate over the last three years. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.

This quarter, Reddit reported magnificent year-on-year revenue growth of 69.7%, and its $725.6 million of revenue beat Wall Street’s estimates by 8.7%. Company management is currently guiding for a 52.9% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 34.7% over the next 12 months, a deceleration versus the last three years. Still, this projection is commendable and implies the market is forecasting success for its products and services.

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Domestic Daily Active Visitors

User Growth

As a social network, Reddit generates revenue growth by increasing its user base and charging advertisers more for the ads each user is shown.

Over the last two years, Reddit’s domestic daily active visitors, a key performance metric for the company, increased by 29.2% annually to 52.5 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

In Q4, Reddit added 4.5 million domestic daily active visitors, leading to 9.4% year-on-year growth. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t accelerating user growth just yet.

Revenue Per User

Average revenue per user (ARPU) is a critical metric to track because it measures how much the company earns from the ads shown to its users. ARPU can also be a proxy for how valuable advertisers find Reddit’s audience and its ad-targeting capabilities.

Reddit’s ARPU growth has been exceptional over the last two years, averaging 22.1%. Its ability to increase monetization while growing its domestic daily active visitors at an impressive rate reflects the strength of its platform, as its users are spending significantly more than last year.

This quarter, Reddit’s ARPU clocked in at $10.79. It grew by 53.3% year on year, faster than its domestic daily active visitors.

Key Takeaways from Reddit’s Q4 Results

We were impressed by how significantly Reddit blew past analysts’ EBITDA expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Looking ahead, next quarter's guidance for revenue and EBITDA both beat expectations. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $154.47 immediately following the results.

Indeed, Reddit had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).