Wednesday, May 08, 2024 10:09:34 PM
Story by Aisha Counts • 15h • Bloomberg
RDDT
(Bloomberg) -- Reddit Inc. shares jumped as much as 16% in premarket trading after improvements to the social media platform’s advertising system helped push quarterly sales higher than expected in its first results as a public company.
Revenue increased 48% to $243 million in the period ended March 31, the social media company said Tuesday in a statement. Analysts, on average, estimated $211.9 million, according to data compiled by Bloomberg.
Reddit’s initial public offering in March was one of the largest on a US exchange this year, raising about $748 million. Its strong debut was bolstered by the site’s large user base and data licensing agreements with artificial intelligence companies, which will let those firms use Reddit’s data to train its AI systems. Reddit first filed confidentially for an IPO in 2021.
The company projected revenue of $240 million to $255 million in the current period ending in June. Analysts, on average, estimated $227.6 million. Reddit said the growth was spurred by investments in making the site easier to use and improvements in its ad targeting technology.
“It was a strong start to the year and a milestone quarter for Reddit and our communities,” co-founder and Chief Executive Officer Steve Huffman said in the statement. “We see this as the beginning of a new chapter as we work toward building the next generation of Reddit.”
If gains hold, the shares will rise the most since the week of the company’s March listing, when stock gained more than 90% over four days. Reddit closed at $49.40 in New York on Tuesday and had gained 45% since the IPO.
The text-based social media company said it now has more than 82.7 million global daily users — a jump of 37% from a year earlier — who post multiple times each day to the site’s forums. Reddit was founded in 2005 before being acquired by Conde Nast a year later and then spun out as a private company again in 2011.
“Reddit’s high-20% to mid-30% growth in daily average users seems sustainable on the steady increase of communities and content on its platform, which has boosted its relevance for training large language models,” Mandeep Singh, a Bloomberg Intelligence senior analyst, said in a note after the results were released.
Reddit reported a net loss of $575.1 million in the quarter compared with a loss of $60.9 million a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization were $10 million, compared with a loss of $50.2 million in the quarter a year earlier.
While Reddit has been popular among users, it has struggled to reach profitability. Last year, the company reported a net loss of $91 million on revenue of $804 million. Historically, about 98% of the company’s sales have come from advertising.
Moving forward, Reddit plans to diversify its revenue streams by licensing its data to AI companies and boosting commerce on the platform. In its S-1 filing, the company said it entered into data licensing agreements worth $203 million, with terms ranging from two to three years. Reddit reported $20 million in data licensing revenue in the first quarter.
“I think the next biggest business model for us is what we call the user economy, so this is users making money from other users on Reddit,” Huffman said in an interview after the earnings release. Reddit users can currently make money from subscriptions, digital gifts and collectibles such as avatars.
The company also plans to increase sales by expanding internationally and translating Reddit posts to other languages, he said. About 50% of Reddit’s users come to the site from outside the US, but the company expects that number to grow to 80% to 90% in the future.
“We believe this will not only drive growth in the near term, but also over time will allow users from all over the world to connect regardless of the languages they speak,” Huffman said in a conference call after the results were released.
Recent RDDT News
- Doordash and Deliveroo Terminate Talks; Universal Announces UK Theme Park Plan, and More News • IH Market News • 06/26/2024 11:08:35 AM
- IAS PARTNERS WITH REDDIT TO PROVIDE AI-DRIVEN MEASUREMENT TO ADVERTISERS • PR Newswire (US) • 06/13/2024 10:00:00 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/29/2024 12:37:53 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/29/2024 12:36:27 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/29/2024 12:33:22 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/29/2024 12:32:18 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 12:42:05 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 12:35:43 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 12:34:10 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 12:32:09 AM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/23/2024 12:29:43 AM
- U.S. Stocks May Add To Last Week’s Strong Gains In Early Trading • IH Market News • 05/20/2024 01:10:36 PM
- Form S-8 - Securities to be offered to employees in employee benefit plans • Edgar (US Regulatory) • 05/20/2024 10:03:35 AM
- Dow Finishes Choppy Trading Day Above 40,000 For First Time • IH Market News • 05/17/2024 08:35:35 PM
- OpenAI’s Reddit Partnership Boosts Shares by 14%, Microsoft Embraces AMD Chips for AI, and More News • IH Market News • 05/17/2024 11:36:28 AM
- Meme Stock GameStop Rallies After Roaring Kitty Post • IH Market News • 05/14/2024 12:31:22 PM
- Novavax Surges 57% Post $1.4 Billion Sanofi Deal; Apple Boosts Data Centers with AI and Internal Chips, and More News • IH Market News • 05/10/2024 12:02:56 PM
- Form 3 - Initial statement of beneficial ownership of securities • Edgar (US Regulatory) • 05/09/2024 10:06:54 PM
- Reddit to Participate in Upcoming Investor Conferences • Business Wire • 05/09/2024 06:23:00 PM
- Reddit Rises 15% After First Quarterly Report, Upstart and Twilio Plunge Due to Weak Q2 Forecast, and More in Earnings • IH Market News • 05/08/2024 12:23:27 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 05/07/2024 08:15:37 PM
- Reddit Announces First Quarter 2024 Results • Business Wire • 05/07/2024 08:07:00 PM
- Disney Slashes Streaming Losses, UBS shoots up 9% as profit triples expectations, and More in Earnings • IH Market News • 05/07/2024 11:46:44 AM
- Perficient Stock Soars 52.9% Post-Acquisition; Luminar Declines 10% Amid Workforce Cutbacks, and Other News • IH Market News • 05/06/2024 12:09:00 PM
- Anglo American Rejects BHP Group’s Offer, Toyota Invests $1.4 Billion in Indiana, and More News • IH Market News • 04/26/2024 11:48:07 AM
FEATURED POET Wins "Best Optical AI Solution" in 2024 AI Breakthrough Awards Program • Jun 26, 2024 10:09 AM
HealthLynked Promotes Bill Crupi to Chief Operating Officer • HLYK • Jun 26, 2024 8:00 AM
Bantec's Howco Short Term Department of Defense Contract Wins Will Exceed $1,100,000 for the current Quarter • BANT • Jun 25, 2024 10:00 AM
ECGI Holdings Targets $9.7 Billion Equestrian Apparel Market with Allon Brand Launch • ECGI • Jun 25, 2024 8:36 AM
Avant Technologies Addresses Progress on AI Supercomputer-Driven Data Centers • AVAI • Jun 25, 2024 8:00 AM
Green Leaf Innovations, Inc. Expands International Presence with New Partnership in Dubai • GRLF • Jun 24, 2024 8:30 AM