Reddit Inc (NYSE:RDDT) Surpasses Q3 Estimates with Strong Revenue and User Growth

Reddit Inc (NYSE:RDDT) delivered third-quarter results that significantly exceeded analyst expectations, demonstrating robust growth across its advertising business and user metrics. The social media platform's strong performance was highlighted by substantial beats on both revenue and earnings per share, though the market's initial reaction appeared measured.

Quarterly Performance Versus Estimates

Reddit's Q3 CY2025 results showcased impressive growth momentum, with the company surpassing Wall Street's projections across key financial metrics. The platform's revenue expansion and profitability improvements stood out as particularly strong aspects of the quarter.

• Revenue: $584.9 million actual versus $556.5 million estimated (4.9% beat)
• Earnings Per Share (Non-GAAP): $0.80 actual versus $0.51 estimated (56.6% beat)
• Year-over-Year Revenue Growth: 68% increase from $348 million in Q3 2024

The company's advertising revenue grew 74% year-over-year to $549 million, representing the primary driver of overall revenue growth. This performance indicates Reddit continues to successfully monetize its platform and attract advertising dollars from brands seeking to engage with its community-based audience.

Financial Health and User Metrics

Beyond the headline numbers, Reddit demonstrated significant improvements in profitability and cash flow generation. The company's net income reached $163 million, a substantial improvement from $30 million in the prior year period. Operating cash flow grew to $185 million, while free cash flow reached $183 million.

User engagement metrics showed healthy expansion, with global daily active unique visitors (DAUq) increasing 19% year-over-year to 116.0 million. International markets represented a particular area of strength, with international DAUq growing 31% to 64.4 million. The company also reported 444 million weekly active unique visitors, underscoring the platform's broad reach and engagement.

Forward Guidance and Market Reaction

Reddit provided fourth-quarter revenue guidance ranging between $655 million to $665 million, with the midpoint of $660 million exceeding analyst expectations of $648.95 million by approximately 3.3%. The company's Adjusted EBITDA guidance of $275 million to $285 million similarly suggests continued strong operational performance.

Despite these positive results and outlook, the stock's after-market reaction showed modest gains of approximately 4%. This tempered response may reflect investor expectations that were already elevated heading into the earnings report, or potentially concerns about sustainability of the current growth trajectory amid broader digital advertising market conditions.

Strategic Positioning and Outlook

The quarterly results reinforce Reddit's position as a growing player in the social media and digital advertising landscape. The company's focus on community-driven content continues to resonate with users and advertisers alike. With a strong balance sheet featuring $2.23 billion in cash and marketable securities, Reddit maintains financial flexibility to invest in growth initiatives and platform development.

For investors seeking more detailed analysis of Reddit's earnings trajectory and future estimates, additional information is available through the company's earnings and estimates page.

Disclaimer: This article presents financial information for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any particular security or investment strategy. Readers should conduct their own research and consult with a qualified financial advisor before making investment decisions.