ReElement Technologies stock soars after securing $1.4B government deal
Reddit Inc (NYSE:RDDT) shares surged over 12% in premarket trading Friday after the company delivered third-quarter earnings that handily beat Wall Street expectations and issued an upbeat forecast for the upcoming period.
The social media platform reported strong revenue growth and sharp profitability gains, buoyed by rising engagement and improved monetization.
Adjusted earnings per share came in at $0.80, topping consensus estimates by $0.29, while revenue surged 68% year-over-year to $585 million, beating the $546 million analysts had anticipated. U.S. revenues rose 67% to $480 million, while international revenues advanced 74% to $105 million, indicating robust demand across markets.
Reddit’s net income climbed to $163 million, or 28% of revenue, compared with just $30 million in the prior-year period, reflecting expanded operating leverage. The company also posted an adjusted EBITDA of $236 million, representing 40% of revenue, a significant jump from $94 million a year earlier.
“444 million people come here each week for authentic conversations they can’t find anywhere else,” said Steve Huffman, Reddit Co-Founder and CEO. “And increasingly, for engagement with brands, institutions and publishers.”
The platform saw Daily Active Uniques (DAUq) rise 19% to 116 million. Reddit’s gross margin improved to 91.0%, up 90 basis points from last year, signaling efficiency gains even as the company invests in infrastructure and moderation.
Advertising revenue surged 74% compared to a year ago, totaling $549 million and accounting for over 93% of total revenue. Other revenue, which includes data licensing and premium subscriptions, grew a modest 7% to $36 million, as initiatives to diversify income streams progress.
Cash generation was also a bright spot: operating cash flow reached $185 million, while Free Cash Flow hit $183 million, both more than doubling from the prior year. Fully diluted shares fell slightly to 206.1 million, easing dilution concerns among investors.
For the fourth quarter, Reddit guided for revenue between $655 million and $665 million and adjusted EBITDA between $275 million and $285 million, signaling continued growth. With enhanced user traction, strong monetization, and improving margins, investors appeared to interpret the results as a sign that Reddit’s turnaround and scaling strategy is gaining momentum.
Commenting on the report, Bank of America analysts said this was "another strong revenue beat with mixed user trends," adding that "advertising execution remains top stock driver." The bank lifted its price target to $210 from $180.
Morgan Stanley also raised the target price to $250 from $230 after the release, noting that the company’s "ability to drive higher user retention and user growth via improved personalization/onboarding [remains] key to potential multiple expansion."
(Luke Juricic contributed to this report.)