Reddit (RDDT) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $348.4 million, up 68% year-over-year, with GAAP profitability and net income of $29.9 million, reversing a prior year net loss.

• Daily Active Uniques (DAUq) grew 47% year-over-year to 97.2 million, with U.S. DAUq up 51% and international DAUq up 44%.

• Adjusted EBITDA was $94.1 million (27% margin), nearly doubling from Q2, and gross margin improved to 90.1%.

• Cash, cash equivalents, and marketable securities totaled $1.75 billion at quarter end.

• Conversation page views exceeded 90 billion, up 40% year-over-year.

Financial highlights

• Advertising revenue grew 56% year-over-year to $315.1 million, with performance revenue from mid and lower funnel objectives accounting for about 60% of total ad revenue.

• U.S. revenue rose 70% to $288.0 million; international revenue increased 57% to $60.4 million year-over-year.

• Free cash flow was $70.3 million for Q3, representing 20% of Q3 revenue.

• Gross margins exceeded 90% for Q3, up 280 basis points year-over-year.

• Capital expenditures were $1.4 million, less than 1% of revenue.

Outlook and guidance

• Q4 2024 revenue expected between $385 million and $400 million, with Adjusted EBITDA projected at $110 million–$125 million and a 30% margin at the midpoint.

• Management anticipates increased losses and declining operating margins as investments continue in product innovation and international growth.

• Plans to expand machine translation to over 30 countries through 2025.

• Search product modernization and monetization are top investment areas for 2025.

• Existing cash and credit facilities are expected to be sufficient for at least the next 12 months.