Reddit Q3 Revenue Up 53% to $895M, but Warns Q4 DAUqs Could Fall Low-Double-Digits
RDDT is trading near its 52-week low of $119.27 (4.4% below the low) on elevated volume (2.5× avg).
Summary
Reddit beat on Q3 with revenue of $895 million (+53%) and net income of $283 million, but warned that continued search-referral declines could push Q4 DAUqs down a low-double-digit percentage from 130 million.
Key Events · Earnings and Guidance · RDDT
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Q3 Revenue Grows 53% to $895M
Ad revenue rose 54% to $847 million and net income was $283 million, 32% of revenue, with diluted EPS of $1.40, up 75% year-over-year.
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Q4 Guidance Set at $1.00B-$1.03B Revenue
Management guided Q4 revenue to $1,000-$1,030 million and Adjusted EBITDA to $480-$510 million.
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Search Referral Decline Threatens Q4 Users
Search referral traffic fell meaningfully in Q3 and accelerated later in the quarter; October search traffic is down more than 1 million referrals per week on average, and continued trends would suggest total DAUqs could fall in Q4 by a low-double-digit percentage from the 130 million base.
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Logged-In-Only Shift Tested in Q4
Reddit will begin fully testing a primarily logged-in-only experience in select markets outside the U.S. in Q4, aiming for better ad targeting signals and data protection.
Analysis · RDDT · Technology
The quarter itself was strong: revenue of $895 million grew 53% and net income of $283 million was up 74%, with Adjusted EBITDA of $402 million at a 45% margin. What changes the thesis is the forward picture. Management said search referral traffic fell meaningfully in Q3, the decline accelerated later in the quarter, and October search traffic has dropped by more than 1 million referrals per week on average. If that pace continues, total DAUqs could fall in Q4 by a low-double-digit percentage from the current base of 130 million. Q4 revenue guidance of $1,000-$1,030 million and Adjusted EBITDA of $480-$510 million is being issued against that user trend, so the debate is whether monetization per user can outrun a shrinking top of funnel. The planned shift to a logged-in-only experience, tested outside the U.S. starting in Q4, is the company's answer, and it carries execution risk of its own.
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At the time of this filing, RDDT was trading at $114.00 on NYSE in the Technology sector, with a market capitalization of approximately $24.9B. The 52-week trading range was $119.27 to $263.50. This filing was assessed with negative market sentiment and an importance score of 8 out of 10.