Daily Active Uniques (“DAUq”) increased 47%
year-over-year to 97.2 million
Strong revenue growth of 68% to $348.4
million
Achieved GAAP profitability with net income
of $29.9 million and net margin of 8.6%
Adjusted EBITDA1 of $94.1 million and
Adjusted EBITDA1 margin of 27.0%
Positive operating cash flow of $71.6
million and Free Cash Flow1 of $70.3 million, invested $66 million
to net settle 1.2 million employee shares
Reddit, Inc. (NYSE: RDDT) today announced financial results for
the quarter ended September 30, 2024. Reddit’s complete financial
results and management commentary can be found in its shareholder
letter on Reddit’s Investor Relations website at
https://investor.redditinc.com.
“It was another strong quarter for Reddit and our communities as
we achieved important milestones, including new levels of user
traffic, revenue growth, and profitability,” said Steve Huffman,
Co-Founder and CEO of Reddit. “Reddit continues to be one of the
most visited and trusted sites in the world with opportunities
available to us that aren’t available to most companies.”
- Revenue increased 68% year-over-year to $348.4 million, Ad
revenue increased 56% year-over-year to $315.1 million, and Other
revenue increased 547% year-over-year to $33.2 million
- Gross margin was 90.1%, an improvement of 280 basis points from
the prior year
- Net income was $29.9 million, as compared to net loss of $(7.4)
million in the prior year
- Adjusted EBITDA1 was $94.1 million, as compared to $(6.9)
million in the prior year
- Operating cash flow was $71.6 million, an improvement of $79.3
million from the prior year
- Free Cash Flow1 was $70.3 million and capital expenditures were
$1.4 million, less than 1% of revenue
Third Quarter 2024 Financial
Highlights
Three months ended September
30,
(in millions, except percentages;
unaudited)
2024
2023
% Change
Revenue
$
348.4
$
207.5
68
%
U.S.
$
288.0
$
169.0
70
%
International
$
60.4
$
38.5
57
%
GAAP gross margin
90.1
%
87.3
%
Net income (loss)
$
29.9
$
(7.4
)
NM
Net margin
8.6
%
(3.6
)%
Adjusted EBITDA*
$
94.1
$
(6.9
)
NM
Adjusted EBITDA margin*
27.0
%
(3.3
)%
Net cash provided by (used in) operating
activities
$
71.6
$
(7.7
)
NM
Free Cash Flow*
$
70.3
$
(11.6
)
NM
Cash, cash equivalents, and marketable
securities
$
1,745.0
NM - not meaningful
*The definitions of Adjusted EBITDA,
Adjusted EBITDA margin, and Free Cash Flow can be found in the Use
of Non-GAAP Financial Measures section of this release. A
reconciliation of non-GAAP financial measures to the most directly
comparable U.S. GAAP measure can be found on pages 10-11.
Financial Outlook
The guidance provided below is based on Reddit’s current
estimates and is not a guarantee of future performance. This
guidance is subject to significant risks and uncertainties that
could cause actual results to differ materially, including the risk
factors discussed in Reddit’s reports on file with the Securities
and Exchange Commission. Reddit undertakes no duty to update any
forward-looking statements or estimates, except as required by
applicable law.
As we look ahead, we will share our internal thoughts on revenue
and Adjusted EBITDA for the fourth quarter.
In the fourth quarter of 2024, we estimate:
- Revenue in the range of $385 million to $400 million
- Adjusted EBITDA2 in the range of $110 million to $125
million
Earnings Conference Call Information and Community
Update
Reddit will host a conference call to discuss the results for
the third quarter of 2024 on October 29, 2024, at 2:00 p.m. PT /
5:00 p.m. ET. A live webcast of the call can be accessed on
Reddit’s Investor Relations website at
https://investor.redditinc.com and investor relations subreddit,
r/RDDT, at https://www.reddit.com/r/RDDT/. A replay of the webcast
and transcript will be available following the conclusion of the
conference call on the same websites.
Reddit will solicit questions from the community in the investor
relations subreddit, r/RDDT, at https://www.reddit.com/r/RDDT/ on
Tuesday, October 29, 2024, and post responses following the
earnings call at Reddit’s Investor Relations website at
https://investor.redditinc.com and r/RDDT at
https://www.reddit.com/r/RDDT/.
Reddit uses the investor relations page on its website
https://investor.redditinc.com, as well as the subreddits r/RDDT
and r/reddit, available at https://www.reddit.com/r/RDDT/ and
https://www.reddit.com/r/reddit/, respectively, as means of
disclosing material non-public information and for complying with
its disclosure obligation under Regulation FD.
Notes
1 The definitions of Adjusted EBITDA, Adjusted EBITDA margin,
and Free Cash Flow can be found in the Use of Non-GAAP Financial
Measures section of this release. A reconciliation of non-GAAP
financial measures to the most directly comparable U.S. GAAP
measure can be found on pages 10-11. 2 We have not provided a
reconciliation to the forward-looking U.S. GAAP equivalent measures
for our non-GAAP guidance due to uncertainty regarding, and the
potential variability of, reconciling items. Therefore, a
reconciliation of these non-GAAP guidance measures to their
corresponding U.S. GAAP guidance measures is not available without
unreasonable effort.
About Reddit
Reddit is a community of communities. It’s built on shared
interests, passion, and trust and is home to the most open and
authentic conversations on the internet. Every day, Reddit users
submit, vote, and comment on the topics they care most about. With
100,000+ active communities and approximately 97+ million daily
active unique visitors, Reddit is one of the internet’s largest
sources of information. For more information, visit
www.redditinc.com.
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements generally relate to future events or Reddit's future
financial or operating performance. In some cases, you can identify
forward-looking statements because they contain words such as
"may," "will," "should," "expects," "plans," "anticipates," "going
to," "could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential" or "continue" or
the negative of these words or other similar terms or expressions
that concern Reddit's expectations, strategy, priorities, plans or
intentions. Forward-looking statements in this release include, but
are not limited to, statements regarding Reddit’s future financial
and operating performance and GAAP and non-GAAP guidance. Reddit's
expectations and beliefs regarding these matters may not
materialize, and actual results in future periods are subject to
risks and uncertainties that could cause actual results to differ
materially from those projected, including those more fully
described under the caption “Risk Factors” and elsewhere in
documents that Reddit files with the Securities and Exchange
Commission (the “SEC”) from time to time, including Reddit’s
Quarterly Report on Form 10-Q for the quarter ended September 30,
2024, which is being filed with the SEC at or around the date
hereof. The forward-looking statements in this release are based on
information available to Reddit as of the date hereof, and Reddit
undertakes no obligation to update any forward-looking statements,
except as required by law.
A Note About Metrics
We define a daily active unique (“DAUq”) as a user whom we can
identify with a unique identifier who has visited a page on the
Reddit website, www.reddit.com, or opened a Reddit application at
least once during a 24-hour period. Average DAUq for a particular
period is calculated by adding the number of DAUq on each day of
that period and dividing that sum by the number of days in that
period.
We define a weekly active unique (“WAUq”) as a user whom we can
identify with a unique identifier who has visited a page on the
Reddit website, www.reddit.com, or opened a Reddit application at
least once during a trailing seven-day period. Average quarterly
WAUq for a particular period is calculated by adding the number of
WAUq on each day of that period and dividing that sum by the number
of days in that period.
We define average revenue per unique (“ARPU”) as quarterly
revenue in a given geography divided by the average DAUq in that
geography. For the purposes of calculating ARPU, advertising
revenue in a given geography is based on the geographic location in
which advertising impressions are delivered, as this approximates
revenue based on user activity, while other revenue in a given
geography is based on the billing address of the customer.
Use of Non-GAAP Financial Measures
We use certain non-GAAP financial measures to supplement our
consolidated financial statements, which are presented in
accordance with U.S. GAAP, to evaluate our core operating
performance. These non-GAAP financial measures include Adjusted
EBITDA, Adjusted EBITDA margin, and Free Cash Flow. We use these
non-GAAP financial measures to facilitate reviews of our
operational performance and as a basis for strategic planning. By
excluding certain items that are non-recurring or not reflective of
the performance of our normal course of business, we believe that
these non-GAAP financial measures provide meaningful supplemental
information regarding our performance. Accordingly, we believe
these non-GAAP financial measures are useful to investors and
others because they allow investors to supplement their
understanding of our financial trends and evaluate our ongoing and
future performance in the same manner as management. However, there
are a number of limitations related to the use of non-GAAP
financial measures as they reflect the exercise of judgment by our
management about which expenses are included or excluded in
determining these non-GAAP measures. These non-GAAP measures should
be considered in addition to, not as a substitute for or in
isolation from, our financial results prepared in accordance with
U.S. GAAP. Other companies, including companies in our industry,
may calculate these non-GAAP financial measures differently or not
at all, which reduces their usefulness as comparative measures.
A reconciliation is provided below for each historical non-GAAP
financial measure to the most directly comparable financial measure
stated in accordance with U.S. GAAP. Reddit encourages investors to
review the related U.S. GAAP financial measures and the
reconciliation of these non-GAAP financial measures to their most
directly comparable U.S. GAAP financial measures, and not to rely
on any single financial measure to evaluate Reddit’s business. We
have not provided a reconciliation to the forward-looking GAAP
equivalent measures for our non-GAAP guidance due to uncertainty
regarding, and the potential variability of, reconciling items.
Therefore, a reconciliation of these non-GAAP guidance measures to
their corresponding GAAP guidance measures is not available without
unreasonable effort.
Adjusted EBITDA is defined as net income (loss) excluding
interest (income) expense, net, income tax expense (benefit),
depreciation and amortization, stock-based compensation expense and
related taxes, other (income) expense, net, and certain other
non-recurring or non-cash items impacting net income (loss) that we
do not consider indicative of our ongoing business performance.
Other (income) expense, net consists primarily of realized gains
and losses on sales of marketable securities, foreign currency
transaction gains and losses, and other income and expense that are
not indicative of our core operating performance. Adjusted EBITDA
margin is defined as Adjusted EBITDA divided by revenue. We
consider the exclusion of certain non-recurring or non-cash items
in calculating Adjusted EBITDA and Adjusted EBITDA margin to
provide a useful measure for investors and others to evaluate our
operating results in the same manner as management.
Free Cash Flow represents net cash provided by (used in)
operating activities less purchases of property and equipment. We
believe that Free Cash Flow is useful to investors as a liquidity
measure because it measures our ability to generate or use cash.
Once our business needs and obligations are met, cash can be used
to maintain a strong balance sheet and invest in future growth.
Additionally, we believe that Free Cash Flow is an important
measure since we use third-party infrastructure partners to host
our services and therefore we do not incur significant capital
expenditures to support revenue generating activities.
Reddit, Inc.
Key Operating Metrics by
Geography
(in millions, except ARPU)
(unaudited)
Three months ended September
30,
Nine months ended
September 30,
2024
2023
% Change
2024
2023
% Change
Revenue: Global
$
348.4
$
207.5
68
%
$
872.5
$
554.3
57
%
Revenue: U.S.
$
288.0
$
169.0
70
%
$
715.8
$
447.0
60
%
Revenue: International
$
60.4
$
38.5
57
%
$
156.7
$
107.3
46
%
Three months ended
September 30,
2024
2023
% Change
DAUq: Global
97.2
66.0
47
%
DAUq: U.S.
48.2
32.0
51
%
DAUq: International
49.0
34.0
44
%
Logged-in DAUq: Global
44.1
34.7
27
%
Logged-in DAUq: U.S.
21.5
16.7
29
%
Logged-in DAUq: International
22.7
18.0
26
%
Logged-out DAUq: Global
53.1
31.3
70
%
Logged-out DAUq: U.S.
26.7
15.3
75
%
Logged-out DAUq: International
26.3
16.0
64
%
WAUq: Global
365.4
239.1
53
%
WAUq: U.S.
178.0
112.9
58
%
WAUq: International
187.4
126.2
48
%
ARPU: Global
$
3.58
$
3.14
14
%
ARPU: U.S.
$
5.88
$
5.27
12
%
ARPU: International
$
1.32
$
1.14
16
%
Reddit, Inc.
Consolidated Balance Sheets
(in thousands)
September 30, 2024
December 31, 2023
(unaudited)
Assets
Current assets
Cash and cash equivalents
$
515,895
$
401,176
Marketable securities
1,229,072
811,946
Accounts receivable, net
283,890
245,279
Prepaid expenses and other current
assets
31,974
21,286
Total current assets
2,060,831
1,479,687
Property and equipment, net
13,775
14,946
Operating lease right-of-use assets,
net
23,872
24,008
Intangible assets, net
27,904
32,147
Goodwill
42,174
26,299
Other noncurrent assets
3,152
19,380
Total assets
$
2,171,708
$
1,596,467
Liabilities, convertible preferred
stock, and stockholders’ equity (deficit)
Current liabilities
Accounts payable
$
62,042
$
46,514
Operating lease liabilities
5,398
3,707
Accrued expenses and other current
liabilities
104,844
83,349
Total current liabilities
172,284
133,570
Operating lease liabilities,
noncurrent
21,567
22,040
Other noncurrent liabilities
249
287
Total liabilities
194,100
155,897
Commitments and contingencies
Convertible preferred stock
—
1,853,492
Stockholders’ equity (deficit):
Preferred stock
—
—
Class A common stock
12
—
Class B common stock
5
6
Class C common stock
—
—
Additional paid-in capital
3,245,315
302,820
Accumulated other comprehensive income
(loss)
4,150
814
Accumulated deficit
(1,271,874
)
(716,562
)
Total stockholders’ equity (deficit)
1,977,608
(412,922
)
Total liabilities, convertible preferred
stock, and stockholders’ equity (deficit)
$
2,171,708
$
1,596,467
Reddit, Inc.
Consolidated Statements of
Operations
(in thousands, except share and per share
amounts)
(unaudited)
Three months ended
September 30,
Nine months ended
September 30,
2024
2023
2024
2023
Revenue
$
348,351
$
207,508
$
872,498
$
554,279
Costs and expenses:
Cost of revenue
34,633
26,395
91,750
82,094
Research and development
166,701
108,285
746,508
326,778
Sales and marketing
74,510
55,114
270,063
172,250
General and administrative
65,653
37,299
377,617
116,333
Total costs and expenses
341,497
227,093
1,485,938
697,455
Income (loss) from operations
6,854
(19,585
)
(613,440
)
(143,176
)
Other income (expense), net
22,968
12,647
58,246
36,677
Income (loss) before income taxes
29,822
(6,938
)
(555,194
)
(106,499
)
Income tax expense (benefit)
(31
)
445
118
2,859
Net income (loss)
$
29,853
$
(7,383
)
$
(555,312
)
$
(109,358
)
Net income (loss) per share attributable
to Class A and Class B common stock
Basic
$
0.18
$
(0.13
)
$
(4.12
)
$
(1.87
)
Diluted
$
0.16
$
(0.13
)
$
(4.12
)
$
(1.87
)
Weighted-average shares used to compute
net income (loss) per share attributable to common stockholders
Basic
169,169,922
58,855,589
134,723,892
58,495,544
Diluted
192,322,916
58,855,589
134,723,892
58,495,544
Reddit, Inc.
Consolidated Statements of Cash
Flows
(in thousands)
(unaudited)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Cash flows from operating
activities
Net income (loss)
$
29,853
$
(7,383
)
$
(555,312
)
$
(109,358
)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
3,969
3,288
11,482
9,947
Non-cash operating lease cost
1,453
3,428
4,041
10,112
Amortization of premium (accretion of
discount) on marketable securities, net
(12,393
)
(7,613
)
(31,884
)
(18,895
)
Stock-based compensation expense
74,758
9,392
716,532
31,975
Other adjustments
(4,665
)
199
(4,039
)
365
Changes in operating assets and
liabilities:
Accounts receivable
(44,108
)
(25,630
)
(38,914
)
(717
)
Prepaid expenses and other assets
8,416
1,273
(11,766
)
2,101
Operating lease right-of-use assets and
liabilities
(1,378
)
(2,168
)
(2,688
)
(5,250
)
Accounts payable
442
2,010
16,484
2,393
Accrued expenses and other liabilities
15,275
15,501
28,135
19,646
Net cash provided by (used in)
operating activities
$
71,622
$
(7,703
)
$
132,071
$
(57,681
)
Cash flows from investing
activities
Purchases of property and equipment
(1,353
)
(3,936
)
(5,406
)
(5,122
)
Proceeds from sale of cryptocurrency
6,869
—
6,869
—
Purchases of marketable securities
(428,225
)
(313,823
)
(1,425,737
)
(928,035
)
Maturities of marketable securities
447,302
320,337
1,043,361
955,214
Proceeds from sale of marketable
securities
—
—
—
37,538
Cash paid for acquisitions, net of cash
acquired
(17,137
)
—
(17,137
)
—
Other investing activities
487
(3
)
460
109
Net cash provided by (used in)
investing activities
$
7,943
$
2,575
$
(397,590
)
$
59,704
Cash flows from financing
activities
Proceeds from issuance of Class A common
stock in initial public offering, net of underwriting discounts and
commissions
—
—
600,022
—
Proceeds from exercise of employee stock
options
38,001
794
62,933
2,585
Taxes paid related to net share settlement
of restricted stock units
(65,800
)
—
(268,106
)
(4,229
)
Payments of initial public offering
costs
(2,162
)
(38
)
(8,500
)
(896
)
Payments of deferred consideration and
holdbacks for acquisitions
(1,661
)
(979
)
(6,111
)
(979
)
Net cash provided by (used in)
financing activities
$
(31,622
)
$
(223
)
$
380,238
$
(3,519
)
Net increase (decrease) in cash, cash
equivalents, and restricted cash
47,943
(5,351
)
114,719
(1,496
)
Cash, cash equivalents, and restricted
cash at the beginning of the period
468,002
439,715
401,226
435,860
Cash, cash equivalents, and restricted
cash at the end of the period
$
515,945
$
434,364
$
515,945
$
434,364
Cash and cash equivalents
515,895
434,314
515,895
434,314
Restricted cash
50
50
50
50
Total cash, cash equivalents, and
restricted cash
$
515,945
$
434,364
$
515,945
$
434,364
Reddit, Inc.
Reconciliation of Adjusted EBITDA and
Adjusted EBITDA Margin
(in thousands)
(unaudited)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Net income (loss)
$
29,853
$
(7,383
)
$
(555,312
)
$
(109,358
)
Add (deduct):
Interest (income) expense, net
(21,155
)
(14,292
)
(57,543
)
(37,965
)
Income tax expense (benefit)
(31
)
445
118
2,859
Depreciation and amortization
3,969
3,288
11,482
9,947
Stock-based compensation expense and
related taxes
83,326
9,423
745,635
32,706
Restructuring costs(1)
—
—
—
8,098
Other (income) expense, net
(1,813
)
1,645
(703
)
1,288
Adjusted EBITDA
$
94,149
$
(6,874
)
$
143,677
$
(92,425
)
Net margin
8.6
%
(3.6
)%
(63.6
)%
(19.7
)%
Adjusted EBITDA margin
27.0
%
(3.3
)%
16.5
%
(16.7
)%
(1)
During the nine months ended September 30,
2023, we incurred restructuring costs of $8.1 million, primarily
composed of severance and benefits expense. These charges are
non-recurring and are not reflective of underlying trends in our
business.
Reddit, Inc.
Reconciliation of Free Cash
Flow
(in thousands)
(unaudited)
Three months ended September
30,
Nine months ended September
30,
2024
2023
2024
2023
Net cash provided by (used in) operating
activities
$
71,622
$
(7,703
)
$
132,071
$
(57,681
)
Less:
Purchases of property and equipment
(1,353
)
(3,936
)
(5,406
)
(5,122
)
Free Cash Flow
$
70,269
$
(11,639
)
$
126,665
$
(62,803
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028719220/en/
Investor Relations Jesse Rose ir@reddit.com
Media Relations Gina Antonini press@reddit.com
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