Reddit’s remarkable third-quarter earnings report sent its stock soaring 25% in after-hours trading, marking a significant milestone for the social media platform that went public in March 2024. The company reported its first-ever profit as a public company, delivering 16 cents per share compared to analyst expectations of a 7-cent loss.
Revenue performance exceeded all expectations, with Reddit posting $348.4 million in Q3 revenue—a stunning 68% year-over-year increase that comfortably beat analyst projections of $312.8 million. This growth trajectory represents Reddit’s strongest quarter yet, building on previous quarters that saw 48% and 54% revenue increases respectively.
The platform’s user engagement metrics were equally impressive. Daily active unique visitors jumped 47% to 97.2 million in the quarter ending September 30, while global average revenue per user climbed 14% to $3.58. These growth rates significantly outpaced competitors, with X (formerly Twitter) reporting just 1.6% growth and Meta’s combined platforms seeing 7% increases in daily active users.
Artificial intelligence emerged as a key driver of Reddit’s success. CEO Steve Huffman highlighted how the company leveraged AI technology to enhance its machine translation capabilities, initially testing with French before expanding to Spanish, Portuguese, Italian, and German. The results were dramatic: machine translation drove four times more users in Q3 than the previous quarter. Based on this success, Reddit plans an ambitious expansion to over 30 countries throughout 2025.
Reddit also revitalized its popular “Ask Me Anything” (AMA) feature, which resulted in a fivefold increase in AMAs created using the new format. Huffman emphasized that users increasingly turn to Reddit “for answers, advice or community,” reflecting the platform’s growing influence in the social media landscape.
Looking ahead, Reddit projects Q4 revenue between $385 million and $400 million, substantially higher than analyst expectations of $357.9 million. Jefferies analysts maintained their Buy rating, describing Reddit’s advertising revenue growth as a “nascent monetization opportunity” with multiple avenues for future expansion. The stock, which IPO’d at $34 per share in March, closed at $81.74 before surging to $102 in after-hours trading.
Key Quotes
This quarter, machine translation drove four times more users than last quarter, and based on the success we’ve seen so far, we plan to expand machine translation to over 30 countries through 2025
Reddit CEO Steve Huffman explained how AI-powered translation has become a major growth driver for the platform, with plans for aggressive international expansion leveraging this technology.
Reddit’s influence has continued to grow, with people seeking out the platform for answers, advice or community
Huffman described Reddit’s evolving role in the social media ecosystem during the earnings call, highlighting how users increasingly view the platform as a trusted resource for information and connection.
We think RDDT has multiple avenues to drive impressions and pricing higher over time, which contributes to an impressive growth profile for advertising revenue
Jefferies analysts emphasized Reddit’s untapped monetization potential in their research note, maintaining a Buy rating and highlighting the platform’s nascent advertising opportunities.
Our Take
Reddit’s earnings reveal a critical insight about AI’s commercial viability: the technology delivers exponential returns when applied to specific, measurable problems like language translation. While many companies struggle to monetize AI investments, Reddit achieved 4x user growth in one quarter—a concrete ROI that justifies further AI spending.
What’s particularly noteworthy is Reddit’s strategic focus over flashy features. Rather than chasing generative AI trends, they deployed machine translation to solve a fundamental barrier to growth. This pragmatic approach contrasts sharply with competitors throwing resources at AI chatbots and content generation tools with unclear business cases.
The 47% user growth rate—nearly 7x faster than Meta—suggests Reddit has found a sustainable competitive advantage through AI. As the platform expands to 30+ countries with AI translation, it’s building network effects that will be difficult for competitors to replicate, potentially reshaping the social media hierarchy.
Why This Matters
Reddit’s earnings report represents a watershed moment for AI-driven social media growth. The company’s success demonstrates how artificial intelligence can be strategically deployed to break down language barriers and expand global reach—a blueprint other platforms will likely follow.
The 4x user growth from machine translation in a single quarter illustrates AI’s tangible business impact beyond hype. As Reddit expands AI translation to 30+ countries by 2025, it’s positioning itself as a truly global platform while competitors struggle with single-digit growth rates.
This matters for the broader AI industry because it validates practical AI applications that directly drive revenue and user engagement. Reddit isn’t just experimenting with AI—it’s using it to fundamentally transform its business model and competitive position. The company’s outperformance of established giants like Meta and X suggests that strategic AI implementation can level the playing field in social media.
For investors and businesses, Reddit’s results signal that AI-powered localization and content enhancement represent significant monetization opportunities, potentially reshaping how social platforms approach international expansion and user growth strategies.
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Source: https://www.businessinsider.com/reddit-stock-surge-q3-earnings-ai-wall-street-2024-10