Reddit reported fourth quarter revenue of $726 million on February 5, 2026, representing 70% year-over-year growth as the social platform's AI-powered advertising tools and product innovations drove substantial gains across all major performance metrics. The San Francisco-based company simultaneously announced a $1 billion share repurchase program, signaling confidence in its cash generation capabilities less than two years after completing its initial public offering.

The quarterly performance exceeded analyst expectations across multiple dimensions. Net income reached $252 million, representing a 35% margin and marking an improvement of $181 million from the prior year period. Daily Active Uniques climbed to 121.4 million, up 19% year-over-year, while Weekly Active Uniques expanded 24% to 471.6 million users.

According to Reddit's shareholder letter, advertising revenue grew 75% year-over-year to $690 million, driven by broad-based strength across objectives, verticals, geographies, and customer channels. Lower-funnel conversion volume doubled compared to Q4 2024, demonstrating the effectiveness of machine learning enhancements deployed throughout the year. The company's "Other revenue" category, primarily comprising data licensing agreements, reached $36 million, up 8% from the prior year.

"We're entering the next era of Reddit - defined by sharper execution, global expansion, and product innovation that puts real people and conversations at the center," said Steve Huffman, Reddit Co-Founder and CEO, in the announcement. "Our focus is on turning Reddit's authenticity into even more everyday utility."

The fourth quarter results capped a transformative year for the platform. Full year 2025 revenue reached $2.2 billion, up 69% from 2024, while net income totaled $530 million compared to a $484 million loss in the prior year. Adjusted EBITDA for the full year hit $845 million at a 38% margin, representing a $547 million improvement year-over-year.

Advertising momentum accelerates

Reddit's advertising business demonstrated remarkable acceleration throughout 2025. The platform's introduction of Reddit Max campaigns in early January 2026 represented the culmination of extensive product development focused on AI-powered automation. The automated campaign type, which entered public beta during the fourth quarter, delivered 17% lower cost per action and 27% higher conversion volume compared to standard campaigns in split testing.

According to Jen Wong, Reddit's Chief Operating Officer, four distinct revenue drivers fueled Q4 growth. Performance advertising outperformed expectations, with revenue from lower-funnel objectives including purchase conversions and app installs doubling year-over-year. The company observed strength across distribution channels, with year-over-year growth ranging from mid-to-high double digits within both large customer and scaled segments. Small and medium business revenue specifically doubled compared to Q4 2024.

Vertical performance remained robust, with 11 of Reddit's top 15 industry categories growing revenue by 50% or more year-over-year. Retail, pharmaceutical, financial services, and technology sectors led the expansion. Geographic distribution showed balanced growth, with United States revenue increasing 68% to $583 million and international revenue climbing 78% to $142 million.

The platform's machine learning and signals optimization initiatives drove pricing improvements alongside impression volume gains. In Q4, impression growth represented the primary revenue driver, while pricing increased year-over-year as Reddit delivered enhanced outcomes and efficiency for advertisers. Total active advertiser count expanded by over 75% year-over-year, with new accounts added across all channel segments including large enterprises, mid-market organizations, and small businesses.

Reddit's shopping solutions, specifically Dynamic Product Ads, emerged as a significant lower-funnel driver during the Black Friday and Cyber Monday period. Since launching to general availability in May 2025 with documented performance improvements of 2x higher Return on Ad Spend compared to standard conversion campaigns, the product category has seen continuous enhancement. According to the company's announcement, improvements to shopping ad machine learning models delivered over 75% improvement in advertiser ROAS throughout 2025.

Measurement tool adoption accelerated during the quarter. Conversion API-covered conversion revenue tripled year-over-year in Q4, continuing a pattern established throughout 2025 as Reddit made it progressively easier for businesses of all sizes to implement Pixel and CAPI tracking. This measurement infrastructure enables more sophisticated attribution and optimization capabilities crucial for performance advertising growth.

Product innovation drives engagement

Reddit's consumer product development focused heavily on improving new user retention and search functionality during Q4. The platform deployed numerous onboarding experiments, actively iterating on learnings to improve retention for new and casual users. According to Huffman, better retention supports growth, engagement, monetization, and more effective marketing efficiency.

Search functionality received particular attention throughout the quarter. Reddit made significant progress unifying core search with Reddit Answers, the platform's AI-powered search feature launched in 2025. Together, these capabilities drove increased search volume and queries per user, with over 80 million people searching directly on Reddit every week in Q4, up from 60 million one year earlier.

The company released Reddit Answers in five new languages during the quarter, with additional languages planned for 2026. Reddit is piloting dynamic, agentic search results that include media beyond text, positioning the platform as an end-to-end search destination rather than merely a traffic source for external search engines.

The evolution of Reddit's search capabilities reflects broader strategic priorities around reducing dependence on third-party platforms. While the company experienced temporary disruption from Google algorithm changes in late 2024, traffic patterns showed recovery in early 2025, demonstrating platform resilience.

Machine translation capabilities continued expanding Reddit's international reach. The platform now supports 35 languages, serving as a powerful top-of-funnel growth engine particularly in focus markets including India, Australia, Brazil, Germany, and France. According to the shareholder letter, the key to international growth remains getting new local communities established, as communities attract users and drive sustained engagement.

Reddit launched verified profiles during Q4 to enable professional contributors - including individuals, businesses, journalists, and celebrities - to confirm their identities and provide transparency when contributing to the platform. Early testing data indicated verified users post over 10% more in their first week and generate higher consumer engagement compared to unverified accounts.

Addressing authenticity challenges

Huffman emphasized Reddit's focus on preserving authenticity and conversation quality amid increasing artificial intelligence content generation across the internet. The verified profiles launch in Q4 represented the beginning of a broader initiative to maintain trust in an era where distinguishing human perspectives from automated content becomes progressively more challenging.

"In a world flooded with AI slop, people are seeking real community, lived experience, and trusted opinions," Huffman stated in the shareholder letter. "That's Reddit's differentiator."

The company plans to rapidly expand bot verification and labeling capabilities following the verified profiles introduction. According to Huffman, Reddit has been fighting manipulation attempts for two decades, and the AI content challenge represents merely a new chapter requiring continued vigilance and systematic responses.

The authentication initiatives complement Reddit's broader value proposition as "the most human place on the internet" in Huffman's characterization. This positioning matters particularly as the platform becomes increasingly central to consumer decision-making processes, with 40% of posts containing commercial elements according to internal data disclosed earlier in 2025.

Financial performance demonstrates scalability

Reddit's financial metrics demonstrated substantial operating leverage throughout Q4. Gross margin reached 91.9%, compared to 92.6% in the prior year, with the modest decline attributed primarily to infrastructure scaling investments. Operating expenses totaled $435 million, growing at approximately 46% year-over-year - substantially below the 70% revenue growth rate.

Adjusted EBITDA reached $327 million at a 45% margin, an improvement of $173 million from Q4 2024. The company's "Rule of 115" metric - combining 70% revenue growth with 45% Adjusted EBITDA margin - substantially exceeded the traditional Rule of 40 benchmark used to evaluate software company performance.

Cash generation remained robust throughout the quarter. Operating cash flow totaled $267 million, an improvement of $177 million year-over-year, while Free Cash Flow reached $264 million compared to $89 million in Q4 2024. The company's minimal capital expenditure requirements of $3.2 million, representing just 0.4% of revenue, reflect its asset-light infrastructure model leveraging third-party hosting services.

According to Drew Vollero, Reddit's Chief Financial Officer, the company ended Q4 with $2.5 billion in cash, cash equivalents, and marketable securities. This strong balance sheet position enables the newly announced share repurchase program while maintaining over $1 billion in working capital consistent with Reddit's capital deployment framework.

The share repurchase authorization of up to $1 billion carries no expiration date. Vollero indicated Reddit plans to execute repurchases opportunistically from time to time through open market transactions, pre-set trading plans, or privately negotiated transactions in accordance with applicable securities laws. The program does not obligate Reddit to acquire any particular share amount and may be suspended or discontinued at management discretion.

"Strategic capital deployment has been an important driver of total shareholder returns for market leaders," Vollero stated during the earnings call. "We think about the share repurchase as a strategic move to return capital to shareholders."

The company's capital allocation priorities remain unchanged, with business investment ranking first, mergers and acquisitions second, and share repurchases third. Vollero emphasized that Reddit's differentiated financial profile - characterized by 91% gross margins, 38% Adjusted EBITDA margin, and $684 million annual Free Cash Flow generation - provides capacity to pursue all three priorities simultaneously.

Stock-based compensation remains disciplined

Reddit maintained strict discipline around equity dilution throughout 2025. Total fully diluted shares outstanding reached 206.1 million as of December 31, 2025, flat sequentially and down from 206.2 million one year earlier. This represented negative 0.1% dilution compared to Reddit's medium-term guidance range of 1% to 3% annual dilution.

Stock-based compensation expense totaled $387 million for full year 2025, representing 18% of revenue. According to Vollero, this compares favorably to peer companies and reflects measured hiring practices, with headcount growing 14% in 2025 - well below the 69% revenue growth rate.

Basic earnings per share reached $1.32 in Q4, with diluted EPS coming in at $1.24. For the full year, basic EPS totaled $2.84 while diluted EPS reached $2.62, compared to a loss of $3.33 per share in 2024. The substantial improvement reflected both revenue growth and operating leverage expansion throughout the year.

Leadership changes support execution

Reddit announced the appointment of Maria Angelidou-Smith as Chief Product Officer during Q4. According to Huffman, Angelidou-Smith brings a proven track record scaling product organizations and is already helping Reddit move faster while focusing on highest-impact areas for users and growth.

The leadership addition reflects Reddit's emphasis on execution quality as the platform scales. "To rise to this occasion, we're leveling up our execution, and that starts with leadership," Huffman stated in the shareholder letter. "I have full confidence that Maria will be a great partner to the business and significantly up-level our pace and quality of results."

The product organization leadership change comes as Reddit pursues ambitious 2026 priorities around feed relevancy improvements, AI and machine learning deployment for personalization, and international market expansion. Huffman indicated confidence that the team's focus and velocity will deliver measurable impact throughout the current year.

Outlook reflects continued momentum

Reddit provided first quarter 2026 guidance indicating continued strong growth. The company estimates revenue between $595 million and $605 million, representing 52% to 54% year-over-year growth at the midpoint. Adjusted EBITDA guidance ranges from $210 million to $220 million, implying an approximately 36% margin at the midpoint.

The Q1 guidance implies total adjusted costs of approximately $385 million, down sequentially from Q4 expenses of $399 million. This reduction reflects normal seasonal patterns in marketing expenditure while maintaining investment in revenue-generating functions.

Vollero noted that Reddit entered Q1 with momentum from Q4's strong finish. "We were pretty strong from start to finish in Q4," Vollero stated during the earnings call. "We had a good October, we had a good November, we had a good December. Like it was a good quarter for us."

However, the CFO acknowledged that Reddit still enters quarters with approximately 40% to 50% of orders to be written within the period, creating some forecasting uncertainty. For Q1 specifically, March typically represents the largest month, requiring successful execution of campaigns booked intra-quarter.

The company's advertising platform roadmap for 2026 focuses on three key themes according to Wong. First, scaling automation through Ads Manager and Reddit Max, with plans to streamline advertiser onboarding particularly for smaller customers. Second, delivering more value across the full funnel through investments in brand autobidding, video view objectives, shopping ad improvements, and app ads optimization. Third, expanding the Reddit for Business ecosystem through partnerships that leverage Reddit's unique community insights and tools.

User metrics show evolution

Reddit's user metrics continued demonstrating strong growth across multiple dimensions in Q4. Daily Active Uniques reached 121.4 million, up 19% year-over-year, with United States DAUq growing 9% to 52.5 million and international DAUq expanding 28% to 68.9 million. The international growth rate substantially outpaced domestic expansion, consistent with Reddit's strategic focus on global market development.

Weekly Active Uniques totaled 471.6 million, representing 24% year-over-year growth. United States WAUq increased 12% to 193.4 million, while international WAUq climbed 34% to 278.2 million. The metrics demonstrate Reddit's expanding reach across diverse geographic markets.

Logged-in users grew 10% year-over-year to 50.7 million daily actives, while logged-out users expanded 27% to 70.7 million. The faster logged-out growth primarily reflects users discovering Reddit through search engines, though Huffman emphasized these users represent new user acquisition opportunities rather than a separate segment requiring distinct strategies.

Average revenue per unique totaled $5.98 in Q4, up 42% year-over-year. United States ARPU reached $10.79, representing 53% growth, while international ARPU increased 38% to $2.31. The substantial ARPU expansion across both geographies demonstrates improving monetization effectiveness alongside user growth.

Reddit announced plans to phase out reporting logged-in versus logged-out user metrics later in 2026. According to Huffman, product strategy evolution around streamlined onboarding - including instant personalization capabilities - increasingly blurs distinctions between these states. The company will continue reporting aggregate DAUq and WAUq metrics broken down by United States and international geographies.

Advertising platform evolution continues

Reddit's advertising infrastructure underwent substantial development throughout Q4, building on initiatives launched earlier in 2025. The platform's Interactive Ads format, introduced in November 2025, continued gaining adoption with major brand partners. The format enables custom experiences ranging from countdown timers and quizzes to fully bespoke campaigns, transforming passive advertising exposure into active participation.

The company launched Reminder Ads to beta during Q4, providing advertisers with tools to drive performance and engagement around product launches and events including live streams and AMAs. This format complements Reddit's broader suite of conversation-focused advertising products including Free-Form ads, AMA ads, and Conversation Summary add-ons.

Reddit's measurement capabilities expanded throughout the quarter, addressing advertiser demand for comprehensive performance validation. The company has been developing first-party measurement tools, expanding third-party partnerships, and enhancing attribution capabilities to demonstrate Reddit's incremental impact on marketing outcomes.

The Bombora partnership announced in December 2025 extended B2B audience targeting capabilities, making 19,000 intent-based segments available to Reddit advertisers. This collaboration reflected Reddit's systematic expansion of enterprise-grade capabilities designed to attract sophisticated B2B advertisers to the platform.

Financial history demonstrates trajectory

Reddit's Q4 2025 performance represents the sixth consecutive quarter of revenue growth exceeding 60%. The company has maintained gross margins above 90% for six consecutive quarters while progressively expanding Adjusted EBITDA margins from 29% in Q1 2025 to 45% in Q4 2025.

The platform completed its initial public offering in March 2024 at $34 per share, valuing the company at approximately $6.4 billion. The stock jumped as much as 60% on its first trading day, reflecting investor enthusiasm for Reddit's community-driven model and advertising potential.

Subsequent quarterly results demonstrated consistent execution against the business model outlined in Reddit's IPO prospectus. Q1 2024 results showed 37% user growth and 48% revenue expansion. Q2 2024 performance delivered 54% revenue growth to $281 million. The acceleration continued through subsequent quarters, with Q1 2025 reporting 61% advertising revenue growth, Q2 2025 achieving 78% total revenue expansion, and Q3 2025 maintaining 68% growth momentum.

The consistent performance reflects Reddit's successful transition from a venture-backed private company to a public market growth story. The platform's unique positioning - combining massive user-generated content archives with authentic community discussions - has proven increasingly valuable as artificial intelligence systems and search engines prioritize human perspectives over synthetic content.

Strategic partnerships support growth

Reddit's data licensing business, captured in the "Other revenue" category, reflects strategic partnerships with major technology companies. The platform announced agreements with Google and OpenAI earlier in 2025, providing these companies access to Reddit's vast repository of human conversations for AI model training purposes.

According to Huffman, these partnerships are evolving from purely business deals toward product collaborations. "The conversation is shifting from a purely business deal to more of a product partnership," Huffman stated during the earnings call. "The exchange will be, we help you build the best version of your products and you help us build the best version of our products."

The CEO emphasized that Reddit seeks partnerships where AI companies bring users into Reddit's community experiences rather than merely extracting content for training purposes. "What we're looking for in any relationship like this is, can we bring users into the community parts of Reddit," Huffman explained. "Reddit's product is human connection, it's conversation, it's communities."

The strategic approach reflects Reddit's recognition that AI platforms are reshaping how users discover and consume information. According to data from Profound cited during the earnings call, Reddit ranks as the number one cited source in AI answers across major AI platforms.

Marketing community implications

Reddit's Q4 performance demonstrates the platform's maturation as a major advertising destination for marketers seeking to reach engaged audiences in contextually relevant environments. The 75% advertising revenue growth substantially outpaced broader digital advertising market expansion, indicating Reddit is capturing share from established social media platforms.

The platform's emphasis on performance advertising - with lower-funnel conversion volume doubling year-over-year - addresses a critical need for marketers balancing brand awareness objectives with direct response requirements. The success of Dynamic Product Ads and emerging Max campaigns provides concrete evidence that Reddit's contextual targeting capabilities deliver measurable business outcomes.

For marketers evaluating Reddit as an advertising channel, the Q4 results validate several strategic considerations. First, the platform's unique community structure enables precise targeting based on demonstrated interests rather than inferred demographic attributes. Second, Reddit's anti-promotional culture requires authentic engagement strategies that align with community norms rather than traditional interruptive advertising approaches. Third, the platform's growing measurement capabilities increasingly enable sophisticated attribution and optimization comparable to established social advertising platforms.

The expansion of B2B targeting capabilities through partnerships like Bombora specifically addresses enterprise marketers seeking to reach business decision-makers. According to Comscore data cited in prior announcements, Reddit reaches 61% of business decision-makers in the United States, establishing the platform as increasingly relevant for B2B marketing strategies.

Timeline

Summary

Who: Reddit Inc., a social media platform with 121.4 million daily active unique visitors and over 100,000 active communities, led by Co-Founder and CEO Steve Huffman, COO Jen Wong, and CFO Drew Vollero.

What: Reddit announced fourth quarter 2025 financial results showing $726 million revenue (70% year-over-year growth), $252 million net income (35% margin), $327 million Adjusted EBITDA (45% margin), 121.4 million Daily Active Uniques (19% growth), and $690 million advertising revenue (75% growth). The company simultaneously announced a $1 billion share repurchase program authorized by the Board of Directors.

When: The announcement was made on February 5, 2026, covering the quarter ended December 31, 2025, with an earnings conference call held at 1:30 p.m. PT / 4:30 p.m. ET.

Where: Results cover Reddit's global operations across the United States (contributing $583 million revenue with 52.5 million daily actives) and international markets (contributing $142 million revenue with 68.9 million daily actives), with the company headquartered in San Francisco and traded on the New York Stock Exchange under ticker RDDT.

Why: The strong financial performance reflects Reddit's successful execution of product innovation including AI-powered advertising tools like Max campaigns, expansion of lower-funnel capabilities through Dynamic Product Ads, improved measurement and attribution infrastructure, international growth through machine translation, and strategic focus on authentic community experiences that differentiate Reddit as "the most human place on the internet" amid increasing artificial intelligence content generation across digital platforms.

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