Reddit (RDDT -0.61%), the online community platform known for its thousands of interest-based forums, posted second quarter fiscal 2025 results on July 31, 2025 that widely exceeded expectations. The company reported GAAP revenue of $500 million, soaring 78% year-over-year and beating analyst forecasts by over $74 million (GAAP). Diluted earnings per share (GAAP) reached $0.45 compared to a consensus estimate of $0.19, as profitability improved sharply from a net loss in the year-ago period to GAAP net income of $89 million. Operating metrics showed strong user growth and improved monetization, especially on the international side. Overall, the quarter marked another period of rapid growth, sharp margin gains, and a strong beat on both GAAP revenue and GAAP earnings forecasts.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Diluted | $0.45 | $0.19 | $(0.06) | $0.51 |
| Revenue | $500 million | $425.67 million | $281 million | 78 % |
| Adjusted EBITDA | $167 million | $40 million | 318% | |
| Gross Margin | 90.8 % | 89.5 % | 1.3 pp | |
| Free Cash Flow | $111 million | $27 million | 311.1 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Inside Reddit’s Platform: A Community-Centric Business with Data-Driven Opportunity
Reddit is built around an ecosystem of user-driven communities known as subreddits, where users gather to share discussions, advice, and news on specific topics. The community moderation model relies on volunteer moderators who help enforce subreddit-level rules.
In recent years, the company has sharpened its focus on scaling user engagement, strengthening its data and artificial intelligence (AI) capabilities, and deepening its monetization strategies through advertising and new revenue sources like data licensing. Effective moderation and onboarding tools, paired with AI-driven content curation, are seen as keys to quality and retention as the platform expands both in the U.S. and internationally. Growth in international markets, expansion of ad formats, and continued innovation in AI all stand at the center of Reddit’s business priorities.
Quarter Highlights: Growth, Monetization, and Platform Innovation
Reddit delivered major financial surprises, with GAAP revenue of $500 million and GAAP diluted EPS of $0.45, both significantly exceeding analyst estimates. Revenue (GAAP) jumped 78% to $500 million, well above analyst expectations. Net income (GAAP) swung positive to $89 million from a $10 million loss the prior year, and adjusted EBITDA reached $167 million, with a 33.4% margin. Gross margin (GAAP) improved by 1.3 percentage points to 90.8%, aided by operating leverage and improved infrastructure terms. Free cash flow (non-GAAP) rose to $111 million, up 311% from the prior year, supported by strong revenue gains and disciplined spending.
Core user metrics showed year-over-year growth. Global daily active uniques (DAUq) climbed 21% year-over-year to 110.4 million. U.S. DAUq grew by 11%, while international DAUq jumped 32%. Logged-in DAUq—users with registered accounts—grew 17%. Weekly active users rose 22% to 416 million.
Monetization accelerated, with global average revenue per unique (ARPU) up 47% year over year. U.S. ARPU rose 59% and International ARPU gained 40%, reflecting improved ad pricing, product updates, and increased value delivered to advertisers. Advertising revenue reached $465 million—an 84% jump. Investments in machine learning-driven ad targeting, dynamic product ads, and improved sales tools fueled this higher monetization rate.
Data licensing and other non-advertising revenue contributed $35 million, up 24% from the prior year. Partnerships for licensing user-generated content to AI and large language model developers are becoming an important revenue contributor, even while legal actions around data use continue. The company’s use of its own data corpus for AI-driven features like Reddit Answers, an AI-powered search product, demonstrates strategic use of its unique data assets. Platform innovation extended to onboarding and AI-powered moderator tools, reducing the workload for volunteer moderators and improving content quality for all users.
International expansion remained a focus. Of Reddit's 110.4 million daily users, 60.1 million are outside the U.S.—a 32% increase from the prior year. International revenue was $90.8 million, up 71%. The company expanded machine translation to 13 languages. However, international ARPU remains significantly lower than the U.S, indicating room for further monetization growth as local ad markets mature.
Reddit exited the quarter with a strong balance sheet: $2.06 billion in cash and marketable securities, $2.63 billion in total assets, and low debt obligations. The fully diluted share count was 206.6 million, inching up just 0.3% quarter over quarter.
Looking Ahead: Guidance and Key Areas to Watch
Management provided guidance for the next quarter, forecasting revenue of $535–$545 million and adjusted EBITDA (non-GAAP) in the $185–$195 million range. These figures suggest sequential growth of around 8.0% in revenue at the midpoint.
Looking forward, investors will be monitoring Reddit’s ability to close the monetization gap between its U.S. and international user base. Sustaining per-user engagement and community quality remains a critical operational challenge as the platform scales globally. Outcomes of ongoing legal actions regarding data use, particularly in the fast-evolving AI landscape, may impact future data licensing revenues and strategic partnerships. The company continues to emphasize profitable growth and careful cost control as it balances investment in new features and market expansion.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
