Reddit (NYSE:RDDT) executives used the company’s fourth quarter 2025 earnings call to highlight rapid revenue growth, record profitability and expanding advertiser adoption, while outlining product priorities focused on onboarding, search, and authenticity in an AI-influenced internet.
Financial results cap a “breakout year”
CEO Steve Huffman said 2025 was a “breakout year” for Reddit, with the company surpassing $2.2 billion in revenue, up 69% year-over-year, and generating $530 million in net income. In the fourth quarter, Reddit reported total revenue of more than $726 million, up 70% year-over-year, with net income of $252 million.
Average revenue per user (ARPU) rose 42% year-over-year to $5.98, according to Vollero. He said “other revenue,” including content licensing, was $36 million, up 8%.
User growth, product roadmap, and reporting changes
Reddit said Q4 daily active users reached more than 121 million, up 19% year-over-year, and weekly active users exceeded 471 million, up 24%. Huffman framed Reddit’s value proposition around human conversation and trusted opinions, arguing that in a world “flooded with AI slop,” people increasingly turn to Reddit to connect, learn, and research.
To preserve authenticity as AI-generated content spreads across the internet, Huffman said Reddit launched verified profiles for brands and individuals in Q4 and plans to “quickly move to bot verification and labeling next.” He said the company would share more updates “in the coming weeks.”
Product priorities highlighted on the call included improving new user onboarding and integrating search experiences. Huffman said Reddit ran “numerous experiments” on onboarding in Q4, with mixed results, but maintained that streamlining onboarding improves retention. In the Q&A, he added that bringing users into the feed faster “requires the feed to be better,” and said Reddit will invest in machine learning to improve the “cold start” feed for new users.
Search also remained a major focus. Huffman said Reddit made “significant progress” in unifying core search with Reddit Answers, the company’s AI-powered search feature. Management said more than 80 million people searched directly on Reddit every week in Q4, up from 60 million a year earlier. During Q&A, Huffman said Reddit Answers queries rose from about 1 million to 15 million over the last year, and he suggested answers could increasingly handle more queries over time because they allow more flexible responses.
Reddit also plans to change how it reports user metrics. Huffman said the distinction between logged-in and logged-out users is becoming less meaningful as product initiatives blur the line between the two states. Vollero later detailed the plan: starting with Q3 2026 disclosures, Reddit will continue to report U.S. and international daily active users and weekly active users, but will stop reporting logged-in and logged-out metrics (with those metrics still provided for the first two quarters of 2026).
Advertising strength across funnel, verticals, and regions
COO Jen Wong said Q4 advertising revenue grew 75% year-over-year to $690 million, driven by “broad-based strength across objectives, channels, verticals, and regions.” Wong highlighted four primary revenue drivers:
- Lower-funnel performance strength: revenue from objectives such as purchase conversions and app installs doubled year-over-year, which Wong attributed to ML investments and newer formats such as shopping ads.
- Channel momentum: growth ranged from mid- to high-double digits across both large customers and the scaled segment (mid-market and SMBs), with SMB revenue doubling year-over-year.
- Vertical breadth: 11 of the top 15 verticals grew revenue by 50% or more year-over-year, led by retail, pharma, financial services, and tech.
- Geographic expansion: U.S. revenue rose 68% and international revenue increased 78% year-over-year.
Wong said impression growth was the main driver of revenue growth in Q4, while pricing also increased year-over-year as Reddit delivered more outcomes and efficiency for advertisers. On active advertiser count, she said total active advertisers grew by more than 75% year-over-year in Q4.
On performance initiatives, Wong cited growth in mid-funnel click volume of more than 60% and lower-funnel conversion volume that doubled year-over-year. She also discussed a beta launch of Campaign Budget Optimization (CBO) for mid-funnel traffic objectives, and said Dynamic Product Ads (DPA) emerged as a lower-funnel driver during Black Friday and Cyber Monday. Wong said improvements to shopping ad ML models delivered more than 75% improvement in advertiser return on ad spend (ROAS) since last year.
Reddit also pointed to broader measurement tool adoption. Wong said Conversions API (CAPI)-covered conversion revenue tripled year-over-year in Q4, consistent with each quarter in 2025.
Automation, Reddit Max, and brand initiatives
At CES, Reddit announced the public beta launch of Reddit Max Campaigns, which Wong described as an AI-powered campaign platform using Reddit community intelligence to optimize mid- and lower-funnel performance. In testing, she said Max Campaigns delivered an average 17% reduction in cost per acquisition and a 27% lift in conversion volume.
Asked about timing and advertiser mix, Wong said Reddit is currently focused on converting existing lower-funnel advertisers to Reddit Max and noted that converting “thousands of advertisers” will take time. She said onboarding new advertisers through Max is “quarters out” because the team is focused on conversion efforts first.
On brand advertising, Wong said Reddit is investing in brand as part of a full-funnel approach. She pointed to interactive ads tested in Q4, continued investments in video and video view optimization, and plans to broaden adoption of features like auto bidding and auto targeting for brand campaigns. She also said measurement will remain a focus, including marketing mix modeling (MMM) measurement partners, to demonstrate brand value.
Capital allocation: $1 billion buyback and cash position
Reddit announced a board-authorized share repurchase program of up to $1 billion with no set expiration date. Huffman described Reddit as having a “special business model” generating significant cash, and Vollero said share repurchases can be an incremental tool to drive total shareholder returns alongside growth and margin expansion.
Vollero said Reddit ended the year with nearly $2.5 billion in cash and cash equivalents and reiterated a goal to keep over $1 billion of cash on the balance sheet. He outlined three capital allocation priorities: investing in the core business, pursuing M&A (including tuck-ins and potentially larger opportunities), and repurchasing shares when it makes sense. In response to a community question about using capital for growth instead of buybacks, Vollero said Reddit believes it can execute on all three priorities.
Looking ahead, Vollero guided to first quarter 2026 revenue of $595 million to $605 million and adjusted EBITDA of $210 million to $220 million, implying an adjusted EBITDA margin of about 36% at the midpoint. He also said Reddit is aiming for stock-based compensation in the “high teens” as a percentage of revenue in 2026 and is targeting dilution at the low end of its medium-term 1% to 3% guide.
About Reddit (NYSE:RDDT)
Reddit is an online social news aggregation, discussion and content-sharing platform organized around user-created communities called “subreddits,” each focused on a particular topic or interest. Registered users submit links, text posts, images and video, and community members vote and comment to surface popular content. The site is accessed via its web platform and mobile apps for iOS and Android, and it supports live events such as Ask Me Anything (AMA) sessions and community-driven discussions.
Founded in 2005 by Steve Huffman and Alexis Ohanian, Reddit is headquartered in San Francisco and serves a global audience with particularly large user bases in the United States and other English-speaking markets.
