Reddit Inc (NYSE:RDDT) reported stronger-than-expected first-quarter results on Friday, with revenue surging past Wall Street estimates as the social media platform continued to gain traction with advertisers adopting its lower-funnel advertising products.
The company posted revenue of $663 million, topping analyst estimates of $611 million, while adjusted earnings per share came in at $1.01, well ahead of the $0.58 expected.
Adjusted EBITDA reached $266 million, beating estimates of $221 million.
Shares rose 7.7% in early Friday trading.
The period marked the seventh consecutive quarter in which Reddit's revenue growth exceeded 60%, driven by broad-based strength across categories, advertising objectives, and regions. The number of advertisers on the platform grew 75% year-over-year.
Advertising revenue climbed 74% year-over-year, fueled by rapid adoption of conversion-driven products. Automated campaign tools and dynamic shopping ads helped deliver higher returns on ad spend for marketers, with conversion-driven revenue growing triple digits year-over-year. Ad revenue per logged-in user rose 64% annually.
Daily active unique users reached 126.8 million, ahead of estimates of 121.1 million, with overall user growth of 17% year-over-year.
Reddit guided for second-quarter revenue of $715 million to $725 million, above analyst estimates of $712 million, and adjusted EBITDA of $285 million to $295 million, topping estimates of $277 million.
Cost discipline stood out to analysts at Jefferies, with Reddit projecting adjusted total expense growth of just 29% year-over-year in the second quarter against 45% revenue growth.
Analysts also pointed to gross margin, which expanded 100 basis points despite higher machine learning costs, as hosting efficiencies offset increased AI-related investment.
Jefferies reiterated its Buy rating on the stock, raising its fiscal 2026 revenue and EBITDA estimates by 2% and 4%, respectively, and maintained a price target of $250.