Another exciting analyst conference last week was that of $REDDIT (+2%) the fourth quarter and full year 2024. The fourth quarter marked the end of a significant year for Reddit. significant yearits first as a publicly traded company. In 2024, Reddit surpassed $1 billion in revenue, broke the 100 million mark in daily active users (DAU) and gained traction in several new countries around the world.
Financially The fourth quarter was the strongest of the year in financial terms, with revenue growth of 71 % compared to the previous year. Of particular note, international growth of 76% exceeded growth in the US for the first time since mid-2023. Adjusted EBITDA reached USD 154 million and GAAP net income USD 71 million. Gross margins increased to 92.6%2 in the fourth quarter. Revenue for the first quarter of 2025 is expected to be between USD 360 million and USD 370 million, which corresponds to year-on-year growth of 48% to 52%.
Operationally The company recorded strong growth in its advertising business, which increased by 60 % year-on-year to USD 395 million in the fourth quarter. This growth was driven by broad strength across all channels, sectors and regions. Of particular note was the 77% year-on-year growth in international advertising revenue, led by the UK and EMEA.
In the area of product development Reddit is focusing on improving the search function on the platform and making it the first port of call for information on Reddit. In the US, the beta version of "Reddit Answers" was launched, an AI-powered search tool that provides curated summaries of community discussions. Reddit has updated its mission to reflect both the creation of a platform for the community and the use of Reddit as a source of knowledge.
In the content licensing business Reddit partnered with Intercontinental Exchange to develop new data and analytics products for the financial industry.
In the subsequent analysts' Q&A session the following topics were discussed:
Reddit Answers: The initial results are promising, especially in terms of the depth of the answers. Reddit plans to integrate Reddit Answers into the general search function.
Google Search: Google's algorithm changes have historically led to fluctuations in traffic, mainly from non-logged-in users in the US. Reddit observed an increase in search queries with the term "Reddit", which indicates that users specifically want to access the platform.
Monetization of search: Reddit is inherently commercial, with many posts relating to products and services. Reddit Answers offers a great opportunity to monetize recommendations as users are searching with a high intent to purchase.
International growth: Reddit sees great potential for international growth as communities are universal. The company relies on machine translation and community work to drive growth in international markets.
Open source AI models: Reddit welcomes open-source AI models and utilizes both commercial and open-source models. The company believes that open source does not jeopardize licensing opportunities, as Reddit sells ongoing access to up-to-date information.
In summary, Reddit has had a strong quarter and a successful first year as a publicly traded company. The company is focused on improving product quality, increasing user growth, monetizing the platform and expanding into new markets.
I hope you enjoyed the summary.
Stay tuned!
