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Original headline: Reddit Earnings Highlight the Company’s Google Problem
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Reddit reported 66.6% revenue growth over the four quarters to June 2026, but guidance for 47% to 49% growth in Q3 points to a cooler near-term pace. Beyond advertising, AI data licensing is a second growth engine, with about US$35 million in one recent quarter against roughly US$500 million in total sales. The key risk is that Google AI direct answers could reduce traffic to Reddit and dilute its monetization. The article argues the slowdown may look more like a reset in expectations than a break in the thesis, provided user engagement and data licensing deals hold up. The narrative projects US$6.0 billion in revenue and US$2.1 billion in earnings by 2029.
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- Reddit Earns More From Fewer U.S. Users: Rapid Earnings Reaction
Reddit grew third-quarter revenue 53% to $895 million, even though its U.S. daily active uniques fell 2% from a year earlier to 50.7 million. Shares dropped about 10% in early after-hours trading. All of the user growth came from outside the U.S., so U.S. revenue rose 50% mainly by earning more per user, with U.S. average revenue per unique at $13.82, up 53%. Logged-out U.S. users fell 4%, while logged-in U.S. users, which the company calls its most engaged, grew only 1%. Net income reached $283 million, up 74%, and fourth-quarter revenue guidance of $1.00 billion to $1.03 billion sits above this quarter's $895 million.
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Reddit (RDDT) is scheduled to release its third-quarter 2026 results on Oct. 29, 2026. Management expects revenue of $860 million to $870 million, a midpoint implying about 48% year-over-year growth, while the Zacks Consensus Estimate is $886.35 million (up 51.54%) and EPS of $1.30 (up 62.50%). Drivers cited include strong advertising demand, active advertisers up more than 70%, growth in the AI ad automation platform Reddit Max, and international revenue up 84% in the second quarter. Risks include volatility in search referral traffic amid AI-powered search summaries, along with higher spending on AI, product development and marketing. RDDT shares are down 39.8% year to date, versus a 14% gain for the Zacks Computer & Technology sector, and trade at a forward 12-month Price/Sales of 6.18X, above the Internet - Software industry's 4.12X.
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Reddit reported second-quarter 2026 advertising revenue up 64% year over year to $762 million, its eighth straight quarter of more than 60% revenue growth. The platform reaches more than 0.5 billion people weekly, including over 130 million daily users, and new app user retention improved 50% year over year. Advertiser usage of its AI-driven ad suite, Reddit Max, grew more than 60% from the first quarter, with revenues from Max campaigns up more than 150%. For the third quarter of 2026, management expects revenues of $860 million to $870 million, or 47% to 49% growth. The article compares this with Meta Platforms, whose third-quarter 2026 advertising revenue was $63.1 billion, up 26%, and Snap, whose second-quarter advertising revenue rose 9% to $1.28 billion.
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