By Jaspreet Singh
April 30 (Reuters) – Reddit forecast second-quarter revenue above analysts’ estimates on Thursday betting on its AI-powered tools to boost advertising on the platform and sending its shares up 9% in extended trading.
The social media company offers AI-focused features that allow advertisers to target users based on interests and communities within subreddit discussion threads.
Its ad platform uses AI to improve campaign creation and management through features including an AI copywriter for Reddit-specific advertisements and an automatic creative asset cropper that optimizes images for various ad placements.
“Our active advertiser count grew 75% year-over-year, which I think is the third consecutive quarter that we’ve had really strong active advertiser count,” Reddit Chief Operating Officer Jen Wong told Reuters.
Reddit shares have fallen around 35% so far this year.
The company’s quarterly revenue forecast of $715 million to $725 million exceeded the LSEG-compiled analysts’ average estimate of $711.6 million.
Reddit expects adjusted earnings before interest, taxes, depreciation and amortization of $285 million to $295 million, above estimates of $277.1 million.
A day earlier, bigger rival Meta projected second-quarter revenue of $58 billion to $61 billion, in line with estimates. Meta also confirmed its plans for layoffs during its post-earnings call.
Wong said Reddit is “still hiring and adding to our talent base.” She acknowledged that “every company is thinking” about how AI could reshape the workforce.
Reddit said its first quarter revenue rose 69% to $663 million, beating estimates of $610.9 million.
Performance advertising, which focuses on driving measurable actions such as purchases, installs or sign-ups, represented over 60% of total ad revenue, Wong said on the post-earnings call.
Daily active unique visitors grew 17% to 126.8 million in the quarter, while global average revenue per user increased by 44%.
Strong results from Reddit show its strategy is paying off as it jostles with dominant platforms such as TikTok and Meta’s Instagram and Facebook for ad dollars in a crowded market.
Last month, Reddit partnered with Shopify to help merchants advertise products directly on the social media platform, aiming to convert user discussions into shopping activity.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)
