Reddit Crushes Q1 Expectations With Strong Revenue

the staff of the Ridgewood blog

SAN FRANCISCO CA,  Reddit delivered a blowout earnings report for the first quarter of 2025, exceeding Wall Street expectations in both revenue and profit, and offering a bullish forecast for the upcoming quarter. Despite initial enthusiasm that sent Reddit stock soaring by as much as 19% in after-hours trading, gains moderated to around 5% after executives highlighted ongoing economic headwinds and search-related challenges tied to Google.

Q1 2025 Reddit Earnings Highlights

• Earnings per Share (EPS): $0.13 vs. $0.02 expected

• Revenue: $392 million vs. $370 million expected

• Revenue Growth: Up 61% from $243 million in Q1 2024

• Net Income: $26.2 million, compared to a net loss of $575.1 million a year earlier

Reddit also issued second-quarter revenue guidance between $410 million and $430 million, comfortably ahead of Wall Street estimates of $396 million.

User Growth Driving Momentum

Reddit’s global Daily Active Uniques (DAUq) jumped 31% year-over-year to 108.1 million, surpassing analyst expectations of 107.3 million.

• Logged-in DAUq: 48.7 million (+23% YoY)

• Logged-out DAUq: 59.4 million (+38% YoY)

These gains come amid improvements in Reddit’s site infrastructure and user experience, which have helped convert passive, logged-out users into active, account-holding community members — a key metric for advertiser value.

Navigating a Shaky Economic and Search Landscape

Reddit CEO Steve Huffman acknowledged the volatile economic climate and evolving digital ecosystem during the earnings call, saying, “Ever-shifting macro environments create both challenges and opportunities. People need connection and information just as much in uncertain times.”

Operating chief Jen Wong added that while the broader economy remains uncertain, Reddit has seen “mostly business as usual” and continues to work closely with advertisers to share data-driven insights.

Search Traffic and AI Strategy

Reddit confirmed that Google search algorithm changes impacted traffic growth late last year, but noted that search-driven traffic rebounded in Q1. Huffman warned of continued “bumps” in the near term due to ongoing changes in the search ecosystem, including the rise of AI-powered search tools.

Huffman emphasized, however, that Reddit is charting its own course, stating, “Search-related short-term bumps don’t affect our long-term strategy or opportunity. We are in control of our own destiny.”

Reddit is also embracing the AI wave with its own AI tool, Reddit Answers, which now boasts 1 million weekly active uniques (WAUq). Huffman underscored the value of Reddit’s unique, user-generated content in the AI age, noting that “messy, subjective, authentic” discussions offer a distinct advantage over sterile summaries produced by language models.

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