Reddit Drums Up Surprise Profit Thanks To Fast-Growing Ad Revenue, AI Licensing Deals
When Reddit readied up to test the IPO market in March, users were scared about what kind of “Franken-Facebook” it might become — and skeptical investors were hesitant to grant the valuation the company had sought in private markets. Alas, the social media giant is far from undead; it’s alive and thriving on booming ad sales and AI licensing deals.
- In Tuesday’s earnings report, Reddit reported $315M in ad revenue, plus $33M from AI licensing deals with Google and OpenAI’s ChatGPT.
- The banner results beat analyst estimates by 10% and included a surprise profit, pushing stock over 42% on Wednesday.
Upvoted: Investors may have even more to look forward to, as Reddit’s daily active user count increased 47% year-over-year to 97.2M — just shy of the 97.7M analysts expected but still a pivotal showing of its growing influence. The company anticipates revenue to rise between 10% and 15% quarter-over-quarter in Q4. Still, Reddit has to be careful not to give away the ranch — with its dicey AI content licensing deals increasing non-user traffic on the site. After all, lurkers don’t create the content that drives revenue.