Date:
October 30, 2024
Reddit claims that its daily user count has increased by 47% year-on-year, boosting quarterly revenue growth rate and profits.
Reddit's popularity has grown exponentially over the last three years, from 861 million monthly active users in 2021 to 1.212 billion active monthly users in 2024. However, the company has historically remained a loss-making entity. Surprising the world, Reddit released its third-quarter earnings on Tuesday, claiming a first-ever profit of $29.9 million and a revenue of $348.4 million.
The revenue has increased by 68% compared to last year's performance. This news will mark a significant shift in the stakeholder sentiment ever since the company went public. Reddit lost nearly $575 million during its first quarter on the NYSE after going public. Last quarter, the company managed to reduce the loss to $10 million. Now, it has finally showcased a green chart on the stock exchange.
In just the last few months, Reddit's audience base and active daily user count have grown exponentially to 97.2 million compared to last year. On some days during the same quarter, the number even exceeded 100 million users.
The majority of the contribution to its revenue growth comes from advertising services, which clocked $315.1 million. Other sources of income encompass data licensing agreements signed earlier this year, which summed up to $33.2 million. Two major deals that helped crack a higher revenue growth rate were with Google and OpenAI to train their AI models on its data.
Reddit’s CEO Steve Huffman gave the credit for the recent increase in users to the AI-powered translation feature on the platform. Introduced with the capability to translate posts into French last year, the feature went viral and expanded to Spanish, Portuguese, Italian, and German. Considering the major jump in revenues, Reddit is planning to expand the AI-powered translation feature to 30+ countries.
The platform is also working on making the search function more advanced while simplifying the UX to be more intuitive. CEO Huffman is also considering introducing paid subreddits for creators. The platform’s growing engagement demonstrates a strong strategic approach towards the new generation of online social behavior, with more profitability expected in the next quarter.
