Reddit RDDT reported fourth-quarter 2024 earnings of 36 cents per share, comfortably beating the Zacks Consensus Estimate by 44%. The bottom line increased by 20 cents sequentially.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $427.7 million surpassed the Zacks Consensus Estimate by 4.57%. The reported figure surged 71.2% year over year.
Reddit demonstrated robust revenue growth and improved profitability in the fourth quarter of 2024, supported by product strategies that drove user growth and engagement throughout the year. Investments in machine learning (ML) and search remain key priorities to enhance the user experience.
Reddit Inc. Price, Consensus and EPS Surprise
Reddit Inc. price-consensus-eps-surprise-chart | Reddit Inc. Quote
The company’s shares have outperformed the Zacks Computer & Technology sector year to date. The stock has gained 9.1% compared with the sector’s rise of 1.6%. However, shares of Reddit fell 13.30% to $187.69 in the after-hours trading on Wednesday following the release.
RDDT’s Q4 Top-Line & Metrics in Detail
For the reported quarter, U.S. revenues (contributed 81.3% to revenues) surged 70.1% year over year to $347.7 million. International revenues (18.7% of revenues) soared 76.6% year over year to $80 million.
Advertising revenue surged 92.2% year over year to $394.5 million and other revenue reached $33.2 million.
Daily Active Uniques (DAUq) jumped 39% year over year to 101.7 million. U.S. DAUq jumped 32% year over year to 48.0 million, whereas International DAUq increased 46% to 53.7 million.
Weekly Active Uniques (WAUq) rallied 42% year over year to 379.4 million. U.S. WAUq increased 31% year over year to 172.2 million, whereas International WAUq rose 52% year over year to 207.2 million.
Average revenue per unique (ARPU) moved up 23% year over year to $4.21. U.S. ARPU increased 28% to $7.04, whereas International ARPU climbed 25% on a year-over-year basis to $1.67.
RDDT Operating Details
Non-GAAP sales and marketing expenses rose 29% year over year to $71.6 million. Research and development (R&D) expenses increased 20.9% to $125.6 million, whereas general and administrative expenses grew 16.4% to $44.6 million.
As a percentage of revenues, non-GAAP sales and marketing expenses declined 550 basis points (bps) year over year to 16.7%, R&D expenses fell 1,220 bps to 29.4%, and general and administrative expenses decreased 490 bps to 10.4%.
Adjusted EBITDA surged to $154.3 million from $23.2 million in the year-ago quarter, reflecting an improvement of $131.2 million. The adjusted EBITDA margin expanded to 36.1%.
RDDT’s Balance Sheet & Cash Flow
As of Dec. 31, 2024, Reddit had cash and cash equivalents, including marketable securities, of $1.84 billion compared with $1.74 billion as of Sept. 30, 2024.
In the fourth quarter, the company generated $90 million in cash from operating activities compared with $71.6 million in the previous quarter.
RDDT posted a free cash flow of $89.2 million compared with $70.3 million in the previous quarter.
Reddit Initiates Q1 Guidance
For the first quarter of 2025, RDDT expects revenues between $360 million and $370 million.
Adjusted EBITDA is expected between $80 million and $90 million.
Zacks Rank & Stocks to Consider
Currently, Reddit has a Zacks Rank #3 (Hold).
Grid Dynamics GDYN, Bandwidth BAND and Akamai Technologies AKAM are some better-ranked stocks in the broader sector.
Grid Dynamics flaunts a Zacks Rank #1 (Strong Buy) at present, and Bandwidth and Akamai Technologies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Grid Dynamics shares have increased 2.2% year to date. GDYN is set to report its fourth-quarter 2024 results on Feb. 20.
Bandwidth shares have gained 13.4% year to date. BAND is set to report fourth-quarter 2024 results on Feb. 20.
Akamai Technologies shares have returned 5.1% year to date. AKAM is set to report fourth-quarter 2024 results on Feb.20.
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Bandwidth Inc. (BAND) : Free Stock Analysis Report
Grid Dynamics Holdings, Inc. (GDYN) : Free Stock Analysis Report
Reddit Inc. (RDDT) : Free Stock Analysis Report
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