Reddit(RDDT) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $392 million, up 61% year over year, marking the third consecutive quarter of growth over 60% [8][19][30] - Adjusted EBITDA reached$ 115 million, with a margin of 29%, up over 2,500 basis points year over year [32][34] - GAAP net income was $26 million, or$ 0.14 per basic share and $0.13 per diluted share [41][42] - Operating cash flow exceeded$ 100 million for the first quarter, ending at $128 million, the highest ever [34][40] Business Line Data and Key Metrics Changes - Advertising revenue grew 61% year over year to$ 359 million, driven by broad-based strength across objectives, channels, verticals, and geographies [20][30] - Other revenue, including data licensing, reached $34 million, growing 66% year over year [34] - The total number of active advertisers grew over 50% year over year in Q1 [22] Market Data and Key Metrics Changes - U.S. ad revenue grew 56% year over year, while international ad revenue grew 83% year over year, the fastest growth rate in three years [23][35] - Unique weekly users reached 401 million, and daily users reached 108 million, both up 31% year over year [8][19] Company Strategy and Development Direction - The company aims to enhance its core product and advertising business while focusing on international growth and improving user experience [12][14][19] - The strategy includes becoming a truly global platform with machine translation available in 13 languages and focusing on community-driven content [14][16] - The company is committed to maintaining its unique community model and improving user engagement through product enhancements [17][18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty in the macro environment but expressed confidence in the company's ability to deliver profitable outcomes for customers [50][51] - The company expects revenue in Q2 2025 to be in the range of$ 410 million to $430 million, representing 46% to 53% year-over-year growth [41][42] - Management emphasized that Reddit's unique value proposition lies in authentic human answers, which the company is focused on preserving [43][44] Other Important Information - The company is investing in hiring and technology, particularly in sales and engineering, to support growth [37][38] - The company has over$ 1 billion in cash, allowing for potential future investments [92] Q&A Session Summary Question: What is the current state of the advertising market and its impact on the business? - Management noted that while there is uncertainty in the market, they are well-positioned with their roadmap and are delivering profitable outcomes for customers [50][51] Question: How is user growth expected to trend for the remainder of the year? - Management reported that daily active users were growing in the high teens year over year and emphasized that short-term bumps do not affect long-term strategy [55] Question: Can you discuss the drivers of pricing and how it compares to other platforms? - Management indicated that pricing is an outcome of supply and demand, and they are competitive in delivering market outcomes for advertisers [63][64] Question: What is the status of the Answers feature and its integration into Reddit? - Management shared that Answers has reached 1 million weekly users and is being integrated into the core search experience [66][68] Question: How are contribution rates trending with user growth? - Management highlighted efforts to improve contribution success rates for new users, which enhances the overall user experience [75] Question: How does Google treat machine-translated content? - Management confirmed that Google supports their use of machine translation, which helps increase user-generated content in more languages [86][87] Question: Why not invest more given strong revenue growth? - Management stated that they aim for revenue growth to be twice as fast as cost growth and are focused on sustainable investments [88][92]