Reddit, Inc.
RDDT · NYSE
RDDT · NYSE
Reports Oct 29, 2026.
Consensus is $1.33 EPS for Sep 2026 across 12 estimates, ranging $1.20 to $1.62.
Reddit’s second quarter was another high-growth, high-margin print, with revenue and earnings comfortably ahead of expectations. Revenue of $804.9 million rose 61% year over year and 21% sequentially, while diluted EPS of $1.25 exceeded the $0.99 consensus estimate by 26.26%. Net income increased to $252.8 million from $89.3 million a year ago and $204.0 million in Q1; diluted EPS rose from $0.45 and $1.01, respectively.
The defining feature was monetisation rather than U.S. user acceleration. Advertising revenue increased 64% to $761.6 million as pricing rose approximately 40% and impressions increased 17%, lifting global ARPU 36% to $6.18. International users remained the principal growth engine, with DAUq up 28% and revenue up 84%, compared with 6% and 56% growth in the U.S. Operating leverage was substantial: adjusted EBITDA more than doubled to $342.8 million and margin expanded 920 basis points to 42.6%, while free cash flow reached $260.7 million. Reddit expects the momentum to continue in Q3, guiding to $860 million-$870 million of revenue and $385 million-$395 million of adjusted EBITDA.
Advertising remained the quarter’s central growth driver. Revenue increased 61% to $804.9 million, with advertising contributing $761.6 million, or roughly 95% of total revenue. Management attributed the increase to stronger advertiser demand and improved performance across the full funnel of objectives, which supported approximately 40% higher pricing. Ad impressions increased 17%, helped by new placements and ad-load optimisation. Other revenue grew 24% to $43.3 million, but remained comparatively small.
Reddit continued to expand reach, although the composition of growth favored international and logged-out traffic. Global DAUq increased 18% year over year to 130.3 million and 3% sequentially, while WAUq increased 24% to 514.6 million. International DAUq rose 28% year over year and 5% sequentially, compared with 6% year-over-year growth and relatively flat sequential performance in the U.S. The company cited machine translation, marketing and product improvements as growth contributors, partly offset by search-engine algorithm changes.
The revenue expansion translated into sharply higher profitability despite continued investment in the platform and user acquisition. Gross margin improved 50 basis points to 91.3%, while operating expenses increased 30% to $502.9 million, well below the 61% revenue increase. Operating income rose to $231.7 million from $67.7 million, lifting operating margin to 28.8% from 13.6%.
Cash generation strengthened alongside earnings. Operating cash flow was $261.9 million and free cash flow was $260.7 million, each up 135% year over year. For the first six months, free cash flow reached $571.9 million versus $237.4 million in the prior-year period. Reddit used part of that cash generation for capital returns while maintaining a substantial liquidity position.
Management expects the strong trajectory to persist into Q3, with revenue guidance of $860 million-$870 million and adjusted EBITDA guidance of $385 million-$395 million. At the midpoint, the outlook represents approximately 7.8% sequential revenue growth and 13.2% sequential adjusted EBITDA growth from Q2. The company did not provide a GAAP reconciliation for the EBITDA outlook because of uncertainty around reconciling items.
