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Reddit Forecasts Strong Revenue as AI Boosts Ad Sales

  • tech360.tv
  • 18 hours ago
  • 2 min read

Reddit forecasts first-quarter revenue above analysts' estimates, driven by artificial intelligence-powered enhancements to its ad platform attracting more marketers. The company's shares rose 4% after-hours following Reddit's announcement of its inaugural share repurchase plan, valued at up to USD 1 billion.

Credit: UNSPLASH
Credit: UNSPLASH

Reddit facilitates direct ad placement within subreddit discussion threads. This approach boosts ad spending as brands target highly engaged, niche communities discussing relevant topics.


Reddit's active advertiser base grew over 75% in the fourth quarter. Chief Operating Officer Jen Wong attributed this to new account additions across various channels during a conference call with analysts.


The company's ad platform uses AI to enhance campaign creation and management. Key features include an AI copywriter for Reddit-specific ad copy and an image auto-crop tool.


Eleven of its top 15 ad verticals saw revenue growth of 50% or more year-over-year. Retail, pharmaceuticals, financial services, and technology were the leading sectors.


Reddit anticipates first-quarter revenue between USD 595 million and USD 605 million. This forecast exceeds analysts' average estimate of USD 577.2 million, based on LSEG data.


Its adjusted earnings before interest, taxes, depreciation, and amortisation is forecast at USD 210 million to USD 220 million. This also surpasses estimates of USD 202.9 million.


Emarketer senior director Jeremy Goldman stated, "Expectations were already high coming into the quarter, but the results still surprised by showing how tightly product momentum, advertiser demand, and user engagement are now reinforcing one another."


Reddit is intensifying competition by launching AI-powered Max campaigns in beta. These campaigns automate ad processes, adjusting bids to meet target cost-per-result and dynamically selecting headlines and creatives.


Fourth-quarter revenue increased 70% to USD 726 million, exceeding estimates of USD 665.4 million. Earnings per share were USD 1.24, also surpassing estimates of 94 US cents.


Daily active unique visitors rose 19% to 121.4 million in the fourth quarter. Global average revenue per user increased by 42% during the same period.

  • Reddit forecasts first-quarter revenue of USD 595 million to USD 605 million, exceeding analyst estimates.

  • The company announced an inaugural share repurchase plan of up to USD 1 billion.

  • Artificial intelligence tools are enhancing Reddit's ad platform, attracting more marketers.


Source: REUTERS

 
 
 

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