Reddit Inc (NYSE: RDDT) unveiled its financial performance for the fourth quarter on Thursday after markets closed, revealing notable gains across key metrics. The company's revenue for the quarter reached $725.61 million, outperforming the consensus estimate of $665.44 million based on Benzinga Pro data. This represents a substantial year-over-year increase of 70%, underscoring significant top-line momentum for the social media platform.
In addition to revenue growth, Reddit delivered earnings per share (EPS) of $1.24, surpassing analyst expectations set at 95 cents per share. This positive earnings surprise reflects improved profitability and operational efficiency during the quarter.
Active user engagement remained robust as daily active unique (DAUq) users grew 19% from the previous year to total 121.4 million. This expansion in the user base played a pivotal role in driving revenue and engagement metrics higher, confirming Reddit's position as a fast-growing platform for real-time conversations and content sharing.
On the cash flow front, Reddit generated $267 million in operating cash flow and $264 million in free cash flow during the period. The company ended the quarter with a healthy liquidity position, holding approximately $2.48 billion in cash, cash equivalents and marketable securities. The strong cash flow metrics indicate solid financial health and operational cash generation capability.
Commenting on the quarterly results, Steve Huffman, Reddit's co-founder and CEO, emphasized the company's strategic focus, stating, "We're entering the next era of Reddit - defined by sharper execution, global expansion, and product innovation that puts real people and conversations at the center. Our focus is on turning Reddit's authenticity into even more everyday utility." This statement highlights management's commitment to scaling the platform with continued prioritization of user experience and innovation.
Looking ahead, Reddit provided its first-quarter outlook, expecting revenue to fall within the range of $595 million to $605 million. This projection exceeds analyst consensus, which currently sits around $577.17 million. The company also anticipates adjusted EBITDA in the range of $210 million to $220 million for the first quarter, signaling an expectation for sustained profitability.
In alignment with its strong cash position and confidence in future prospects, Reddit's board approved a share repurchase program authorized to acquire up to $1 billion of its common stock. This buyback initiative aims to return value to shareholders and reflects management's positive outlook on the stock's valuation.
Following the earnings announcement, Reddit's shares experienced initial positive movement but later retreated, trading down approximately 2.02% to $148 in extended-hours, according to Benzinga Pro data at the time of reporting. This fluctuation indicates a mixed investor reaction despite the company exceeding revenue and earnings expectations.
Overall, Reddit's fourth-quarter report underscores strong financial execution and operational growth, bolstered by expanding user engagement and strategic initiatives such as the new share repurchase program. Investors and analysts will likely monitor forthcoming discussions during the scheduled earnings call for further detail on growth drivers and capital allocation strategies.