Reddit shares surged in after-hours trading following a robust fourth-quarter earnings report that surpassed analyst expectations on both revenue and profit. The social media platform also issued an optimistic outlook for the first quarter of 2026, signaling continued growth momentum.
The company posted earnings per share of $1.24, significantly outperforming the consensus estimate of 94 cents. Revenue for the quarter reached $726 million, exceeding the projected $665 million.
Looking ahead, Reddit anticipates first-quarter sales to fall within the range of $595 million to $605 million, a figure that comfortably surpasses Wall Street’s expectation of $577 million. Furthermore, adjusted earnings for the first quarter are projected to be between $210 million and $220 million, also ahead of StreetAccount’s estimate of $203 million. In a move underscoring confidence in its financial trajectory, Reddit also announced a substantial $1 billion share repurchase program.
The company’s fourth-quarter performance showcased impressive year-over-year growth, with revenue climbing 70% and net income soaring by nearly 255% to $252 million. This expansion was particularly strong in the U.S. market, where revenue hit $583 million, surpassing analyst forecasts of $529 million.
User engagement metrics also demonstrated healthy growth. Global daily active unique users (DAUq) rose 19% year over year to 121.4 million, exceeding the 120 million anticipated by analysts. Within the U.S., DAUq grew 9% year over year to 52.5 million, slightly ahead of projections.
However, a closer look at user demographics revealed a nuance in growth patterns. Logged-in DAUq for the U.S. increased 5% year over year to 23 million. This marks a deceleration compared to the 7% growth observed in the third quarter and signifies the sixth consecutive quarter of slowing logged-in U.S. user growth.
This metric has been a key focus for investors, as logged-in users are generally considered more valuable for Reddit’s online advertising business. These users tend to be more engaged and interactive than those who access the platform via search engines without logging in, a category referred to as logged-out DAUq.
Addressing this evolving user landscape, Reddit CEO Steve Huffman indicated plans to phase out the distinct reporting of logged-in and logged-out users later this year. He explained that product enhancements aimed at streamlining onboarding and improving user experience, such as instant personalization, are blurring the lines between these user states. “As the industry evolves, how we think about our product and users must evolve too,” Huffman stated. “We’ve historically reported logged-in vs. logged-out users, but as some of our work to streamline onboarding — instant personalization, for example — blurs the line between these states, the distinction between them makes less sense.” Reddit’s chief financial officer, Drew Vollero, confirmed that both metrics will continue to be reported through the first two quarters of 2026.
Discussions surrounding Reddit’s strategic data-licensing agreements with major technology players like Google and OpenAI also provided insights into the company’s forward-looking strategy. Huffman characterized these relationships as “very healthy,” with conversations evolving from purely transactional business deals to more integrated product partnerships. The core objective, he noted, is to leverage these collaborations to drive user engagement within Reddit’s community-centric areas.
Furthermore, Huffman elaborated on Reddit’s integration of its traditional search functionality with its newer generative AI-powered search capabilities. The company has observed that generative AI search results often offer a superior experience, particularly in delivering a multiplicity of perspectives from a diverse user base, which aligns with Reddit’s inherent strength as a platform for varied viewpoints. This strategic integration aims to enhance the overall search experience for users, solidifying Reddit’s position as a hub for information and discussion.
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