"Reddit enters this quarter with credibility to protect. The company crushed Q3 expectations, posting $1.26 EPS against a $1.05 estimate, a 20% beat. Revenue hit $584.9 million, up 68% year-over-year, with advertising revenue climbing 74%. Reddit reached its pre-IPO profitability target of 40% adjusted EBITDA margin and immediately raised the bar, setting a new 50% margin North Star."
"The question is whether Q4 can validate that trajectory. Management guided to $655 to $665 million in revenue and $275 to $285 million in adjusted EBITDA. Consensus expects $0.93 EPS, down from Q3's $1.26 but still reflecting strong profitability. Management's guidance implies roughly 54% year-over-year growth at the midpoint. I'll focus on three things: user growth sustainability, international momentum, and advertising execution."
"Advertising remains the core business at 94% of revenue. Management noted "broadly stable" market conditions with "low visibility" heading into Q4, citing tariff concerns among some customers. Watch whether Reddit's full-funnel ad offering held up and whether pricing power continued. Q3 saw 75% growth in active advertisers and strong performance across both brand and direct response ads."
Reddit reported strong Q3 results with $1.26 EPS versus a $1.05 estimate and revenue of $584.9 million, driven by 74% advertising growth and a 68% overall revenue increase. The company reached a 40% adjusted EBITDA margin target and set a new 50% margin goal. Guidance for Q4 is $655–$665 million in revenue and $275–$285 million in adjusted EBITDA, implying roughly 54% year-over-year growth at the midpoint and consensus EPS of $0.93. Key focus areas include sustaining daily active user growth, accelerating international expansion via machine translation, and maintaining advertising pricing and advertiser momentum amid low visibility.
Read at 24/7 Wall St.
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