Reddit (NYSE: $RDDT) is a popular social media platform where participants promote posts via voting. Users can post images, videos, links, and more with the community, which the other members then vote on.
On May 8, 2024, the social media company announced its Q1 earnings for fiscal 2024, which ended on March 31, to a positive market reaction.
Reddit Surpasses Estimates in Debut Results
Reddit reported an EPS of 29 cents, beating consensus estimates by 2.63%. The revenue surpassed estimates by 14.62%, amounting to $243 million, an increase of 48% from its prior quarter, with ad revenue up by 39% year-to-year to $222.7 million.
Moreover, DAUq (Daily Active Uniqueness) has risen 37% year-over-year to a record $82 million. The weekly DAUq also increased by 40% year-to-year, totaling $306.2 million. DAUq in the US surged by 45% compared to the previous year, reaching $41.5 million, with International DAUq experiencing a 30% year-over-year growth, totaling $41.2 million.
Furthermore, ARPU (Average Revenue Per User) soared by 8% year-over-year to $2.94. United States ARPU increased by 3% to $4.77, and International ARPU reached $1.10, increasing by 10% year-over-year.
The company reported adjusted EBITDA of $10 million against the loss of $50 million in the prior year. The social media platform generated $32.1 million of cash from operating activities with a free cash flow of $29.2 million.
In addition, Sara Farrell, the co-founder and Managing Partner of Waygrove Partnership, has joined the Reddit Board of Directors.
Net Loss & Next Quarter Guidance
Reddit disclosed a net loss amounting to $575.1 million. The expenses associated with stock-based compensation and related taxes totaled $595.5 million, mainly attributed to charges incurred from the initial public offering.
The company has provided its guidance for the next quarter. It anticipates revenue of $240 million to $255 million, overtaking LSEG analyst expectations of $224 million. The midpoint of the guidance range indicates a projected growth of approximately 32% for the second quarter, surpassing the $183 million figure from the previous year.
The company also forecasts that adjusted EBITDA will reach $0 to $15 million in the second quarter of 2024.
Reddit co-founder and CEO Steve Huffman, said, “It was a strong start to the year and a milestone quarter for Reddit and our communities as we debuted as a public company.”
He added, “We see this as the beginning of a new chapter as we work towards building the next generation of Reddit.”
Reddit (RDDT) Stock Performance
Following the Q1 results, $RDDT is currently trading at $51.30, up by 3.85% as of 3:03 PM EDT Tuesday. The stock surged over 11% to a high of $57.64 in the early trading hours. It has gained 15.44% since the start of April and 11.74% since the IPO. At the time of writing, the market cap is 8.362 billion, with a 24-hour trading volume of 13,357,062.
Should You Invest in RDDT?
Reddit has gained attention from users and investors over the past few years and is considered one of the best long-term investment options. The company expects higher revenue, EPS, and EBITDA in the next quarter, which could potentially lead to a surge in the stock price in upcoming quarters.
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