Reddit Posts $575 Million Loss Tied to I.P.O. but Also Strong Growth

Technology|Reddit Posts $575 Million Loss Tied to I.P.O. but Also Strong Growth

https://www.nytimes.com/2024/05/07/technology/reddit-quarterly-earnings-report.html

Reddit’s first earnings report as a public company showed a loss from expenses related to its initial public offering, along with leaps in users and advertising revenue.

Reddit’s logo appears on a banner above a bank of monitors that also display the logo inside the New York Stock Exchange.
The New York Stock Exchange on Reddit’s first day of trading in March. On Tuesday, the company reported a 48 percent increase in quarterly revenue.Credit…Natalie Keyssar for The New York Times

Mike Isaac

By Mike Isaac

Mike Isaac has covered Reddit from San Francisco since 2010.

Reddit on Tuesday reported a more than $500 million quarterly loss in its first earnings report as a public company, largely due to stock-based compensation expenses incurred during its initial public offering in March.

But the social media company also posted robust revenue and user growth, underscoring the potential of its digital advertising business as people flock to the site. Last month, Google, Meta and Snap also reported rising advertising sales and double-digit revenue growth.

Reddit’s revenue was $243 million in the first quarter, up 48 percent from $163.7 million a year earlier and above Wall Street estimates of $214 million, according to data compiled by FactSet. The net loss was $575.1 million, compared with a loss of $60.9 million a year earlier. Stock-based compensation expenses totaled $595.5 million, versus $13.2 million a year earlier.

Daily active users jumped to 82.7 million, up 37 percent from a year earlier.

“We see this as the beginning of a new chapter as we work toward building the next generation of Reddit,” Steve Huffman, Reddit’s co-founder and chief executive, said in a statement.

Reddit, which went public after more than 18 years as a private company, has turned into a kind of litmus test for technology initial public offerings. The company successfully debuted in what had been a tepid I.P.O. market, with its shares soaring 48 percent on the first day of trading and giving investors cause for optimism. Reddit’s shares continue to trade above the company’s I.P.O. price of $34.

Essentially a message board where users congregate on forums to research and discuss interests they have in common, Reddit has spent years trying to diversify its main business of digital advertising. It has struck deals with Google and other companies that wish to license its vast amounts of conversation data, such as for building artificial intelligence technology. It has also tried to spur an e-commerce business.

Reddit projected $240 million to $255 million in revenue in the current quarter, above Wall Street’s expectations.

Roy Walsh

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