01—Abstract
Summary
Summary of the 10-Q filed May 2, 2025. Cited figures are marked; the original filing is the authoritative source.
Reddit, Inc. (RDDT) reported first-quarter 2025 revenue of $392.4 milliona, up 61% year over year from $243.0 million, with advertising revenue of $358.6 million and other revenue of $33.7 million.
The company swung to net income of $26.2 millionb, compared with a net loss of $575.1 million in the prior-year quarter, which was heavily affected by stock-based compensation recognized upon the IPO. Income from operations was $3.9 million, and Adjusted EBITDA was $115.3 million versus $10.0 million a year earlier. Gross margin was 90.5%, compared with 88.6% in the prior-year period.
User metrics grew strongly: average DAUq was 108.1 million, up 31% year over year, and ARPU was $3.63c, up 23%. U.S. ARPU was $6.27 and rest-of-world ARPU was $1.34. The filing attributes growth to third-party search engine and algorithm changes, machine translation, and product enhancements, and notes that logged-out DAUq comprised 55% of global DAUq in the quarter.
Logged-out users monetize at lower rates than logged-in users. Liquidity remained strong, with $2.0 billiond in cash, cash equivalents and marketable securities and operating cash flow of $127.6 million, producing Free Cash Flow of $126.6 million.
Remaining performance obligations on contracts longer than one year totaled $224.5 million, mostly long-term content licensing contracts, with $85.9 million expected to be recognized in the rest of 2025. The filing notes that substantially all content licensing contract value is derived from two partners.
02—Key points
Key Highlights
- Revenue of $392.4 million rose 61% year over year; advertising revenue was $358.6 million and other revenue was $33.7 million.
- Net income of $26.2 million (diluted EPS $0.13) compared with a net loss of $575.1 million in Q1 2024, which included large IPO-related stock-based compensation.
- Adjusted EBITDA of $115.3 million versus $10.0 million a year earlier; operating income was $3.9 million versus a $589.3 million loss.
- DAUq reached 108.1 million (up 31% year over year), with U.S. DAUq up 21% and rest-of-world DAUq up 41%; logged-out DAUq was 55% of global DAUq.
- ARPU of $3.63 (up 23%), with U.S. ARPU at $6.27 and rest-of-world ARPU at $1.34.
- Operating cash flow of $127.6 million and Free Cash Flow of $126.6 million; cash, equivalents and marketable securities totaled $2.0 billion.
- Remaining performance obligations of $224.5 million, mainly long-term content licensing contracts, with substantially all licensing contract value derived from two partners.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2025, Reddit kept $0.07.
- Revenue$392.4M100.0%
- Cost of revenue−$37.1M9.5%
- Gross profit$355.3M90.5%
- Operating costs−$351.4M89.6%
- Operating income$3.9M1.0%
- Interest, other & tax$22.3M5.7%
- Net income$26.2M6.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2025filed May 2, 2025Financial Statements
Q1 FY2025 against Q1 FY2024
| Line item | Q1 FY2025Q1 FY2024 | Change |
|---|---|---|
| Revenue | $392.36M$242.96M | +61.5% |
| Cost of Revenue | $37.09M$27.62M | +34.3% |
| Gross Profit | $355.27M$215.35M | +65.0% |
| R&D Expenses | $191.27M$437.03M | −56.2% |
| Operating Expenses | $388.46M$832.22M | −53.3% |
| Operating Income | $3.90M-$589.25M | +100.7% |
| Net Income | $26.16M-$575.07M | +104.5% |
| EPS (Basic) | $0.14$-8.19 | +101.7% |
| EPS (Diluted) | $0.13$-8.19 | +101.6% |
| Shares Outstanding (Basic) | 182.02M70.24M | +159.1% |
| Shares Outstanding (Diluted) | 201.28M70.24M | +186.6% |
05—Questions
Frequently Asked Questions
Why did Reddit swing from a large net loss to net income?
The prior-year quarter included a large stock-based compensation charge tied to RSUs with a liquidity-event vesting condition, recognized upon the IPO. Research and development expense fell from $437.0 million to $191.3 million, and general and administrative expense fell from $243.5 million to $69.4 million, largely for the same reason. Revenue growth also contributed.
What is driving user growth?
The filing attributes global DAUq growth to third-party search engine and algorithm changes, traction in growth strategies particularly machine translation, and product enhancements. The company also notes that logged-out users, who come mainly from search, monetize at a lower rate than logged-in users.
How concentrated is Reddit's revenue and content licensing income?
The filing states that the top ten customers accounted for approximately 25% of 2024 revenue and that substantially all content licensing contract value comes from two partners. Advertisers have no long-term commitments, and the licensing contracts may not be renewed or may be renewed on less favorable terms.
How strong is the company's liquidity?
As of March 31, 2025, Reddit held $2.0 billion in cash, cash equivalents and marketable securities. It also had $745.1 million available under its $750.0 million revolving credit facility, and management believes these resources will be sufficient for at least the next 12 months.
06—Continue