01—Abstract
Summary
Summary of the 10-Q filed October 30, 2026. Cited figures are marked; the original filing is the authoritative source.
Reddit, Inc. reported third-quarter 2026 revenue of $894.96 milliona, up 53% year-over-year from $584.91 million, and net income of $283.26 million versus $162.66 million a year earlier.
For the nine months ended September 30, 2026, revenue was $2.36 billionb (up 60%) and net income was $740.09 million. Advertising revenue was $846.996 million in the quarter, up from $549.342 million, driven mainly by a roughly 34% increase in ad prices and a roughly 15% increase in ad impressions delivered. Adjusted EBITDA was $402.3 million in the quarter, compared with $236.0 million a year earlier.
Free Cash Flow was $362.6 millionc in the quarter and $934.5 million for the nine months. User metrics were mixed. Average DAUq was 130.3 million, up 12% year-over-year, but the filing states that U.S. DAUq declined 2% year-over-year and 5% quarter-over-quarter, while rest-of-world DAUq grew 24% year-over-year.
Management attributes the referral-traffic softness to third-party search engine changes, including AI-generated summaries. ARPU rose 36% to $6.87d, with U.S. ARPU at $13.82. The company also disclosed that it intends to begin experiments requiring logged-in access in one or more international markets in the quarter ending December 31, 2026, with possible global implementation afterward.
The balance sheet held $3.0 billion in cash, cash equivalents, and marketable securities as of September 30, 2026. The company repurchased 2,193,461 Class A shares for $340.0 million during the nine months under a $1.0 billion program, with $660.0 million remaining.
The filing notes a reasonable possibility of a significant release of the U.S. deferred tax valuation allowance within the next 12 months, which would produce a significant income tax benefit. Key legal exposures include a securities class action tied to Google Search and AI Overviews, derivative complaints, and a UK ICO fine of GBP 14.5 million that the company is appealing.
02—Key points
Key Highlights
- Revenue of $894.96 million in Q3 2026, up 53% year-over-year; advertising revenue of $846.996 million, up from $549.342 million
- Net income of $283.26 million in Q3 2026 versus $162.66 million in Q3 2025; diluted EPS of $1.40 versus $0.80
- Adjusted EBITDA of $402.3 million in Q3 2026 versus $236.0 million; Free Cash Flow of $362.6 million versus $183.1 million
- Average DAUq of 130.3 million, up 12% year-over-year, but U.S. DAUq declined 2% year-over-year and 5% quarter-over-quarter; rest-of-world DAUq grew 24%
- ARPU of $6.87, up 36%; ad prices rose approximately 34% and ad impressions delivered rose approximately 15% year-over-year
- Cash, cash equivalents and marketable securities of $3.0 billion; $340.0 million of Class A shares repurchased in the nine months under a $1.0 billion program
- Possible significant release of the U.S. deferred tax valuation allowance within 12 months, which would create a significant income tax benefit
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Reddit kept $0.32.
- Revenue$895.0M100.0%
- Cost of revenue−$75.8M8.5%
- Gross profit$819.2M91.5%
- Operating costs−$557.6M62.3%
- Operating income$261.6M29.2%
- Interest, other & tax$21.7M2.4%
- Net income$283.3M31.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed October 30, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $894.96M$584.91M | +53.0% |
| Cost of Revenue | $75.79M$52.51M | +44.3% |
| Gross Profit | $819.17M$532.40M | +53.9% |
| R&D Expenses | $263.53M$196.38M | +34.2% |
| Operating Expenses | $633.37M$446.37M | +41.9% |
| Operating Income | $261.59M$138.54M | +88.8% |
| Net Income | $283.26M$162.66M | +74.1% |
| EPS (Basic) | $1.47$0.87 | +69.0% |
| EPS (Diluted) | $1.40$0.80 | +75.0% |
| Shares Outstanding (Basic) | 192.60M188.04M | +2.4% |
| Shares Outstanding (Diluted) | 201.86M202.73M | −0.4% |
05—Questions
Frequently Asked Questions
How did Reddit's revenue and profitability trend in the third quarter of 2026?
Revenue rose 53% year-over-year to $894.96 million, and income from operations increased to $261.59 million from $138.54 million. Net income was $283.26 million, and Adjusted EBITDA was $402.3 million. For the nine months, revenue was $2.36 billion, up 60%, and net income was $740.09 million.
What is driving revenue growth, and how sustainable does the filing suggest it is?
Growth came primarily from higher pricing, with ad prices up approximately 34% year-over-year, and from ad impressions up approximately 15%. The filing attributes impression growth partly to ad load optimization and new ad placements. It also notes that ARPU tends to grow more slowly than revenue when DAUq growth is strong.
Why did U.S. user numbers decline, and what does the company plan to do about it?
The filing states that U.S. DAUq fell 2% year-over-year and 5% quarter-over-quarter, and it attributes the softness to third-party search engine changes, including AI-generated summaries that reduce referral traffic. The company plans experiments requiring logged-in access in one or more international markets starting in the quarter ending December 31, 2026, and says it intends to then implement logged-in restrictions globally, including in the United States. The filing warns this could reduce total users and ad reach.
What are the main legal and regulatory risks disclosed in the filing?
A securities class action alleges misleading statements about the impact of Google Search and its AI Overviews on the business; the court dismissed the prior complaint with leave to amend, and a second amended complaint was filed on October 23, 2026. Shareholder derivative complaints with similar allegations have also been filed. In February 2026, the UK ICO issued a GBP 14.5 million fine under the UK GDPR, which Reddit is appealing. The company also received inquiries from the Dutch data protection authority about its content licensing efforts.
How is the company returning capital and managing its cash?
During the nine months ended September 30, 2026, Reddit repurchased 2,193,461 Class A shares for $340.0 million under a $1.0 billion program authorized in February 2026, leaving $660.0 million available. Operating cash flow was $937.9 million for the nine months. The company has a $500.0 million revolving credit facility with $494.3 million available, and it states that it has never paid cash dividends.
06—Continue