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Can Reddit's Solid Q3 Earnings & Revenue Beat Drive the Stock?
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Reddit (RDDT - Free Report) reported third-quarter 2024 earnings of 16 cents per share, comfortably beating the Zacks Consensus Estimate of a loss of 7 cents per share. Reddit had reported a loss of 13 cents per share in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $348.4 million surpassed the Zacks Consensus Estimate by 11.31%. The reported figure rallied 68% year over year.
Reddit offered a strong fourth-quarter 2024 guidance. This, along with the solid third-quarter earnings beat, is expected to drive the stock in the near term. Year to date, RDDT shares have surged 62.1%, outperforming the Zacks Computer & Technology sector’s return of 27.5%.
While Snap and Bumble shares have declined 29.3% and 51.1% year to date, the industry has appreciated 25.6%.
RDDT’s Q3 Revenues Ride on Strong Advertising Growth
Advertising revenues increased 56% year over year to $315.1 million, driven by increased impressions from strong user growth.
Other revenues surged 547% year over year to $33.2 million, led by a new data licensing agreement with Alphabet’s (GOOGL - Free Report) Google and OpenAI.
Daily Active Uniques (DAUq) jumped 47% year over year to 97.2 million. U.S. DAUq jumped 51% year over year to 48.2 million, while International DAUq increased 44% to 49 million.
Weekly Active Uniques (WAUq) rallied 53% year over year to 365.4 million. U.S. WAUq jumped 58% year over year to 178 million, whereas International WAUq increased 48% year over year to 187.4 million.
Average Revenue Per User (ARPU) moved up 14% year over year to $3.58. U.S. ARPU increased 12% to $5.88, whereas International ARPU climbed 16% on a year-over-year basis to $1.32.
Third-quarter 2024 U.S. revenues (contributed 82.7% to revenues) increased 70% year over year to $288 million. International revenues (17.3% of revenues) rose 57% year over year to $60.4 million.
The adjusted EBITDA was $94.1 million against an adjusted EBITDA loss of $6.9 million in the year-ago quarter.
RDDT’s Balance Sheet Remains Strong
As of Sept. 30, 2024, Reddit had cash and cash equivalents, including marketable securities of $1.745 billion, compared with $1.7 billion as of June 30, 2024.
In the third quarter, Reddit generated $71.6 million of cash from operating activities compared with $28.4 million in the previous quarter.
RDDT posted a free cash flow of $70.3 million compared with $27.2 million in the previous quarter.
Reddit’s Guidance Positive
For the fourth quarter of 2024, RDDT expects revenues between $385 million and $400 million, which indicates growth of 54-60% (57% at the mid-point).
Adjusted EBITDA is expected between $110 million and $125 million, indicating an adjusted EBITDA margin of 30% at the mid-point.
Image: Bigstock
Can Reddit's Solid Q3 Earnings & Revenue Beat Drive the Stock?
Reddit (RDDT - Free Report) reported third-quarter 2024 earnings of 16 cents per share, comfortably beating the Zacks Consensus Estimate of a loss of 7 cents per share. Reddit had reported a loss of 13 cents per share in the year-ago quarter.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Revenues of $348.4 million surpassed the Zacks Consensus Estimate by 11.31%. The reported figure rallied 68% year over year.
Reddit offered a strong fourth-quarter 2024 guidance. This, along with the solid third-quarter earnings beat, is expected to drive the stock in the near term. Year to date, RDDT shares have surged 62.1%, outperforming the Zacks Computer & Technology sector’s return of 27.5%.
Reddit Inc. Price, Consensus and EPS Surprise
Reddit Inc. price-consensus-eps-surprise-chart | Reddit Inc. Quote
RDDT shares have also outperformed the Zacks Internet Software industry and peers Snap (SNAP - Free Report) and Bumble (BMBL - Free Report) over the same time frame.
While Snap and Bumble shares have declined 29.3% and 51.1% year to date, the industry has appreciated 25.6%.
RDDT’s Q3 Revenues Ride on Strong Advertising Growth
Advertising revenues increased 56% year over year to $315.1 million, driven by increased impressions from strong user growth.
Other revenues surged 547% year over year to $33.2 million, led by a new data licensing agreement with Alphabet’s (GOOGL - Free Report) Google and OpenAI.
Daily Active Uniques (DAUq) jumped 47% year over year to 97.2 million. U.S. DAUq jumped 51% year over year to 48.2 million, while International DAUq increased 44% to 49 million.
Weekly Active Uniques (WAUq) rallied 53% year over year to 365.4 million. U.S. WAUq jumped 58% year over year to 178 million, whereas International WAUq increased 48% year over year to 187.4 million.
Average Revenue Per User (ARPU) moved up 14% year over year to $3.58. U.S. ARPU increased 12% to $5.88, whereas International ARPU climbed 16% on a year-over-year basis to $1.32.
Third-quarter 2024 U.S. revenues (contributed 82.7% to revenues) increased 70% year over year to $288 million. International revenues (17.3% of revenues) rose 57% year over year to $60.4 million.
The adjusted EBITDA was $94.1 million against an adjusted EBITDA loss of $6.9 million in the year-ago quarter.
RDDT’s Balance Sheet Remains Strong
As of Sept. 30, 2024, Reddit had cash and cash equivalents, including marketable securities of $1.745 billion, compared with $1.7 billion as of June 30, 2024.
In the third quarter, Reddit generated $71.6 million of cash from operating activities compared with $28.4 million in the previous quarter.
RDDT posted a free cash flow of $70.3 million compared with $27.2 million in the previous quarter.
Reddit’s Guidance Positive
For the fourth quarter of 2024, RDDT expects revenues between $385 million and $400 million, which indicates growth of 54-60% (57% at the mid-point).
Adjusted EBITDA is expected between $110 million and $125 million, indicating an adjusted EBITDA margin of 30% at the mid-point.
Zacks Rank
Reddit currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.