We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Reddit Q2 Earnings Beat on Ad Growth and Strong Monetization
Read MoreHide Full Article
Key Takeaways
Reddit beat Q2 earnings and revenue estimates on strong advertising demand and pricing.
RDDT ad revenue rose 64%, while active advertisers increased more than 70%.
Reddit expects Q3 revenue of $860M-$870M and adjusted EBITDA of $385M-$395M.
Reddit (RDDT - Free Report) delivered second-quarter 2026 earnings of $1.25 per share, up 177.8% year over year and surpassing the Zacks Consensus Estimate by 26.26%. Strong advertising demand, higher pricing and increased impressions supported the upside.
Revenues rose 61% year over year to $805 million and beat the consensus mark by 8.2%. Daily Active Uniques averaged 130.3 million, up 18% year over year, while improving advertiser performance helped sustain commercial momentum.
RDDT’s Revenue Mix Shows Broad-Based Strength
Advertising revenues increased 64% year over year to $762 million. Other revenues rose 24% to $43 million, providing a smaller but growing contribution to the top line.
U.S. revenues advanced 56% to $638.1 million. International revenues increased 84% to $166.8 million, reflecting faster growth outside the company’s core domestic market.
Weekly Active Uniques averaged 514.6 million, up 24% year over year and crossing the half-billion mark. U.S. WAUq rose 9% year over year to 197.2 million, while international WAUq grew 35% to 317.4 million.
U.S. DAUq increased 6% year over year to 53.2 million, whereas international DAUq surged 28% to 77.1 million. Global average revenue per unique rose 36% year over year to $6.18, with U.S. ARPU climbing 51% to $11.85 and international ARPU increasing 31% year over year to $2.26.
RDDT’s Ad Tools Support Full-Funnel Gains
Conversion volume more than doubled and click volume grew more than 30% year over year. Revenues from dynamic product ads and app-install campaigns each more than doubled, while the scaled sales channel, which includes mid-market and small businesses, also doubled.
Active advertisers increased more than 70%. Reddit Max advertisers grew more than 60% sequentially and Max revenues rose more than 150% from the first quarter as automation and machine learning improved campaign setup and performance.
Reddit also expanded its Shopify integration to general availability and launched Shopping Listing Ads in alpha. The multi-advertiser format matches product catalogs with high-intent shopping conversations, which grew 40% year over year.
RDDT’s Operating Details
RDDT maintained very high gross profitability. Reddit’s GAAP gross margin expanded 50 basis points on a year-over-year basis to 91.3%.
Operating expenses increased with continued investment. Sales and marketing expenses surged 62.4% year over year to $195.9 million. Research and development expenses rose 17.6% year over year to $231.3 million, while general and administrative expenses increased 10.1% to $75.7 million.
Adjusted EBITDA increased 106% year over year to $342.8 million, and the adjusted EBITDA margin improved to 42.6% from 33.4%.
RDDT’s Balance Sheet & Cash Flow
As of June 30, 2026, Reddit had cash, cash equivalents, and marketable securities of $2.79 billion compared with $2.77 billion as of March 31, 2026.
For the second quarter of 2026, operating cash flow rose 135% to $262 million and free cash flow reached $261 million.
The company repurchased 1.5 million shares for $235 million at an average price of $157.57 per share. Approximately $760 million remained under the current authorization.
Reddit's Q3 Outlook Signals Continued Momentum
For the third quarter of 2026, management expects revenues between $860 million and $870 million. The midpoint implies about 48% year-over-year growth.
Adjusted EBITDA is projected to be between $385 million and $395 million, representing a midpoint margin of about 45%. Management also lowered its full-year stock-based compensation outlook to the low-to-mid-teens as a percentage of revenues and expects full-year dilution at the lower end of its 1% to 3% target range.
Arista Networks shares have gained 30.5% in the year-to-date period. Arista Networks is set to report second-quarter 2026 results on Aug. 4.
Shares of ACI Worldwide have gained 20.6% in the year-to-date period. ACI Worldwide is set to report the second-quarter 2026 results on Aug. 6.
Shares of Analog Devices have rallied 35.2% in the year-to-date period. Analog Devices is slated to report fiscal third-quarter 2026 results on Aug. 19.
View the Zacks #1 Rank List
Image: Bigstock
Reddit Q2 Earnings Beat on Ad Growth and Strong Monetization
Key Takeaways
Reddit (RDDT - Free Report) delivered second-quarter 2026 earnings of $1.25 per share, up 177.8% year over year and surpassing the Zacks Consensus Estimate by 26.26%. Strong advertising demand, higher pricing and increased impressions supported the upside.
Revenues rose 61% year over year to $805 million and beat the consensus mark by 8.2%. Daily Active Uniques averaged 130.3 million, up 18% year over year, while improving advertiser performance helped sustain commercial momentum.
RDDT’s Revenue Mix Shows Broad-Based Strength
Advertising revenues increased 64% year over year to $762 million. Other revenues rose 24% to $43 million, providing a smaller but growing contribution to the top line.
U.S. revenues advanced 56% to $638.1 million. International revenues increased 84% to $166.8 million, reflecting faster growth outside the company’s core domestic market.
Reddit Inc. Price, Consensus and EPS Surprise
Reddit Inc. price-consensus-eps-surprise-chart | Reddit Inc. Quote
Reddit’s User Growth Extends Global Reach
Weekly Active Uniques averaged 514.6 million, up 24% year over year and crossing the half-billion mark. U.S. WAUq rose 9% year over year to 197.2 million, while international WAUq grew 35% to 317.4 million.
U.S. DAUq increased 6% year over year to 53.2 million, whereas international DAUq surged 28% to 77.1 million. Global average revenue per unique rose 36% year over year to $6.18, with U.S. ARPU climbing 51% to $11.85 and international ARPU increasing 31% year over year to $2.26.
RDDT’s Ad Tools Support Full-Funnel Gains
Conversion volume more than doubled and click volume grew more than 30% year over year. Revenues from dynamic product ads and app-install campaigns each more than doubled, while the scaled sales channel, which includes mid-market and small businesses, also doubled.
Active advertisers increased more than 70%. Reddit Max advertisers grew more than 60% sequentially and Max revenues rose more than 150% from the first quarter as automation and machine learning improved campaign setup and performance.
Reddit also expanded its Shopify integration to general availability and launched Shopping Listing Ads in alpha. The multi-advertiser format matches product catalogs with high-intent shopping conversations, which grew 40% year over year.
RDDT’s Operating Details
RDDT maintained very high gross profitability. Reddit’s GAAP gross margin expanded 50 basis points on a year-over-year basis to 91.3%.
Operating expenses increased with continued investment. Sales and marketing expenses surged 62.4% year over year to $195.9 million. Research and development expenses rose 17.6% year over year to $231.3 million, while general and administrative expenses increased 10.1% to $75.7 million.
Adjusted EBITDA increased 106% year over year to $342.8 million, and the adjusted EBITDA margin improved to 42.6% from 33.4%.
RDDT’s Balance Sheet & Cash Flow
As of June 30, 2026, Reddit had cash, cash equivalents, and marketable securities of $2.79 billion compared with $2.77 billion as of March 31, 2026.
For the second quarter of 2026, operating cash flow rose 135% to $262 million and free cash flow reached $261 million.
The company repurchased 1.5 million shares for $235 million at an average price of $157.57 per share. Approximately $760 million remained under the current authorization.
Reddit's Q3 Outlook Signals Continued Momentum
For the third quarter of 2026, management expects revenues between $860 million and $870 million. The midpoint implies about 48% year-over-year growth.
Adjusted EBITDA is projected to be between $385 million and $395 million, representing a midpoint margin of about 45%. Management also lowered its full-year stock-based compensation outlook to the low-to-mid-teens as a percentage of revenues and expects full-year dilution at the lower end of its 1% to 3% target range.
RDDT’s Zacks Rank & Stocks to Consider
Reddit currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Arista Networks (ANET - Free Report) , ACI Worldwide (ACIW - Free Report) and Analog Devices (ADI - Free Report) . Each stock carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arista Networks shares have gained 30.5% in the year-to-date period. Arista Networks is set to report second-quarter 2026 results on Aug. 4.
Shares of ACI Worldwide have gained 20.6% in the year-to-date period. ACI Worldwide is set to report the second-quarter 2026 results on Aug. 6.
Shares of Analog Devices have rallied 35.2% in the year-to-date period. Analog Devices is slated to report fiscal third-quarter 2026 results on Aug. 19.