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Reddit (RDDT - Free Report) reported third-quarter 2026 earnings of $1.40 per share, up 75% year over year and surpassing the Zacks Consensus Estimate by 6.87%. Strong advertising demand, higher pricing and improved monetization supported the upside.
Revenues increased 53% year over year to $895 million, beating the consensus mark by 0.96%. Advertising revenues climbed 54%, while global Daily Active Uniques (DAUq) averaged 130.3 million, up 12% year over year.
RDDT’s Revenue Mix Reflects Broad-Based Growth
Advertising revenues increased 54% year over year to $847 million, driven by higher pricing and increased impressions. Other revenues grew 35% to $48 million, providing an additional contribution to overall growth.
U.S. revenues advanced 50% year over year to $718.9 million. International revenues surged 67% to $176.1 million, reflecting continued expansion across overseas markets.
Reddit's User Trends Highlight Monetization Strength
Weekly Active Uniques (WAUq) averaged 515.2 million, increasing 16% year over year. U.S. WAUq remained nearly flat at 188.5 million, while international WAUq rose 28% to 326.7 million.
U.S. DAUq declined 2% year over year to 50.7 million, whereas international DAUq grew 24% to 79.6 million. Global average revenue per unique user increased 36% to $6.87. U.S. ARPU jumped 53% to $13.82, while international ARPU increased 32% to $2.43.
Search referral traffic declined meaningfully during the quarter, with weakness accelerating toward September. Management highlighted sequential growth in logged-in and app users, which account for more than 80% of platform monetization.
RDDT's Ad Products Drive Conversion Gains
Advertising performance strengthened across the sales funnel. Click volume increased more than 50% year over year, while conversion volume more than tripled. Shopping and app-install advertising revenues each grew more than 95%, reflecting strong demand for performance-oriented campaigns.
Scaled channel revenues increased more than 80% year over year, supported by higher advertiser spending and new customer acquisition. Mid-market active advertisers grew more than 50%, with demand spanning North America and Europe.
Reddit Max advertiser adoption more than tripled sequentially as the company expanded automation capabilities. Video advertising revenues more than doubled, while revenues generated through the Ads API ecosystem increased more than 45% quarter over quarter.
The company also expanded shopping campaign capacity to 20 million products and enhanced lead generation capabilities, supporting advertiser engagement across retail and business services.
In the third quarter of 2026, GAAP gross margin improved 50 basis points year over year to 91.5%.
Research and development expenses increased 34.2% year over year to $263.5 million. Sales and marketing expenses surged 62.7% to $209.4 million, while general and administrative expenses rose 23.1% to $84.7 million.
As of Sept. 30, 2026, Reddit held $3.03 billion in cash, cash equivalents and marketable securities compared with approximately $2.79 billion at the end of the preceding quarter.
Operating cash flow increased 96% year over year to $363.8 million. Free cash flow reached approximately $362.6 million, up 98%, with a free cash flow margin of approximately 41%.
The company repurchased approximately 670,000 shares for $100 million at an average price of $149.81 per share. Approximately $660 million remained under its existing repurchase authorization.
Reddit’s Q4 Outlook Signals Growth Amid Traffic Pressure
For the fourth quarter of 2026, management expects revenues between $1 billion and $1.03 billion. The midpoint represents approximately 40% year-over-year growth.
Adjusted EBITDA is projected to be between $480 million and $510 million, implying an adjusted EBITDA margin of approximately 49% at the midpoint.
Management cautioned that continued weakness in search referrals could cause total daily active users to decline by a low-double-digit percentage sequentially in the fourth quarter.
Reddit plans to begin testing a primarily logged-in experience in select international markets during the fourth quarter. The initiative aims to improve personalization, engagement, and advertising targeting while reducing dependence on external search traffic.
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Image: Bigstock
Reddit Q3 Earnings Beat on Ad Growth and Strong Monetization
Key Takeaways
Reddit (RDDT - Free Report) reported third-quarter 2026 earnings of $1.40 per share, up 75% year over year and surpassing the Zacks Consensus Estimate by 6.87%. Strong advertising demand, higher pricing and improved monetization supported the upside.
Revenues increased 53% year over year to $895 million, beating the consensus mark by 0.96%. Advertising revenues climbed 54%, while global Daily Active Uniques (DAUq) averaged 130.3 million, up 12% year over year.
RDDT’s Revenue Mix Reflects Broad-Based Growth
Advertising revenues increased 54% year over year to $847 million, driven by higher pricing and increased impressions. Other revenues grew 35% to $48 million, providing an additional contribution to overall growth.
U.S. revenues advanced 50% year over year to $718.9 million. International revenues surged 67% to $176.1 million, reflecting continued expansion across overseas markets.
Reddit Inc. Price, Consensus and EPS Surprise
Reddit Inc. price-consensus-eps-surprise-chart | Reddit Inc. Quote
Reddit's User Trends Highlight Monetization Strength
Weekly Active Uniques (WAUq) averaged 515.2 million, increasing 16% year over year. U.S. WAUq remained nearly flat at 188.5 million, while international WAUq rose 28% to 326.7 million.
U.S. DAUq declined 2% year over year to 50.7 million, whereas international DAUq grew 24% to 79.6 million. Global average revenue per unique user increased 36% to $6.87. U.S. ARPU jumped 53% to $13.82, while international ARPU increased 32% to $2.43.
Search referral traffic declined meaningfully during the quarter, with weakness accelerating toward September. Management highlighted sequential growth in logged-in and app users, which account for more than 80% of platform monetization.
RDDT's Ad Products Drive Conversion Gains
Advertising performance strengthened across the sales funnel. Click volume increased more than 50% year over year, while conversion volume more than tripled. Shopping and app-install advertising revenues each grew more than 95%, reflecting strong demand for performance-oriented campaigns.
Scaled channel revenues increased more than 80% year over year, supported by higher advertiser spending and new customer acquisition. Mid-market active advertisers grew more than 50%, with demand spanning North America and Europe.
Reddit Max advertiser adoption more than tripled sequentially as the company expanded automation capabilities. Video advertising revenues more than doubled, while revenues generated through the Ads API ecosystem increased more than 45% quarter over quarter.
The company also expanded shopping campaign capacity to 20 million products and enhanced lead generation capabilities, supporting advertiser engagement across retail and business services.
Reddit's Operating Margins Expand Despite Higher Costs
In the third quarter of 2026, GAAP gross margin improved 50 basis points year over year to 91.5%.
Research and development expenses increased 34.2% year over year to $263.5 million. Sales and marketing expenses surged 62.7% to $209.4 million, while general and administrative expenses rose 23.1% to $84.7 million.
Adjusted EBITDA increased 70% to $402.3 million. Adjusted EBITDA margin expanded 460 basis points to 44.9%, reflecting revenue growth outpacing adjusted cost increases.
RDDT’s Cash Generation and Balance Sheet Improve
As of Sept. 30, 2026, Reddit held $3.03 billion in cash, cash equivalents and marketable securities compared with approximately $2.79 billion at the end of the preceding quarter.
Operating cash flow increased 96% year over year to $363.8 million. Free cash flow reached approximately $362.6 million, up 98%, with a free cash flow margin of approximately 41%.
The company repurchased approximately 670,000 shares for $100 million at an average price of $149.81 per share. Approximately $660 million remained under its existing repurchase authorization.
Reddit’s Q4 Outlook Signals Growth Amid Traffic Pressure
For the fourth quarter of 2026, management expects revenues between $1 billion and $1.03 billion. The midpoint represents approximately 40% year-over-year growth.
Adjusted EBITDA is projected to be between $480 million and $510 million, implying an adjusted EBITDA margin of approximately 49% at the midpoint.
Management cautioned that continued weakness in search referrals could cause total daily active users to decline by a low-double-digit percentage sequentially in the fourth quarter.
Reddit plans to begin testing a primarily logged-in experience in select international markets during the fourth quarter. The initiative aims to improve personalization, engagement, and advertising targeting while reducing dependence on external search traffic.
RDDT’s Zacks Rank & Other Stocks to Consider
Reddit currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector include ACI Worldwide (ACIW - Free Report) , Affirm (AFRM - Free Report) and AMETEK (AME - Free Report) . While AFRM and AME sport a Zacks Rank #1 (Strong Buy), ACI Worldwide carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
ACI Worldwide shares have gained 16.5% in the year-to-date period. ACI Worldwide is set to report third-quarter 2026 results on Nov. 5.
Shares of Affirm have increased 0.5% year to date. Affirm is set to report first-quarter fiscal 2027 results on Nov. 5.
Shares of AMETEK have rallied 22.6% year to date. AMETEK is slated to report third-quarter 2026 results on Nov. 3.