TLDR: Reddit reported a robust second quarter with revenue jumping 78% year-over-year to $500 million, driven by AI-fueled ad innovations and strong user growth. The company also forecast third-quarter revenue above Wall Street estimates, attributing this to growing digital advertising powered by its AI marketing tools. Shares surged following the announcement.
Reddit Inc. has announced a strong second quarter, with revenue soaring by 78% year-over-year to reach $500 million, significantly surpassing analysts’ estimates of $426 million. This impressive performance has been largely attributed to the company’s advancements in AI-powered advertising tools and robust user engagement, leading to a surge in its shares by as much as 15% in extended trading.
The social media platform also provided an optimistic outlook for the third quarter, forecasting revenue between $535 million and $545 million. This projection comfortably exceeds Wall Street’s average estimate of $473 million, signaling continued momentum for the company. The forecast aligns with a broader industry trend where advertisers are increasingly gravitating towards platforms that offer sophisticated AI tools for automated ad creation, precise audience targeting, and access to expanding user bases.
Key to Reddit’s success in the second quarter was the growth in its user base and advertising revenue. Daily active unique visitors increased by 21% to 110.4 million in the quarter ended June 30. Global average revenue per user (ARPU) also saw a significant jump of 47% to $4.53. The company’s profit per share reached 45 cents, exceeding estimates of 19 cents.
Reddit has been actively investing in artificial intelligence to enhance its advertising offerings. Last month, the company launched two new AI-powered ad features designed to boost engagement by leveraging user conversations within its interest-based communities, known as subreddits. These tools include Reddit Insights, which identifies trends and real-time insights for campaign strategies, and Conversation Summary Add-ons, which integrates Reddit user discussions into advertisements. Furthermore, Reddit highlighted the growing adoption of its AI-powered search tool, Reddit Answers, launched in December 2024, which boasted 6 million weekly active users by the end of Q2 2025, a substantial increase from 1 million in the prior period.
In addition to advertising, Reddit’s ‘other revenue’ segment, which includes content licensing deals, saw a 24% year-over-year increase to $35 million in Q2. This segment is bolstered by significant deals with OpenAI and Google, each valued at $60 million. Reddit’s machine translation feature now supports 23 languages, contributing to user growth across Asia Pacific, Europe, and Latin America.
Commenting on the results, Emarketer analyst Jeremy Goldman stated, ‘Reddit just turned in a quarter that would make even its harshest subreddit proud.’ Danni Hewson, head of financial analysis at AJ Bell, added that Reddit’s ability to understand user intent through authentic community conversations positions it to unlock new monetization opportunities, making it ‘hugely popular with advertisers.’
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Despite some volatility in U.S. traffic attributed to fluctuations in Google Search traffic, CEO Steve Huffman noted improved engagement as the quarter progressed. Reddit’s focus on global expansion, sustainable scaling, and becoming the ‘most trusted place on the internet’ remains central to its strategy.
