Reddit finished 2024 with a strong quarter, increasing total revenue by 71%, year-on-year (YoY)
Total revenue rose to $427.7m in the fourth quarter, and global daily active uniques (DAUq) increased by 30% YoY to 101.7 million. In 2024, the company grew its total revenue 62% to $1.3bn and its ad revenue 50% to $1.2bn.
Q4 was the second consecutive profitable quarter for the company. Reddit recorded a net loss of $484m in 2024, which CFO Andrew Vollero attributed in an earnings call with analysts on 12 February to ‘accounting charges related to stock-based compensation.’ Reddit expects Q1 2025 total revenue to be around $360m and $370m.
During the earnings call, Reddit COO Jennifer Wong said that the company grew ‘across the funnel’ in Q4, recording the fastest growth in brand advertising campaigns in over three years. Mid- and lower-funnel revenue now makes up 60% of the company’s total ad revenue, according to Wong, who mentioned that the company will fine tune its ad products to better fit the needs of performance-orientated advertisers.
2024 was a defining year for Reddit. The company went public in March and has introduced several new features since; including giving brands the option to place ads within the comments sections. This new placement accounted for 3% of ad impressions in Q4.
In December, the company introduced Reddit Answers, an AI-powered search tool that summarises community discussions for users. While currently only available in English and not monetised, the company is building a team dedicated to expanding the feature and sees it as a driver of future ad revenue.
The company also introduced an AI Headline Generator and an LLM-powered ad review system, which helps brands create dynamic campaigns and decreases average campaign review time from 30 minutes to one minute, respectively.
In 2025, the company will build more Reddit-unique ad formats and expand machine learning optimisations, said Wong. Already this year, it has launched Ask Me Anything (AMA) ads, which enable brands to promote their Q&A sessions, as well as Pro Trends, which gives brands real-time insights on over 100,000 keywords. The company will invest in making its ad stack more usable and adding more automation features, specifically to improve performance.
Despite exceeding total revenue expectations, Reddit shares fell more than 15% after the earnings call. Reports attributed the plunge to lower-than-expected DAUq growth and changes in the Google search algorithm, which investors think might have affected user growth in Q4.
Featured image: Brett Jordan / Unsplash
