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Reddit posts higher Q2 profit as sales jump 61%; shares fall on search concerns

Reddit posts higher Q2 profit as sales jump 61%; shares fall on search concerns

Second-quarter revenue, earnings and third-quarter guidance beat Wall Street estimates, but shares fell on concerns that choppy Google search referrals and search changes could hurt traffic and user discovery.

Fact Check
Every element of the claim is confirmed by primary reporting. CNBC's earnings report shows Q2 revenue rose 61% YoY to $805M beating estimates, EPS and Q3 guidance both beat Wall Street estimates, and shares fell ~11% after hours specifically on concerns about choppy Google search referrals and reliance on Google traffic. WSJ independently confirms the higher profit ($253M net income). RTTNews corroborates the 61% revenue surge and profit more than doubling.
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Summary

Reddit reported stronger-than-expected second-quarter results as user growth and advertising momentum lifted revenue and profit, but shares fell as investors focused on volatile Google search referrals and the risk that changes to Google search could reduce traffic. Revenue rose 61% to $805 million, while net income increased to $253 million, or $1.25 a share, from $89 million, or 45 cents a share, a year earlier, topping analyst expectations cited by FactSet and LSEG. Reddit forecast third-quarter revenue of $860 million to $870 million and adjusted earnings of $385 million to $395 million, both above Wall Street estimates.

Terms & Concepts
  • DAUq: Daily active unique users metric
  • ARPU: Average revenue earned per user
  • data licensing: Selling access to data for commercial use