Reddit has unveiled its fourth-quarter earnings, showcasing impressive financial results that surpassed market expectations. The platform's revenue soared by 71% to reach $428 million, marking the most rapid growth for any quarter since 2022. Despite experiencing fluctuations in user growth due to a Google search algorithm change, Reddit's global daily active uniques (DAUq) increased by 39% from a year earlier, achieving an average of 101.7 million for the quarter. The company's strategic adaptations to search updates and internal improvements played a crucial role in this outcome.
Reddit demonstrated robust financial performance with a notable rise in both revenue and net income. The company's sales for the fourth quarter surged from $250 million a year earlier, while its net income almost quadrupled to $71 million, translating to 36 cents per share. Reddit also exceeded analysts' expectations with adjusted earnings reaching $154 million, surpassing the forecasted $128 million.
The user metrics for Reddit also indicated substantial growth. Global logged-in DAUq experienced a 27% year-over-year increase, reaching 46.1 million during the quarter. Meanwhile, global logged-out DAUq saw an even more significant rise of 51%, bringing the total to 55.6 million. Despite the temporary challenges presented by changes in Google's search algorithm, Reddit managed to recover and stabilize its search-related traffic in the first quarter.
"What happened wasn't unusual — referrals from search fluctuate from time to time, and they primarily affect logged-out users," said Reddit CEO Steve Huffman.
Reddit benefited from Google's updates alongside enhancements made within its own platform. These efforts helped the company not only recover but also capitalize on the changes, pushing its revenue beyond the anticipated $405 million mark. The earnings per share of 36 cents exceeded expectations, which were pegged at 25 cents.