Reddit Achieves First Profit as a Public Company Driven by User Growth and AI Tools

NEW YORK (AP) — Reddit has made headlines by turning a profit for the first time since becoming a public company.

For the quarter that ended in September, the social media platform reported a profit of $29.9 million, equating to 16 cents per share. Its sales also reached $348.4 million, which exceeded the expectations of analysts who had predicted $312.8 million. Additionally, Reddit's daily user base surged to 97.2 million, marking a significant 47% increase compared to last year.

In a letter directed to shareholders, CEO Steve Huffman highlighted that the success of a new AI translation feature played a crucial role in this remarkable user growth, particularly in international markets like France, India, and the Philippines. This feature allows users to translate posts between languages, including English, French, Spanish, Portuguese, Italian, and German. Huffman also announced plans to extend this feature to over 30 countries by the year 2025.

Huffman noted a growing interest in Reddit, stating that in 2024, the term "Reddit" was the sixth most searched word on Google in the U.S. He emphasized that when individuals seek answers, advice, or connection, they increasingly turn to Reddit. This importance was exemplified when the White House utilized Reddit to disseminate critical information during recent hurricanes, effectively reaching those impacted with timely updates.

Although advertising remains the main revenue source for Reddit, their latest earnings report indicates that recent data licensing agreements are beginning to show financial benefits. Notable companies, such as Google and OpenAI, have entered into agreements with Reddit to use its content for training their AI models.

Operating out of San Francisco, Reddit Inc. went public in March at a share price of $34. Since then, its stock has experienced a significant increase, tripling in value. As of the most recent closing, shares were up 42% to $116.05.

In closing, it is important to clarify that Reddit has achieved its first profit since going public, not throughout its entire 20-year history. This milestone marks a significant achievement as the company continues to grow and innovate.

profit, usergrowth, AI