Reddit has released a pretty spectacular set of Q1 earnings, revealing its revenue climbed 61 per cent to US$313.9 million from US4243 million.
Its revenue outside the US grew by a staggering 82 per cent from US$43.2 million to $78.5 million. These numbers saw Reddit turn its net income from a US$575 million loss to US$26.2 million in the black.
Reddit’s ad revenue of $358.6 million grew 61 per cent year-over-year. Its other revenue was $33.7 million, up
66 per cent year-over-year.
“Over 400 million people now come to Reddit each week—because when you want real opinions, you turn to real people,” said Steve Huffman, co-founder and CEO of Reddit. in a statement announcing the results.
“20 years in, I have never been more excited about Reddit’s future than I am now. We’re growing and building a more valuable platform for community and human perspective.”
Reddit’s share price climbed as much as 19 per cent in after-hours trading but has since dropped to around 5 per cent after its execs discussed the shaky economy and Google search-related challenges.
“Ever-shifting macro environments like these create both challenges and opportunities. We’ve grown through challenging times before—people need connection and information just as much in uncertain times, and we’re well-positioned to meet this moment,” wrote Huffman and Reddit’s CFO Drew Vollero in a letter to shareholders.
“Our unique advantage is that people come to Reddit with intent—they’re not just scrolling, they’re also seeking. They come to Reddit for real opinions from real people. When you ask a question online today— whether it’s about a product, decision, or life choice—you’re not looking for generic answers or sanitised summaries.”
Reddit’s status in the market has seen a significant change of late. It has been a big beneficiary of changes to Google’s search algorithm.
Last year, B&T revealed that since Google changed its algorithm in a Helpful Content Update, Reddit’s traffic across the internet increased nearly fourfold, often at the expense of smaller independent publishers.
In February this year, Reddit said a Google search algorithm change temporarily impacted its user growth during the fourth quarter. Search-driven traffic soon recovered in the first quarter, the company said at the time.
Huffman said on an earnings call that Reddit’s search-derived traffic “could be more bumpy than usual” in the near term, because “the search ecosystem is under heavy construction.”
He said that search-related “short-term bumps don’t affect our long-term strategy or opportunity,” and that the company is “in control of our own destiny.”
Now with OpenAI’s ChatGPT and other services, including Google’s own AI Overviews, providing answers scraped from across the web, users can potentially get answers faster than trawling through Reddit.
Huffman, however, maintained that LLM-powered tools create “annotated” and “sterile” answers, Reddit’s unique user-created content involving “subjective, authentic, messy, multiple viewpoints” will help the company stand out.
