Growing demand for AI-powered advertising tools and stronger community-based targeting helped Reddit deliver a higher-than-expected revenue forecast, pushing the company’s shares up by more than 12% on Friday. If the momentum continues, the platform could add nearly US$3.4 billion to its market value.
The company projected second-quarter revenue between US$715 million and US$725 million, crossing analyst expectations of US$711.6 million. It also forecast adjusted earnings before interest, taxes, depreciation, and amortisation between US$285 million and US$295 million.
Reddit’s first-quarter revenue jumped 69% year-on-year to US$663 million, while advertising revenue surged 74% to US$625 million. Daily active unique visitors increased 17% to 126.8 million, and global average revenue per user climbed 44%.
Performance advertising contributed more than 60% of total ad revenue during the quarter. The company also recorded a 75% rise in active advertisers compared to last year.
Reddit has continued building its ad business around subreddit-based targeting. The platform allows advertisers to place campaigns within discussions linked to specific interests, products, and communities. According to the company, these conversations provide stronger intent signals compared to traditional keyword targeting.
To improve campaign performance, It has expanded its AI-driven advertising tools. These include an AI copywriter for Reddit-style ads, automated image cropping tools, and Max campaigns powered by Reddit Community Intelligence and AI.
The company said Max campaigns help automate targeting, bidding, budget allocation, and creative selection. They reported that these campaigns reduced cost per action by 17% and increased campaign results by 27% during tests conducted between June and August 2025.
Reddit has also introduced Reddit Pro Trends, a tool that allows advertisers to monitor keywords, competitor mentions, community discussions, and brand engagement across the platform.
The results come as it competes for digital advertising budgets against larger social media platforms. The company also confirmed it is continuing to hire talent while several competitors are reducing workforce sizes.
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