Social media platform Reddit delivered a standout performance in the December quarter, reporting a sharp 70 per cent year-on-year jump in revenue to $726 million, driven largely by rapid adoption of AI-powered advertising tools.

The results comfortably beat LSEG estimates of $665.4 million. Earnings per share came in at $1.24, more than double market expectations. Reddit also forecast first-quarter revenue of $595–605 million, above analysts’ projections.

AI advertising fuels momentum

Reddit’s growth has been powered by AI-driven ad products such as automated campaign tools, AI-generated copywriting, and dynamic creative optimisation. These features have helped expand Reddit’s active advertiser base by 75 per cent year-on-year, according to Chief Operating Officer Jen Wong.

Daily active unique visitors rose 19 per cent to 121.4 million, while global average revenue per user increased 42 per cent. Eleven of Reddit’s top 15 advertising categories recorded revenue growth of over 50 per cent, led by retail, technology, financial services and pharmaceuticals.

Subreddits emerge as premium ad spaces

Executives highlighted subreddit-based targeting as a key differentiator, allowing brands to engage with highly focused communities rather than broad algorithm-driven feeds. CEO Steve Huffman described Reddit as “the most human place on the internet”, stressing the value of authentic, moderated conversations.

Alongside advertising, Reddit’s AI data licensing agreements with companies such as OpenAI and Google have emerged as an additional revenue stream, helping offset search traffic risks.

Buyback boosts investor confidence

Reddit announced its first-ever $1 billion share buyback, pushing shares up 4 per cent in after-hours trading. Analysts see the move as a strong signal of confidence. Evercore ISI and Deutsche Bank have raised price targets, citing sustained growth and improving monetisation.

With AI-led ads, growing user engagement, and a strong balance sheet, Reddit is increasingly being viewed as a credible challenger to Meta in digital advertising.