RDDT · Q2 2025 Earnings

Bullish

Reported July 31, 2025

30-second summary

Revenue grew 78% YoY to $500M with ad revenue up 84% to $465M, GAAP EPS of $0.45, and adjusted EBITDA margin of 33.4%. Q3 guidance of $535–545M revenue and $185–195M adjusted EBITDA implies continued mid-70s% YoY growth and roughly 35% EBITDA margin at the midpoint. The strategic story tightening this quarter: Reddit is the #1 most-cited domain for LLMs, Reddit Answers scaled from 1M to 6M weekly users, and ad innovations (DPA, Conversation Summary Add-ons) are converting that corpus authority into measurable ROAS.

Headline numbers

EPS

Q2 FY2025

$0.45

Revenue

Q2 FY2025

$0.50B

+78.0% YoY

Gross margin

Q2 FY2025

90.8%

Free cash flow

Q2 FY2025

$0.11B

Operating margin

Q2 FY2025

13.6%

Key financials

Q2 FY2025

Metric	Q2 FY2025	YoY
Revenue	$0.50B	+78.0%
EPS	$0.45	—
Gross margin	90.8%	—
Operating margin	13.6%	—
Free cash flow	$0.11B	—

Guidance

Prior quarter data unavailable — comparison not possible.

Segment performance

Q2 FY2025

Segment	Q2 FY2025	YoY
Ad revenue	$0.465B	+84.0%
Other revenue	$0.035B	+24.0%

Platform metrics

Q2 FY2025

Segment	Q2 FY2025
Daily Active Uniques (DAUq) - Global	110.4 million
Daily Active Uniques (DAUq) - U.S.	50.3 million
Daily Active Uniques (DAUq) - International	60.1 million
Weekly Active Uniques (WAUq) - Global	416.4 million
Logged-in DAUq - Global	49.3 million
Average Revenue Per Unique (ARPU) - Global	$4.53
Average Revenue Per Unique (ARPU) - U.S.	$7.87

Profitability

Q2 FY2025

Segment	Q2 FY2025
Adjusted EBITDA Margin	33.4%

Other KPIs

Q2 FY2025

Segment	Q2 FY2025	YoY
U.S. Revenue	$0.409B	+79.0%
International Revenue	$0.091B	+71.0%

Management tone

From the prepared remarks and Q&A, three things are notable on first coverage:

Management's framing of Reddit's strategic position has shifted from "valuable community platform" to "internet's reference corpus." Huffman: Reddit is "#1 most cited domain for AI across all models," and Reddit Answers is revealing that the corpus is "deeper and broader than anticipated." This is a different self-conception than the post-IPO "we're a place for communities" pitch — it positions Reddit as infrastructure that LLMs depend on, with data licensing terms tilting in Reddit's favor as that dependence grows.

The user-acquisition narrative has tightened around search. The plan is to unify traditional Reddit search and Reddit Answers into a single search-first experience, with the search box moved "front-and-center." Onboarding is shifting from "questionnaire-heavy to search-box-first with instant personalization." This is a concrete product reorientation, not a vision statement, and it directly answers the perennial question of how Reddit converts external SEO traffic into retained users.

Ad business commentary is unusually specific on monetization mechanics rather than abstract demand strength. DPA delivers "2x higher ROAS than standard conversion campaigns"; Conversation Summary Add-ons drive "10%+ higher CTR than standard image ads." Management is showing the unit economics behind the 84% growth rather than waving at "advertiser demand."

Q&A highlights

Brian Nowak · Morgan Stanley

Asked about U.S. user trends throughout Q2 and into Q3, and inquired about ad business innovations to drive ROAS and advertiser scaling in the back half.

Steve noted slower April start but better traction as Q2 progressed; Q2 exit DAUs higher than Q2 average of 110M, with July adding DAUs in US and internationally. Jen highlighted DPA (Dynamic Product Ads) expansion, automation improvements, and community intelligence products (Reddit Insights and Conversation Summary Add-ons) as key innovations.

Q2 exit DAU higher than 110M quarterly averageJuly added DAUs in both US and international marketsDPA delivering 2x higher ROAS than standard conversion campaigns on averageCommunity Intelligence products launched at Cannes Lions in June

Ron Josie · Citi

Asked about Reddit Answers rollout globally and its role as a central search experience, and inquired about evolution of advertiser relationships given 84% ad growth and 50%+ advertiser count growth.

Steve explained plan to unify traditional Reddit search with Reddit Answers into single search experience, bringing search box front-and-center in app for both new and returning users. Jen described creation of global accounts team for larger customers, integration into third-party services (e.g., Smartly partnership), and increased funnel diversification.

Reddit Answers growing from 1M to 6M weekly users last quarterUnifying search experience under heavy developmentGlobal accounts team created for large-scale customer relationshipsSmartly integration launched in Q2 for easier multi-channel campaign management

Benjamin Black · Deutsche Bank

Asked how Reddit's position as most-cited domain for LLMs translates to user trends; inquired about data licensing opportunity evolution; and requested detail on new user acquisition characteristics and marketing strategy learnings.

Steve noted Reddit corpus growing in importance to major internet players, positioning Reddit strategically; corpus proving deeper and broader than anticipated with Reddit Answers. Jen outlined early marketing learnings: awareness/consideration gap outside US, positive traction from France brand campaign, and plans to market Reddit as unique search destination.

Reddit is #1 most cited domain for AI across all modelsData licensing deal terms shifting as corpus value increasesReddit Answers revealing broader user dependence on Reddit corpus than previously understoodFrance brand campaign generating positive awareness and user acquisition

Tom Champion · Piper Sandler

Asked about engagement and time spent trends relative to personalization and ML models; requested clarification on sales and marketing spend acceleration from Q1 to Q2.

Steve emphasized relevance-retention-growth loop, describing shift from heavy-handed onboarding to simplified search-first approach with instant personalization and contextualized feeds. Drew detailed variable cost drivers of spend increase (commissions, incentives), 100+ sequential hires (70% in consumer-facing), and quantified marketing spend as low double-digits ($10-20M) on ~$500M Q2 base.

Sales and marketing spend grew high 30% YoY in Q2Headcount increased 17% YoY, 70% focused on consumer-facing roles (sales, marketing, ad tech)Marketing spend estimated at low double-digit millions on $500M Q2 revenue baseQ3 guidance implies continued high 30% cost growth range

Mark Shmulek · Bernstein Research

Asked about expected mix shift between scrollers (50M) and seekers (60M); inquired whether Reddit Answers growth is driven by early adopters or incremental users.

Steve indicated no long-term preference for mix balance, expecting single users to serve both roles daily. Noted Reddit Answers will transition from distinct product to integrated capability across app, with many integration points beyond search bar (comment pages, post detail pages). External search to remain important for new user acquisition.

70M weekly users running search on RedditReddit Answers currently second product in nav area, transitioning to integrated capabilityCore users expected to be both scrollers and seekers within single dayMultiple integration points for Reddit Answers capability planned throughout app

What to watch into next quarter

Whether U.S. DAUq holds above 50M and international DAUq sustains growth above 60M now that July showed sequential adds in both regions — these are the inputs that drive the 35% EBITDA-margin print.

Whether ad revenue growth decelerates below 70% YoY in Q3, which would signal that the 84% Q2 print captured one-time DPA/Community Intelligence adoption rather than a sustainable new run-rate.

Other revenue (data licensing + premium) growth: 24% in Q2 was the slowest line. Watch whether renegotiated deal terms — management's stated lever — show up as an acceleration or whether this line continues to decelerate.

Marketing spend efficiency internationally: management called out the France campaign as a positive proof point. Track whether international ARPU (currently $1.73 vs. U.S. $7.87) moves meaningfully or whether spend grows without ARPU response.

Reddit Answers weekly active users vs. the 6M figure cited this quarter, and any disclosure of search-unified product impact on logged-in DAUq retention.

Sources

Reddit Q2 2025 earnings press release (SEC EDGAR) — https://www.sec.gov/Archives/edgar/data/1713445/000171344525000194/earningspressreleaseq225.htm
Reddit Q2 2025 earnings call Q&A transcript

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