Reddit’s ad revenue jumps in first earnings report

R/cha-ching.

Reddit’s advertising business brought in $222.7 million last quarter, up 39% year over year, the company announced yesterday during its first earnings call as a publicly traded company.

Some numbers: Total revenue was $243 million in the quarter, a 48% YoY increase. More than four-fifths of Reddit’s revenue comes from the US.

Still, the platform isn’t profitable. It posted a loss of $575 million, largely because of expenses associated with its IPO.

🚀🚀🚀: User traffic is up. The site reported 82.7 million daily active unique users, up 37% year over year.

That uptick in traffic is largely coming from Google, which in February expanded its partnership with Reddit to use the latter’s data to train Google’s AI tools and improve its search engine. Google has sent more traffic to Reddit since last year, but claims it isn’t preferencing the platform.

“Yes, we’re seeing a tailwind from Google…but the agreement we have with Google around the data training, that has nothing to do with traffic,” Reddit co-founder and CEO Steve Huffman said on a call with investors Tuesday. Huffman said Reddit was open to further licensing agreements like the one it made with Google, but that the company would be “selective.”

“We need to be very considerate of where our data goes and what it’s being used for,” he said.

The ad stuff: Reddit is benefiting from a healthier-than-expected ad market. While its offering remains largely contextual, Reddit COO Jen Wong said on the call that the company’s performance advertising tools “drove more than half of our growth in the quarter.”

She added that the company has a diverse array of advertisers, and that yet no vertical exceeds 20% of the company’s ad revenue. According to the company’s S-1 filing, just 10 advertisers represented more than a quarter of the company’s ad revenue in 2022 and 2023.

Zoom out: Reddit is great if you’ve got a tough question or need to find the best toaster, but advertisers have long considered it a “nice-to-have” platform, rather than an essential one. When Marketing Brew spoke with Wong ahead of Reddit’s earnings call about her vision for the company’s ad ambitions, she said “we are a need-to-have, because we already have users and people and customers that you can’t find anywhere else.”