Reddit forecasts strong revenue on AI-driven ad strength, shares surge

Reddit Inc. signage is seen on the New York Stock Exchange trading floor. (Yuki Iwamura/AP Photo)

Reddit forecast third-quarter revenue above Wall Street estimates on Thursday, betting on growing digital advertising driven by its artificial intelligence-powered marketing tools and sending its shares up nine per cent in extended trading.

The forecast follows bigger rival Meta’s upbeat second-quarter results and strong revenue outlook on Wednesday, lifted by the Facebook and Instagram parent’s core ad business.

Advertisers are increasingly turning to platforms such as Reddit, Meta, and TikTok, which offer advanced AI-powered tools for automated ad creation, precise audience targeting and access to fast-growing user bases.

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Reddit offers marketers various ad formats, including conversation placement ads, which allow brands to advertise directly within discussion threads in its interest-based communities known as subreddits.

The San Francisco, California-based company last month launched two new AI-powered ad features designed to help brands drive engagement by tapping into user conversations on the platform.

Reddit expects third-quarter revenue of US$535 million to US$545 million, well above analysts’ average estimate of US$473 million, according to data compiled by LSEG.

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Second quarter revenue rose 78 per cent to US$500 million, beating estimates of US$426 million.

Daily active unique visitors increased 21 per cent to 110.4 million in the quarter ended June 30, while global average revenue per user jumped 47 per cent to US$4.53, the company said.

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Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid