Reddit’s second quarter results received a strong positive market response as the company delivered substantial revenue growth and profitability above Wall Street’s expectations. Management attributed this outperformance to the continued expansion of its advertising business, product improvements aimed at user engagement, and successful marketing campaigns. CEO Steve Huffman highlighted, “Revenue grew 78% year-over-year to $500 million, our fastest quarterly growth rate since 2022,” pointing to a combination of higher daily active users and increased advertiser demand as key drivers this quarter.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Reddit’s Q2 Earnings Call

• Brian Thomas Nowak (Morgan Stanley) asked about U.S. user trends and improvement drivers. CEO Steven Huffman highlighted product and marketing efforts, saying, “a combination of intentional work on the product side and marketing and user acquisition all benefited.”
• Ronald Victor Josey (Citi) inquired about the evolution of Reddit’s search and LLM (large language model) integration. Huffman detailed plans to unify Reddit’s traditional search with the new AI-powered Reddit Answers to serve both seekers and scrollers.
• Benjamin Thomas Black (Deutsche Bank) questioned how being the most cited domain for AI models impacts user trends and data licensing. Huffman acknowledged Reddit’s growing strategic value for AI partners and noted ongoing learning about the full extent of data usage.
• Thomas Steven Champion (Piper Sandler) asked about engagement and the impact of ML-driven personalization, as well as increased sales and marketing spend. Huffman and Vollero described ongoing product improvements and strategic investment in marketing as key drivers.
• Mark Elliott Shmulik (Bernstein Research) raised questions about the mix of seekers and scrollers and the adoption of Reddit Answers. Huffman indicated both user types are important and emphasized plans to integrate Reddit Answers capabilities throughout the platform.

Catalysts in Upcoming Quarters

Going forward, our analysts will be monitoring (1) adoption and monetization of AI-powered search and Reddit Answers, (2) the effectiveness of machine translation and localized content for international expansion, and (3) the rollout and impact of automated ad tools for small and mid-sized businesses. Progress on these initiatives will be vital indicators of Reddit’s ability to sustain growth and deepen user and advertiser engagement.

Reddit currently trades at $223.60, up from $161.08 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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