Reddit Q1 2025 Earnings Report

Reddit EPS Results

• Actual EPS: $0.13
• Consensus EPS: $0.02
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: -$8.19

Reddit Revenue Results

• Actual Revenue: $392.36 million
• Expected Revenue: $370.55 million
• Beat/Miss: Beat by +$21.82 million
• YoY Revenue Growth: +61.50%

Reddit Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 5:00PM ET

Reddit (NYSE:RDDT) operates a website that organizes digital communities. It organizes communities based on specific interests that enable users to engage in conversations by sharing experiences, submitting links, uploading images and videos, and replying to one another. The company was founded in 2005 and is headquartered in San Francisco, California.

Reddit Q1 2025 Earnings Call Transcript

Key Takeaways

• Reddit reported Q1 2025 revenue of $392 million, up 61% year-over-year, with an adjusted EBITDA of $115 million (29% margin) and GAAP net income of $26 million, marking GAAP profitability on a trailing twelve-month basis and guiding Q2 revenue of $410 million–$430 million.
• Daily active users reached 108 million and weekly users 401 million, both up 31% year-over-year, and April DAUs grew in the high teens despite variable external traffic from Google algorithm shifts.
• Key product initiatives include upgrading Reddit Search with integrated AI via Reddit Answers (1 million weekly users), expanding machine translation to 13 languages for faster international growth, and launching posting guidance and community tools to streamline content creation and reduce moderator burden.
• Advertising revenue of $359 million grew 61% year-over-year, driven by balanced top-funnel and mid/lower-funnel objectives, 50%+ growth in active advertisers, US ad revenue up 56% and international up 83%, and stronger monetization through higher ad loads, pricing gains, ML optimizations, Pixel/CAPI adoption, comments ads, and beta Dynamic Product Ads with 90% higher ROAS.

Presentation

[Operator]

Good afternoon. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to Reddit's Q1 twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer I would now like to turn the conference call over to Jesse Rose, Head of Investor Relations.

[Operator]

You may begin your conference.

[Jesse Rose, Head of Investor Realtions at Reddit]

Thanks, Kelvin. Thank you, and good afternoon, everyone. Welcome to Reddit's first quarter twenty twenty five earnings conference call. Joining me today are Steve Hoffman, Reddit's Co Founder and CEO Jen Wang, Reddit's COO and Drew Valero, Reddit's CFO. Before we get started, I'd like to remind you that our remarks today will include forward looking statements and actual results may vary materially from those contemplated by these forward looking statements.

[Jesse Rose, Head of Investor Realtions at Reddit]

Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings. These forward looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward looking statements. During this call, we will discuss both GAAP and non GAAP financial measures. Reconciliation of GAAP to non GAAP financial measures is set forth in our letter to shareholders.

[Jesse Rose, Head of Investor Realtions at Reddit]

Our first quarter letter to shareholders and accompanying earnings press release are available on our Investor Relations website, investor.redditinc.com, and Investor Relations subreddit rrddt. And now I'll turn the call over to Steve.

[Steve Huffman, Co-Founder and CEO at Reddit]

Hi, everyone. Thank you for joining our Q1 earnings call. Next month, Reddit turns 20. That's two decades of building something special on the Internet, a user powered platform where you can be your honest self and connect over topics you care most about, whether popular, niche, or personal. We've endured a lot of change over the years, the rise of smartphones, social media and now AI, a global pandemic, and countless trends in how people connect online.

[Steve Huffman, Co-Founder and CEO at Reddit]

But one thing has always held true. The world needs community and shared knowledge, and that's what we do best. Millions of people have contributed to Reddit being the eclectic and thriving place it is today. And as a result, we have over 100,000 enduring communities. Twenty years after our founding, we still have many opportunities and much to do.

[Steve Huffman, Co-Founder and CEO at Reddit]

We took a big step forward last year, becoming a public company. And I think we delivered strong results in our first year. We carried that momentum into 2025 with another solid quarter of growth and profitability. Revenue was $392,000,000 up 61% year over year, marking our third consecutive quarter of growth over 60%. We ended the quarter with four zero one million weeklies and 108,000,000 dailies, both up 31% year over year, and we continue to scale efficiently while investing in the future.

[Steve Huffman, Co-Founder and CEO at Reddit]

There's a lot to be excited about as we make progress on our core product and ad business, and we look forward to walking you through those updates today. Ever shifting macro environments like these create both challenges and opportunities. We've grown through challenging times before. People need connection and information just as much in uncertain times, and we're well positioned to meet this moment. Our unique advantage is that people come to Reddit with intent.

[Steve Huffman, Co-Founder and CEO at Reddit]

They're not just scrolling. They're also seeking. They come to Reddit for real opinions from real people. When you ask a question online today, whether it's about a product, decision, or life choice, you're not looking for generic answers or sanitized summaries. You're looking for lived experience from personal recommendations, which is why Reddit is the number one platform for finding, quote, possible solutions to people's needs or situations.

[Steve Huffman, Co-Founder and CEO at Reddit]

And it's where half of all product conversations online take place. For Seekers, Reddit's open nature is essential. It allows our content to surface across the open web and be easily found in search. We remain one of the last major platforms that doesn't require you to sign in to learn something because we believe that by giving everyone access to knowledge, we are helping fulfill the purpose of the Internet. This openness broadens visibility, drives awareness, and brings us new users.

[Steve Huffman, Co-Founder and CEO at Reddit]

But it also means that some of our traffic from external sources is variable. Ultimately, short term shifts don't affect our long term strategy or opportunity. We control our own destiny. On the core product side, we're focused on making it a seamless experience to create, contribute to, and discover communities. Here's how we're realizing that vision through our product road map.

[Steve Huffman, Co-Founder and CEO at Reddit]

First, using Search to help people find what they're looking for on Reddit. Search will help new users opening the app for the first time find their home on Reddit, and it will help visitors from external search find the answers they're looking for. We're upgrading Reddit Search and better integrating it throughout our product. Reddit Answers, our version of AI search, has reached 1,000,000 weekly users. And last month, we began its global expansion, beginning with Australia and The UK.

[Steve Huffman, Co-Founder and CEO at Reddit]

We are now working to integrate it into Reddit's core search experience to further streamline the path from question to answer on Reddit. Next, becoming a truly global platform by growing outside of The U. S. Machine translation is now available in 13 languages with more on the way. The focus markets where we've implemented our international playbook, including France, Spain, and Brazil, are growing nearly twice as fast as total international users.

[Steve Huffman, Co-Founder and CEO at Reddit]

For us, internationalization isn't just a way to grow. It's essential to our mission of providing community and knowledge to everyone in the world. And finally, making Red Hat more fun and easy to use. We're continuing to make it simpler and easier to contribute to communities. In March, we released a set of tools to streamline the contribution process for users, including posting comment guidance, which provides real time suggestions to improve your post, post insights and community suggestions.

[Steve Huffman, Co-Founder and CEO at Reddit]

These improvements not only help users but also meaningfully reduce the burden on moderators as the content people contribute is of higher quality and better aligns with community rules. We also have 400,000 people playing games and other interactive experiences built on our developer platform in Q1, showing that interactive experiences can thrive on Reddit. And we have more big ideas to drive engagement and premium content, which will roll out later this year. None of this happens without our communities. They are the heart of Reddit.

[Steve Huffman, Co-Founder and CEO at Reddit]

From our Minecraft to our witchcraft to our craft beer, every subreddit is a world of its own built by the people who use it. And this unique community model isn't just our history. It's our future. We're not looking to imitate any other platform. We're looking to make Reddit the best version of Reddit by being faster, easier, and better to use.

[Steve Huffman, Co-Founder and CEO at Reddit]

On Reddit, it's not about perfection. It's about participation. Not about broadcasting, but belonging. That's why, twenty years in, we're still growing, still resonating, and still real proudly. Thanks again for being with us on this journey.

[Steve Huffman, Co-Founder and CEO at Reddit]

I'll now hand it over to our COO, Jen Wang.

[Jen Wong, COO at Reddit]

Thanks, Steve. Hello, everyone. It was another strong quarter and a good start to the year for Reddit. We continued our momentum from last year and grew total revenue 61% year over year to $392,000,000 in Q1. Our unique proposition and core platform improvements continue to drive differentiated growth and positive outcomes for advertisers.

[Jen Wong, COO at Reddit]

In Q1, the advertising business grew 61% year over year to $359,000,000 driven by broad based strength across objectives, channels, verticals and geographies. Let me discuss our ad revenue drivers. Our strategy is to be a multi objective ads platform. And in Q1, we continued to see growth across all objectives. Top of the funnel brand objectives accounted for about 40% of total ad revenue, consistent with prior quarters.

[Jen Wong, COO at Reddit]

Mid and lower funnel performance revenue accounted for about 60% of total ad revenue and was a major growth driver in the quarter. Across channels, our scaled business, which includes mid market and SMB advertisers, continues to be a revenue and active advertiser growth driver. The total number of active advertisers, including large, mid market and SMB, grew over 50% year over year in Q1. We saw broad growth across verticals with 10 of our top 15 verticals growing over 50% year over year led by pharma, retail, auto, telecom and finance categories. Across geographies, U.

[Jen Wong, COO at Reddit]

S. Ad revenue grew 56% year over year, and international ad revenue grew 83% year over year, the fastest growth rate in three years. For impressions and pricing, ad revenue was driven by year over year growth in impressions from underlying user growth, ongoing smart ad load work, increases in engagement and improved monetization of the conversation page. The ads and comments placement contributed about 6% of impressions in the quarter, and we're seeing healthy advertiser adoption and performance outcomes with this placement. Ad pricing was up year over year.

[Jen Wong, COO at Reddit]

We are delivering more valuable impressions, and advertisers are benefiting from efficiency improvements. Now moving to our ad stack. We're focused on three things: driving performance across objectives improving usability for our advertisers and productivity for our sales force and offering our advertisers ready to unique solutions in ad formats. We made meaningful progress against each of these areas in Q1. First, driving performance of our ad solutions.

[Jen Wong, COO at Reddit]

The lower funnel investments that we delivered last year, including ML optimizations, measurement adoption and format optimization, continue to drive positive outcomes and performance. In Q1, we delivered more outcomes to advertisers through meaningful year over year increases in conversion and click volume. We improved our ML optimization models and enhanced signal fidelity for our first party pixel to improve tracking accuracy. We're encouraged with our progress driving adoption of our measurement tools, including our Pixel and conversion API, CAPI. Lower funnel conversion revenue covered by CAPI tripled year over year in Q1.

[Jen Wong, COO at Reddit]

Over 90% of our managed advertisers have adopted our Pixel, and we recently launched an integration between our Pixel and Google Tag Manager, enabling easier adoption for new customers. On formats, we're excited about the progress to date with our shopping ad unit, Dynamic Product Ads, or DPA, which is currently in beta testing. In the quarter, we improved our DPA format in two areas: performance and ease of use, and we're excited about the road map for the rest of the year. We're continuing to deploy conversion and click prediction model improvements, enabling advertisers to onboard larger product catalogs with millions of products to deliver more relevant ads. In Q1, BPAs delivered an average of over 90% higher ROAS compared to campaigns run last year.

[Jen Wong, COO at Reddit]

Now second, improving usability for our advertisers and productivity for our sales force. We launched IAS brand safety and viewability in Q1, providing advertisers post campaign measurement in addition to our pre bid integration that we launched last year. We also invested in AI enhancements for our sales teams that enabled them to 10x the number of insights reports that inform campaign decisions and saw substantially higher revenue for campaigns with these insights. Third, offering advertisers Reddit unique solutions and formats. We're leveraging Reddit's community intelligence, including insights and signals from real conversations about almost every product and service to help businesses inform their strategy, learn more about their customers and drive more performance.

[Jen Wong, COO at Reddit]

We've also launched enhancements to our upper funnel offerings. In Q1, we began a series of upgrades to our premium takeover ad products to simplify the sales process and drive more value for advertisers globally. And specifically for category takeovers, which allow advertisers to own placements for contextually relevant communities, we're testing a more visually impactful format and elevated placement. And we'll be working on more enhancements in this area in the coming quarters. Coming off of our launch in Q4 of Reddit Pro trends, the number of companies using Reddit Pro grew over 2x from Q4 with healthy engagement around the toolset.

[Jen Wong, COO at Reddit]

Overall, I'm proud of our progress, and there's a lot to be excited about. Reddit is a differentiated platform and company, and we believe we are well positioned with our road map and our go to market strategy to continue making more businesses successful on Reddit. Now I'll turn the call over to Drew.

[Drew Vollero, CFO at Reddit]

Thank you, Jen, and good afternoon, everyone. Q1 was a solid start to the year for Reddit with strong results quite similar to each quarter since becoming a public company last year. Building on that thought, Q1 revenues were up 61% consistent with revenue growth for the prior four quarters, which has averaged about 60%. Similarly, Q1 total adjusted costs were up 19% consistent with the second half of twenty twenty four where adjusted costs grew about 20%. The financial performance for Q1 was again defined by the five financial strategies that have been consistent over the past several quarters, highlighting the company's solid fundamentals and scalable model.

[Drew Vollero, CFO at Reddit]

These headlines include: one, differentiated revenue growth. In Q1, we delivered strong growth of 61% despite the tougher comps, well above most peers. Second, scaling profitably. Adjusted EBITDA hit $115,000,000 in Q1 and GAAP net income reached 26,000,000 That's good progress to be GAAP profitable in our historically slowest seasonal quarter of the year. We're also now GAAP profitable on a trailing twelve month basis.

[Drew Vollero, CFO at Reddit]

Three, expanding margins. Adjusted EBITDA margin reached 29%, up over 2,500 basis points year over year, and the net income margin was 7%, up from a loss last year. Our incremental adjusted EBITDA margin was 70% plus for the fifth consecutive quarter. On the product side, gross margins expanded 190 basis points to 90.5%. Fourth, generating positive cash flow.

[Drew Vollero, CFO at Reddit]

Operating cash flow exceeded $100,000,000 for the first quarter, ending at $128,000,000 our highest ever, and our operating cash flow margin was 33% of revenue. Fifth, minimizing dilution. Total diluted shares fell again sequentially to $2.00 $6,000,000 in Q1 as we continue to thoughtfully manage our share count. I'll provide a bit more color on these headlines. First, total revenue of $392,000,000 was driven by our advertising revenue, which grew 61% year over year to $359,000,000 and continues to scale rapidly across channels, verticals and geographies.

[Drew Vollero, CFO at Reddit]

Other revenue, which includes revenue from our data license business, reached $34,000,000 growing 66% year over year. Regionally, revenue grew 5782% year over year in The U. S. And international, respectively. International revenue growth accelerated to the fastest growth in over three years as we deepened and expanded our advertising relationships in important markets, including The UK and EMEA.

[Drew Vollero, CFO at Reddit]

In the quarter, we saw three encouraging revenue growth drivers. First, performance revenue drove more than half the dollar growth in the quarter. Second, our scale channel, including mid market and SMB advertisers, was also a growth driver, contributing more than half the dollar growth in the quarter. And third, impressions continues to be the primary driver and consistent with other quarters. But new for this quarter, we also saw a nice tailwind from pricing in the quarter.

[Drew Vollero, CFO at Reddit]

We believe the gains in pricing reflect the progress from our investments in performance and targeting in the middle and lower funnel. We're delivering more clicks and conversions, which is driving more efficient ad spend and higher returns for our advertisers. Now moving to costs, we continue to scale revenue as we continue to scale revenue, our investments are focused in two areas, hiring and technology. Hiring is focused on sales and engineering, which is primarily expanding customer coverage on the sales side. And for engineering, we're adding resources in ad tech, machine learning and search.

[Drew Vollero, CFO at Reddit]

The traction from those investments has been strong and we found a sweet spot where we have both accelerated revenue growth and kept high incremental adjusted EBITDA margins well above our long term target of 50%. In Q1, total adjusted cost growth was up 1% sequentially and 19% year over year, less than a third the rate of revenue growth. Cost of revenue remained efficient with gross margins exceeding 90% for Q1, up 190 basis points year over year. Gross margin benefited from incremental revenue growth and we saw lower contract pricing from our hosting providers from the new contracts we signed late last year. That said, we reinvested some of those savings back across many important areas such as supporting user and ad revenue growth, using more machine learning, scaling search, accelerating machine translation from international markets and better optimizing our site speed and performance across the world.

[Drew Vollero, CFO at Reddit]

OpEx growth was consistent with prior quarters, up 17% as total headcount was up 13% year over year. We ended the quarter with slightly more than 2,300 people, up 3% sequentially. G and A headcount was down 5% sequentially reflecting our strategy to lever back of house expenses. I noted on the fourth quarter call that we're focused on scaling profitably and turning differentiated revenue growth, high margins and low CapEx into meaningful cash flow generation. We delivered on those dimensions in Q1.

[Drew Vollero, CFO at Reddit]

Free cash flow for Q1 was $127,000,000 30 2 percent of revenue. Our CapEx remained light, less than 1% less than $1,000,000 in the quarter. Cash and investments ended at $1,950,000,000 up over $110,000,000 sequentially. That's a healthy gain. SBC was $107,000,000 about 27% of revenue, down substantially versus prior year, which reflected the catch up SBC expense from the IPO.

[Drew Vollero, CFO at Reddit]

Net income was $26,000,000 or $0.14 per basic share and $0.13 per diluted share. As we look ahead, we'll share our internal thoughts on revenue and adjusted EBITDA for the second quarter, which is where we have the greatest visibility. In the second quarter twenty twenty five, we estimate revenue in the range of $410,000,000 to $430,000,000 representing 46 to 53% year over year revenue growth with a midpoint of about 50%. Adjusted EBITDA in the range of 110,000,000 to $130,000,000 representing approximately 180% to 230% year over year growth. So it's good to see Reddolph to a strong start in 2025.

[Drew Vollero, CFO at Reddit]

Our financial goal remains to continue to deliver consistent, strong and differentiated performance. In the end, we'll measure that differentiated financial performance primarily with cash flow. That concludes my comments. Let me turn the call back over to Steve.

[Steve Huffman, Co-Founder and CEO at Reddit]

Thanks, Drew. We're going to start, as usual, with taking one of the questions received from the community. That question was, the core value proposition of Reddit is its meaningful human answers. How is the Reddit team protecting data quality from fake accounts or bots? It's super easy to make an account right now, which I love, but does but does that not run a trade off of more bot accounts?

[Steve Huffman, Co-Founder and CEO at Reddit]

First, let's start at the top. We fully agree. That's the value prop of Reddit, authentic content from humans, and that's what we want to preserve. It has long been an area of work for us, which is preventing the abuse or manipulation of Reddit. And this is a new frontier in that fight, right, with AI and smarter agents.

[Steve Huffman, Co-Founder and CEO at Reddit]

And it is very much top of mind for us. And that work continues. And we agree that some aspects of Reddit, like our historically permissive account creation, will need to evolve, I think, during this time. So very important. Thank you for the question.

[Steve Huffman, Co-Founder and CEO at Reddit]

Okay. Back over to Jesse.

[Jesse Rose, Head of Investor Realtions at Reddit]

Great. Thanks, Steve, Jen, Drew. Kelvin, why don't we open up the line and take some questions from the folks on the line now? Thank you.

[Operator]

Your first question comes from the line of Ron Josey of Citi. Please go ahead.

[Ron Josey, Managing Director at Citi]

Great. Thanks for taking the question. I had two, please. First, just with Jen, I had a question for you on the advertising front. I know you mentioned based strength earlier on the call, but talk to us about what you're seeing currently from a macro perspective and how you see the ad market today and maybe how macro might impact the business?

[Ron Josey, Managing Director at Citi]

That's question one. And then Steve, I wanted to get your thoughts on DAUQs and users overall. Just more specifically, your sense and how you see user growth for the remainder of the year going forward. And I ask you this only because I think we've seen two or so Google algorithm changes since December. And so any thoughts on user base would be very helpful.

[Ron Josey, Managing Director at Citi]

Thank you.

[Jen Wong, COO at Reddit]

Okay. Thanks, Ron. I'll take the first one. Look, we ended Q1 with momentum. And as of April, we're off to a good start.

[Jen Wong, COO at Reddit]

And I think we're well positioned with our road map and our go to market. I will acknowledge there's a lot of uncertainty in the market, but so far, it's mostly business as usual. We're delivering more profitable outcomes for customers with our road map work, and that's important in this moment. And we're staying close to our customers to help them through the volatility by sharing insights on consumer trends, you know, that inform their strategy based on things that we're seeing on Reddit. One thing I'll note is that in moments like this that are volatile or uncertain, Reddit's a really important resource, for users, for people who are just trying to figure out, should I buy this now or are becoming more considered about their purchases because of the uncertainty?

[Jen Wong, COO at Reddit]

So they come to Reddit to navigate that. And, you know, Reddit is an important partner to brands and businesses who are trying to understand how their consumers might be changing their behavior. So, I think we're well positioned for moments like this.

[Steve Huffman, Co-Founder and CEO at Reddit]

Me?

[Jen Wong, COO at Reddit]

Oh, sorry.

[Jen Wong, COO at Reddit]

Steve. Ahead.

[Steve Huffman, Co-Founder and CEO at Reddit]

Alright. Thanks, Shen. Thanks, Ron, for the question. You know, users in Google. So, look, we're happy with the start to the year.

[Steve Huffman, Co-Founder and CEO at Reddit]

In q one, we had 108,000,000 dailies, 400,000,000 weeklies. So that's 31% each year over year. And we believe we're in great shape over the medium and longer term. Look, ultimately, we drive growth when we make improvements to the product, which is where our focus is. So things like onboarding, search, machine translation, they all drive growth over the long term.

[Steve Huffman, Co-Founder and CEO at Reddit]

Now look, remember, we're an open platform, and we want people to find Reddit's content in search. Being open drives awareness and visibility. It can also create variability. And we do expect some bumps along the way from Google because we've already seen a few this year. This is expected in any year, But given that the search ecosystem is under heavy construction, the near term could be more bumpy than usual.

[Steve Huffman, Co-Founder and CEO at Reddit]

To give you an early read on Q2, through the month of April, we're seeing total DAUs growing in the high teens range year over year. But the short term bumps don't affect our long term strategy or opportunity. We're in control of our own destiny. And I think the question behind the question is, is there long term risk to Reddit here? And in my view, the answer is no.

[Steve Huffman, Co-Founder and CEO at Reddit]

In fact, I think there's opportunity. There's no doubt LLMs will evolve search on the Internet. We can all see that, and it's awesome. And sometimes people will want the summarized, annotated, sterile answers from AI, and we're even building this ourselves in Reddit Answers. But other times, they want the subjective, authentic, messy, multiple viewpoints that Reddit provides.

[Steve Huffman, Co-Founder and CEO at Reddit]

So in the same way that Reddit, for the last decade, has been an alternative to social media, social media being performative and manicured and Reddit being the opposite, Reddit communities and conversation will be an alternative to AI search answers. And furthermore, people want what Reddit has. And when they search, they search for Reddit by name. In the last ninety days, the word Reddit was the sixth most searched word on Google between news and Trump, which incidentally also says something about our position in the media landscape. The Google algorithm serves users what they want and what they ask for.

[Steve Huffman, Co-Founder and CEO at Reddit]

And, of course, we have had a long and symbiotic relationship with Google. So in summary, expect some bumps and expect us to continue to improve the product and lay the foundation for more consistency in the back half of the year and beyond. And our opportunity remains huge. Community is universal. Our knowledge base is unparalleled.

[Ron Josey, Managing Director at Citi]

Thanks.

[Operator]

Your next question comes from the line of Andrew Buen of JMP Securities. Please go ahead.

[Andrew Boone, Managing Director at Citizens JMP]

Thanks so much for taking my questions. Jen, I wanted to ask about pricing, just given the fact that this is the first time this has really come through as

[Andrew Boone, Managing Director at Citizens JMP]

a part of revenue growth.

[Andrew Boone, Managing Director at Citizens JMP]

Can you speak to the drivers of that? And then stepping back, how do you think about pricing and maybe ROAS at large compared to other platforms? Or is that not the right way to think about pricing as a formula of of advertising at large? And then, Steve, in terms of Answers, it's great to see that Answers is now being tested in terms of the default search. Can you talk about that evolution and how you view Answers over time?

[Andrew Boone, Managing Director at Citizens JMP]

And, additionally, how were people actually asking questions of Reddit today, and how do you view that evolving in the future? Thanks so much.

[Jen Wong, COO at Reddit]

Sure. Can take the first one on pricing.

[Steve Huffman, Co-Founder and CEO at Reddit]

Yeah.

[Jen Wong, COO at Reddit]

So I I you know, look. We don't pricing is an outcome of the supply and demand in the market.

[Jen Wong, COO at Reddit]

But the work that we're doing to drive more outcomes, clicks, conversions, app installs, makes each impression more valuable. And we've been consistently delivering more outcomes to our advertisers, and more advertisers are using those objectives to get those outcomes. So when advertisers can find the outcomes they want at the prices they want, they can continue to spend. And I'd say we're seeing a combination of pricing has been an output of more demand in the marketplace and more value from each impression from those increasing outcomes that we're delivering. And I think we've consistently continued to deliver that and we'll continue I think there's more on our road map to delivering more value to advertisers.

[Jen Wong, COO at Reddit]

Where we are compared to peers is sometimes hard to see. There's not it's not we hear this from our advertisers that we are competitive. We're able to deliver market competitive outcomes for a lot of our advertisers, either on a CPA, cost per acquisition basis, on a cost per click basis, or on a return on ad spend basis. So I do think we've made progress there and are market competitive in a wide variety for a wide variety of customers. I think there's a balance between that and also scale.

[Jen Wong, COO at Reddit]

So what they what what happens is when they're able to see those outcomes, some of that comes back in comes back in, you know, kind of their pocket of return, and some of that comes back in share to us. So, like I said, we don't optimize for pricing. It's an output of the marketplace, but, we're very encouraged by the movement in pricing. I do think the other thing I'll note that's important is that the marketplace, we want it to be consistent in delivering outcomes and, outcomes at a certain price for our customers. So pricing growth is, you know, fine within a certain level, but we want it to be consistent, I'd say.

[Steve Huffman, Co-Founder and CEO at Reddit]

Okay. On Answers. So okay. For context, Answers, we built relatively quickly, and we put it in the app. So today, Answers lives in the nav bar of the app as its kind of own separate experience.

[Steve Huffman, Co-Founder and CEO at Reddit]

Now it's up to a million, weekly users, which is which is great. But we wanna integrate it with Reddit search, and we wanna integrate search more deeply into Reddit. So so what does that mean? Integrating into Reddit search means we want one search box. And so that'll be the primary search box, and we type your query in there.

[Steve Huffman, Co-Founder and CEO at Reddit]

You'll get potentially your answer's answer or, you know, more of a traditional Reddit response depending on on what you're searching for. And then integrating it more deeply into Reddit means I think there will be at least three that I can think of entry points for search. The first is the one we have, right, the search box. But the two other ones, I think, are really interesting. One would be at the beginning of the user journey.

[Steve Huffman, Co-Founder and CEO at Reddit]

So you're a new user opening Reddit for the first time. I think using Answers to see what's in Reddit and learn that Reddit almost certainly has what you're looking for. And then the other is for users coming from external search, helping them get a more, like, summarized or easy to parse version of the, of the answer on Reddit. And so I think there's lots of opportunities here. And it's how the questions are evolving is itself a really good question.

[Steve Huffman, Co-Founder and CEO at Reddit]

I think it is unlocking a new type of query on the Internet, and that is a, question with a subjective answer. And so it's really good. I just things that I've done, in the last month, I've asked to give me a reading guide for an author I'm interested in. And so it just gives a very practical guide there and then also recommends a few related subreddits. I've asked it for an intro to a new hobby, and it basically prints out a new starter guide.

[Steve Huffman, Co-Founder and CEO at Reddit]

And I think what's cool about Answers is everything it says, every bullet is a, verbatim comment from Reddit. So you can click or tap any of those and get into the Reddit conversation about that thing. So, lots to come. Everything I've described, we're working on right now. So we hope to have that in the app this year.

[Steve Huffman, Co-Founder and CEO at Reddit]

And, of course, there'll be, I'm sure, plenty of iteration. But I think really interesting things we're seeing so far.

[Operator]

Your next question comes from the line of Benjamin Black of Deutsche Bank. Please go ahead.

[Benjamin Black, Co-Head Internet Equity Research at Deutsche Bank]

Great. Thanks for taking my question. Steve, you spoke about making Reddit easier to use and touched on making it sort of easier to contribute. I'd be curious to hear how contribution rates have actually trended as you've grown your user base. And in the past, how improving contribution rates actually impacted the business?

[Benjamin Black, Co-Head Internet Equity Research at Deutsche Bank]

Does it have an impact on time spent, DAU to Wow improvements? Any color there would be helpful. And then one on the data licensing side of the business. You're now entering your second year of your larger LM sort of day deals, and investors are starting to think about the renewal process. Can you maybe talk about your and also your

[Benjamin Black, Co-Head Internet Equity Research at Deutsche Bank]

And how should we be generally thinking about the sustainability of the current data licensing revenue? Thank you.

[Steve Huffman, Co-Founder and CEO at Reddit]

Okay. Question one, contribution rates. So it's a little bit of a complex, system here. Part of it that, we have been focused on and moving is what we call a contribution success. And so that is whether you're a new or core user, the post that you submit, it's surviving.

[Steve Huffman, Co-Founder and CEO at Reddit]

Right? So it not being removed by a mod. Because I think this is one of the most important education moments for new users. So when we talk about post success or post guidance, I I can I can give you a scenario? You're new to Reddit.

[Steve Huffman, Co-Founder and CEO at Reddit]

You've been trained on social media. You're on a community for the first time. You ask a question in a subreddit that, for some reason, is is in violation of its rules, but you don't even know those rules. So you submit that post, and then it ends up getting removed. Really bad user experience.

[Steve Huffman, Co-Founder and CEO at Reddit]

User didn't do anything wrong. They're just new. And so that's work for the mod, bad experience for the new user. So what we're doing now is we catch that post at submit time. So the user hits submit and then get a little pop up that says, hey.

[Steve Huffman, Co-Founder and CEO at Reddit]

You're on a subreddit. This is a community. There's a rules. In particular, there's this rules, and this post doesn't work. And you can fix it.

[Steve Huffman, Co-Founder and CEO at Reddit]

It it it turns a bad user experience into an educational moment. And so that sort of thing has been really meaningful. I don't have to number off the top of my head, but moving post success rate, we've been successful in that. And that just makes the whole ecosystem healthier. So we're gonna keep, you know, we're gonna keep pulling the thread because it also reduces the burden on moderators, and it just makes moderation more fun.

[Steve Huffman, Co-Founder and CEO at Reddit]

Okay. Data licensing. I think too early to talk about renewals. But as far as I've heard, they love Reddit data. I can tell you I mean, I see a lot, right, when I use their respective platforms.

[Steve Huffman, Co-Founder and CEO at Reddit]

I see, you know, our little snoo mascot all over the place. And so I think I'd say mission accomplished there. And, look, I think our our early premise was correct, which is any search company, any AI company needs an ongoing supply of new information, especially new relevant information. So our strategy is still the same, which is let's do everything. Let's be open and open for business.

[Steve Huffman, Co-Founder and CEO at Reddit]

Let's build our own products on top of our own corpus, and do our best to make sure the Reddit information is accessible in as many verticals as possible. So thanks for the questions.

[Operator]

Your next question comes from the line of Tom Champion of Piper Sandler. Please go ahead.

[Thomas Champion, Director & Senior Research Analyst at Piper Sandler Companies]

Hi, good afternoon. Steve, I'm wondering if you could share some thoughts about how Google and the index treats machine translated content. Is this highly ranked in the indexes as unique kind of UGC? Or is it perceived to be AI generated, which could be ranked lower? Just any comments would be helpful.

[Thomas Champion, Director & Senior Research Analyst at Piper Sandler Companies]

And then, Drew, question for you on cost growth. Obviously, really strong results since the IPO and the 19% cost growth is impressive in the context of 60% top line growth. And so I guess the question is why not invest more? Is there anything you could invest in or be doing on the hiring side or performance side in light of that extremely strong top line growth? Why is the 70% incremental EBITDA margin optimal?

[Thomas Champion, Director & Senior Research Analyst at Piper Sandler Companies]

Thank you.

[Steve Huffman, Co-Founder and CEO at Reddit]

What great questions. Alright. Let's start with Google. Machine translation. Good question.

[Steve Huffman, Co-Founder and CEO at Reddit]

We had the same question ourselves when we started on this. And so we just, I think, did the sensible thing and asked Google, hey. Because we're basically the first person to do this at scale. Is this cool? They said yes.

[Steve Huffman, Co-Founder and CEO at Reddit]

They've actually been helping us with it. We use Gemini for the translation. So I think it's just a it's a really nice I think this is a great example of the symbiotic relationship. We can put more UGC in the index, now in more languages, and use that as a channel for new users around the world. So it's totally sanctioned, and it's been working great.

[Steve Huffman, Co-Founder and CEO at Reddit]

And then, Drew.

[Drew Vollero, CFO at Reddit]

Sure.

[Drew Vollero, CFO at Reddit]

Why can't we invest more? Well, we we can't see. We certainly have the money to do that. I think, overall, Tom, thanks for the question. The The North Star here is revenue growth twice as fast as costs.

[Drew Vollero, CFO at Reddit]

So that's how we think about it. You're right that over the last few quarters, we certainly have done better than that. We didn't take 70% and draw it up on the dart board and say this is what we want. That's just where we are currently. We're having a lot of success with the investments, which I think is probably the reason why you're having the question that you're asking.

[Drew Vollero, CFO at Reddit]

So we're really investing in hiring and we're investing in technology, right? So a lot of investments in the P and L and machine learning, in search and answers, machine translation across the globe, like all those are investments. They're paying really solid dividends. It's helping accelerate our growth rate. I think those are the ideas that we're thinking about.

[Drew Vollero, CFO at Reddit]

I think some of the new ideas that are potentially on the plate we're starting to discuss is really marketing. How do you build community both inside The U. S. And outside The U. S.

[Drew Vollero, CFO at Reddit]

Potentially user acquisition. Those are things that are things that we're going back and forth on. I think we're disciplined and we realize great companies are profitable companies. We want to do that. But I think revenue twice as fast as cost is how we think about the business going forward.

[Drew Vollero, CFO at Reddit]

We have been doing better than that. If we do come up with the ideas that we think will make sense for our users and for our shareholders, we're more than happy to invest it. We certainly have the cash as well-to-do it. We have over $1,000,000,000 in cash. So but right now most of the investments that we're looking at are generally a lot cheaper than that.

[Drew Vollero, CFO at Reddit]

They're in the 10,000,000 to $20,000,000 range. And so we're making a lot of them. The good news is the revenue has been growing extremely fast here. And so we've been able to afford those. We've reached that sweet spot that I talked about in my script where we've been able to accelerate revenues and have strong incremental margins.

[Drew Vollero, CFO at Reddit]

But I think as you think about our business in the long term, I think revenue growth twice as fast as cost growth is kind of what we're managing to and we'll see as the ideas come across what we want to invest in.

[Steve Huffman, Co-Founder and CEO at Reddit]

I'll just add ten seconds onto that, which is sometimes I like to tease Drew, but I think the discipline around cost growth has probably been our single most important management lever over the last few years. And I think we've gotten good at being able to build what we wanna build in a, I think, sustainable way. And so it's something we put a lot of effort into, but I it's it's something we're, I think, proud of.

[Operator]

Your next question comes from the line of Ken Gorelski of Wells Fargo. Please go ahead.

[Ken Gawrelski, Analyst at Wells Fargo]

Hi, thank you very much for

[Ken Gawrelski, Analyst at Wells Fargo]

the question. Appreciate it. I want to go back to the DAU point you made about being up high teens in April and volatility. Could you just give us a please a bit more color on both U. S.

[Ken Gawrelski, Analyst at Wells Fargo]

Versus international and kind of logged out versus logged in? Can you just give us a bit more color to understand the trend in April? And was there any disruption that you saw kind of in the March time period that may have impacted the 1Q reported DAU number? Thank you.

[Steve Huffman, Co-Founder and CEO at Reddit]

So look, we're focused on the product and building longer term. Search traffic is mostly logged out, but it's some logged in too. It's more US than not, simply because that's where we've had the content base. That's the biggest content base and where we've had it the longest. So, look, we'll see where it goes.

[Steve Huffman, Co-Founder and CEO at Reddit]

As I said, we expect some bumps. Some bumps are normal. It's probably more bumpy than typical because of the evolution. So we'll share more with you next quarter.

[Operator]

Your next question comes from the line of John Colantini of Jefferies. Please go ahead.

[John Colantuoni, Equity Research Analyst, Internet at Jefferies]

Great. Thanks for the questions. First, when thinking about all the various drivers of your advertising revenue over the medium term, whether it be improved targeting, new ad formats, etcetera. Can you give us your perspective on how you're thinking about the relative contributions to growth from all those various initiatives in the next twelve to twenty four months? You've obviously got a lot going on, so I think that perspective would be helpful.

[John Colantuoni, Equity Research Analyst, Internet at Jefferies]

And second, on dynamic product ads specifically, talk about your progress in marrying predictive analytics and conversion insights along with building other necessary capabilities to begin scaling that product more meaningfully this year? Thanks.

[Jen Wong, COO at Reddit]

I can take that. It's hard it's hard to break down each piece. We, you know, we obviously are investing across a lot of areas. But the growth drivers that we're seeing now, I think, have more opportunity and road map in them. So in the go to market, the scale channel for mid market and SMB just has so many more advertisers that can be on Reddit, that aren't on Reddit today.

[Jen Wong, COO at Reddit]

So that is there's just thousands of advertisers globally across every vertical in that segment that can be on on Reddit. So, you know, that has been our highest growth channel, and I think has a lot of runway and opportunity. The second is the performance objective for us. So actually specifically the conversions, installs and soon adding DPA or dynamic product adds to it has been our highest growing objective. And that's a young objective.

[Jen Wong, COO at Reddit]

That's something we've been working on over the last, let's call it eighteen to twenty four months. We're still early in that journey. And I think that has a lot of roadmap to continue delivering more value for advertisers at higher scale. I'll talk about and then the final one I'll just say is I think we're very early journey just given that more than half of our audience is outside of The U. S, but it's only 20% of our business today.

[Jen Wong, COO at Reddit]

And our there's a lot of opportunity there. So those are the three things I would point to. From a DPA perspective, it's in beta testing. It is early. It is a complicated product.

[Jen Wong, COO at Reddit]

It is end to end, just everything from the formats, the product ingestion, and it gets its own ML models. It benefits greatly from convergent API, it takes from the measurement and the real time data and signals. So there's a lot of work that goes into it. So we're very, very early. But I'd say we've updated our ML model for DPA.

[Jen Wong, COO at Reddit]

And as I mentioned, we saw a 90% ROAS gain. And we're very early in our journey. So I think we feel very encouraged by the testing that we're seeing from the advertisers who are the early adopters here. Look, we'll want to add capabilities to have even more products ingested into the catalog, and we'll want to continue doing even more work on ML. And our models will get better as we lay down more signal and get more signal from more adopters of conversion APIs.

[Jen Wong, COO at Reddit]

So I think we feel very encouraged by the results, but we're very early in the process.

[Operator]

Your next question comes from the line of Eric Sheridan of Goldman Sachs. Please go ahead.

[Eric Sheridan, Managing Director at Goldman Sachs]

Thanks so much for taking the questions. Maybe two, if I could. Steve, maybe a bigger picture question. I think a lot of what you've talked about today is sort of the roadmap for the future of Reddit. Where do you see the biggest sort of opportunity set to put more structure on the activity levels and the content being created on Reddit that could create either improvements in the user conversion dynamic or the user funnel also open up the biggest monetization opportunities over the next couple of years?

[Eric Sheridan, Managing Director at Goldman Sachs]

And Jen, when you think about the evolution of marrying engagements with ads, Any update on richer media formats and how you continue to make progress on elements of video and other elements that could amplify both the engagement side and the monetization side back to the conversations you have with the advertising community? Thank you.

[Steve Huffman, Co-Founder and CEO at Reddit]

Thanks, Eric. Let me see if I can get the first question. I think this points to the kind of framing we've been using the last two quarters about scrollers and seekers. Scrollers being the users who come to Reddit for, you know, the core product that we know and love, community conversation. Right?

[Steve Huffman, Co-Founder and CEO at Reddit]

That's more of engaging in the topics you care about, the things you're going through or the things you're into. It's it's really that community conversation product versus the seekers where, you know, up until very recently, we haven't built a product for them. These are the people either coming to Reddit or ending up on Reddit with a question that they didn't answer for. And so, you know, like, very specifically, if you come to Reddit from Google, you land on a comment page or what we sometimes call a post details page. That page was built for the scrollers.

[Steve Huffman, Co-Founder and CEO at Reddit]

Right? It's built for consuming con conversations, for seeing that back and forth. It's not actually designed to give you an answer or a summary or anything like that. And so but those users are not coming to Reddit for a community in that moment. They're coming for an answer.

[Steve Huffman, Co-Founder and CEO at Reddit]

So I think we can, I think, embrace the use case that the user is bringing us and be more effective at solving it? I think that'll, I think that'll make users happier and then, of course, should improve engagement, retention, all of those things. So I think this is let's call it product one zero one. Give the user what they want. Okay.

[Steve Huffman, Co-Founder and CEO at Reddit]

And then, Jen, the question was about richer media formats.

[Jen Wong, COO at Reddit]

Yeah. I'll take that. So Reddit has some of the deepest engagement of any platform, and that's, you know, video aside, just because of the nature of the platform and the mindset people come to the platform. And our ad platform really consistently delivers strong results in terms of resonance and in outcomes. And that's with, call it, you know, 40 ish percent being in a video format and the rest being maybe a a visual or text driven.

[Jen Wong, COO at Reddit]

So, you know, I think Reddit in delivering outcomes is kind of, media agnostic. This is both on the consumer side and on the ad side. We are working on, you know, making it easier to port existing video assets into the ad stack where we might automatically recrop, etcetera, and are doing work in integrating Memorable AI, a company we bought that has expertise in identifying what are the best sort of creative variants. And and so we are doing work there in our platform, which I'm really excited about, that, again, just make creative easier, more portable, and also more optimized. But video per se is just not a focus for us.

[Jen Wong, COO at Reddit]

It is something that works really well on our platform if it's what you want to use, but you can use many different media types on our platform and have success.

[Operator]

Your next question comes from the line of Richard Greenfield of LightShed. Please go ahead.

[Richard Greenfield, Partner & Media and Technology Analyst at LightShed Partners]

Thanks for taking the question. Steve, I read your comments in the letter about making the best version of Reddit by being faster, easier, and better to use. I'd love sort of your view, like, a scale of one to 10, with 10 being the best, where are you on that journey today, and how should we think about the improvements coming over the coming year? And how does this tie into making Reddit your starting point for where you begin online versus the destination that you get to via a Google OpenAI, etcetera?

[Steve Huffman, Co-Founder and CEO at Reddit]

It's hard to quantify my answer on that scale. Look. We're in the middle. We're and we're always gonna be in the middle. We're better than we've been.

[Steve Huffman, Co-Founder and CEO at Reddit]

And when I use Reddit, all I see are ways for Reddit to be better. And I think that's the fun part of the job is is continuing to iterate on this product. I don't think of it as an either or between us and other products. We have we have different products that fulfill different needs. Right?

[Steve Huffman, Co-Founder and CEO at Reddit]

There's search and AI, which I think is like an extension of search for, you know, the direct answers or kind of summarized answers. And there's Reddit, which is for community, belonging, conversation. And even within our Answers product, it's for getting the broad perspectives of Reddit intentionally. So I think maybe there's some overlap in the middle, but we're really different products that serve different needs. And I expect us to continue, all of the companies you've named, to continue to evolve and coexist.

[Steve Huffman, Co-Founder and CEO at Reddit]

And I expect Google to continue to be a great channel for us, and I expect us to continue to grow doing our own thing as well.

[Operator]

Your next question comes from the line of Jason Helfstein of Oppenheimer. Please go ahead.

[Steven H, Senior Associate - Internet Equity Research at Oppenheimer & Co. Inc.]

Hi, this is Steve Homan on for Jason. So just two questions from us. One, if you could give any commentary on the continued strength within U. S. Logged in users.

[Steven H, Senior Associate - Internet Equity Research at Oppenheimer & Co. Inc.]

Are you driving better conversion or retention either within desktop or app? And then second, any update on the Meta campaign import tool that was announced and launched maybe a month ago? Is that helping to reduce advertisers' time to launch a campaign and or driving solid ad performance? Thank you.

[Steve Huffman, Co-Founder and CEO at Reddit]

Yeah. Look, I think the story of logged in user conversion and retention in our apps over the last couple of years is a success story. We've done a lot of work there to just make it easier to register, to sign up, to get onboarded, to find your community. And so I think that's never ending work. It's probably the single most important number for us is new user retention.

[Steve Huffman, Co-Founder and CEO at Reddit]

So we've been able to move it. We'll continue to do so. And this work broadly or not broadly. It's kind of the in the trenches product work. So when I say make Reddit easier and better, I think every detail here matters.

[Steve Huffman, Co-Founder and CEO at Reddit]

But we've been moving that for a couple of years. And, look, retention compounds into growth. And so that's how we think about it. Jen, on the meta thing?

[Jen Wong, COO at Reddit]

Yeah. So, you know, some platforms have a marketing API for advertisers to advertise their campaigns. Obviously, the advertisers' assets and campaign data are run by the advertiser, and so we did we did an integration. You know, it's part of our strategy of but we're we're, you know, making it easier for advertisers to get started on Reddit, and there's a lot of features that we work on to take the friction out of onboarding and making it easy to to activate. And so this is one of them that, you know, we we worked on.

[Jen Wong, COO at Reddit]

You know, we've seen some adoption of of this feature, but it's one of many in an effort to just make it easier for advertisers to onboard. And obviously, we've been very pleased with the overall growth in our number of advertisers.

[Operator]

Your next question comes from the line of Alan Gould of Loop Capital. Please go ahead.

[Alan Gould, Managing Director at Loop Capital]

Yes. Thanks for taking the question. I've got two. One is, can you comment on what's happening with per user engagement? And then second, Steve, you know, the one of the things special about Reddit is that you have the moderators.

[Alan Gould, Managing Director at Loop Capital]

Given the growth in users that you've had, assuming strong user engagement, I know you're using technology, but how do you manage that growth for all the how do you manage that growth? Are you adding that many more moderators? How do you keep the the moderation going so well? Thank you.

[Steve Huffman, Co-Founder and CEO at Reddit]

Okay. Great questions. Per user engagement, look, of course, this depends on the channel. But this I'll reference all of the answers I've given today about making the product easier to use, more relevant. I'd say one of the big improvements we've made over the last year and will continue to iterate on that I haven't mentioned today is the quality of our home feeds.

[Steve Huffman, Co-Founder and CEO at Reddit]

Your home feed in Reddit is made up of the subreddits you subscribe to. But serving you the right subreddit at the right time of day with the right type of content getting that right is really important. And so that's been one of the biggest drivers of retention over the last couple of years, and that's an area we'll continue to iterate on. And there's some stuff we're doing later this year that I'm very excited about that I think will make Reddit just kind of more accessible and easier to figure out in that in that first session. And, of course, that's a little bit upstream from engagement, but that's how we think about it.

[Steve Huffman, Co-Founder and CEO at Reddit]

It's just get people into Reddit, get them into their home, and the rest follows. Moderators, look, great question. There's kind of two things we're doing at once right now. One is reducing moderator burden. So, AI tools help with this a lot.

[Steve Huffman, Co-Founder and CEO at Reddit]

So whether it's post guidance or our improved safety work, we can just try to require the mods to do less clicking and less repetitive work so that they can focus on doing the things they love, which is being stewards of communities. And at the same time, we have an initiative to grow the number of mods. We just want to see more mods. More mods means more communities, more diversity of communities. It's a big part of our strategy for international growth is starting with that foundation of new moderators.

[Steve Huffman, Co-Founder and CEO at Reddit]

So it's a big part of our work, literally in countries, finding engaged in users and saying, hey, do you want to actually run a community and teaching them how to do that? So it's kind of a whole program around that. So it's actually think it's a unique aspect of work is all of this infrastructure we have around finding, recruiting, training, building products for mops. So thanks for the question.

[Operator]

Your next question comes from the line of Dan Salmon of New Street Research. Please go ahead.

[Dan Salmon, Lead Analyst at New Street Research]

Great. Good afternoon, everyone. Thanks for taking the question. Jen, I believe you mentioned, during your prepared remarks that the conversations ad placement is now up to accounting for 6% of impressions. Could you just tell us a little bit more about the performance of the format, how it's helping, inform your your search strategy and potentially broader monetization strategy later?

[Dan Salmon, Lead Analyst at New Street Research]

Thanks.

[Jen Wong, COO at Reddit]

Sure. Yeah. The so I think you're referring to ads and comments. So on the conversation page, we, you know, have had an ad below the post and above the comments, but we tested and launched an ad inside the comments, which, of course, is a high engagement space for people coming to Reddit because when you're trying to get answers to your questions, you're reading through the conversation there. So highly contextual.

[Jen Wong, COO at Reddit]

And, you know, as a reminder, about 40% of the conversations on Reddit are actually commercial in nature. They're about products and services. So there's a lot of engagement, you know, where people are in a purchase decision journey. We've been really pleased with the adoption of that ad. You know, I think almost no platform has ads in their comments.

[Jen Wong, COO at Reddit]

It's not been typically a high engagement space for other platforms, but it is uniquely, you know, high engagement for Reddit. And we've been pleased with the performance that we're seeing. Again, that space is highly contextual. It is high engagement because that's usually where you're finding the answers to your questions. People who come into that space come two ways.

[Jen Wong, COO at Reddit]

They either come one click past search on a very specific query where they're reading the comments for an answer, or they've clicked into that space from a post that interested them in the feed. So the intent in that space is incredibly high, and we see a lot of opportunity to drive outcomes and performance from that ad unit.

[Jesse Rose, Head of Investor Realtions at Reddit]

Great. Thanks, Jen. Kelvin, I think we're out of time here. So we'll wrap up. Thanks, everyone, for joining.

[Jesse Rose, Head of Investor Realtions at Reddit]

We really appreciate it. Looking forward to speaking with you again soon.

[Operator]

This concludes Reddit's Q1 twenty twenty five earnings call. You may now disconnect.

Participants

Executives

• Jesse Rose, Head of Investor Realtions
• Steve Huffman, Co-Founder and CEO
• Jen Wong, COO
• Drew Vollero, CFO

Analysts

• Ron Josey, Managing Director at Citi
• Andrew Boone, Managing Director at Citizens JMP
• Benjamin Black, Co-Head Internet Equity Research at Deutsche Bank
• Thomas Champion, Director & Senior Research Analyst at Piper Sandler Companies
• Ken Gawrelski, Analyst at Wells Fargo
• John Colantuoni, Equity Research Analyst, Internet at Jefferies
• Eric Sheridan, Managing Director at Goldman Sachs
• Richard Greenfield, Partner & Media and Technology Analyst at LightShed Partners
• Steven H, Senior Associate - Internet Equity Research at Oppenheimer & Co. Inc.
• Alan Gould, Managing Director at Loop Capital
• Dan Salmon, Lead Analyst at New Street Research