Reddit Q4 2025 Earnings: 70% Revenue Growth, 121M Daily Users, $1B Buyback

1. Revenue & Profitability: Record Breaking Quarter

Reddit delivered its strongest financial performance to date in Q4 2025, exceeding analyst expectations across every key metric.

Q4 2025 Revenue Breakdown

• Total Revenue: $726 million (up 70% year-over-year from $428M in Q4 2024)
• Advertising Revenue: $690 million (up 75% YoY)
• Other Revenue: $36 million (up 8% YoY, primarily data licensing deals)
• U.S. Revenue: $583 million (68% YoY growth)
• International Revenue: $142 million (78% YoY growth)

The 78% international revenue growth significantly outpaced U.S. growth, signaling Reddit's successful expansion beyond its core North American market. This trend is accelerating, with international markets now representing 20% of total revenue, up from 19% in Q3 2025.

Profitability Metrics

Reddit achieved profitability milestones that demonstrate operating leverage and margin expansion:

• Net Income: $252 million (35% net margin) vs. $71 million in Q4 2024
• Adjusted EBITDA: $327 million (45% margin) vs. $154 million in Q4 2024
• Operating Cash Flow: $267 million (up $177M YoY)
• Free Cash Flow: $264 million (36% FCF margin)
• Gross Margin: 91.9% (consistent with Reddit's capital-light business model)

CEO Steve Huffman emphasized the company's focus on "sharper execution" and turning "Reddit's authenticity into everyday utility" during the earnings call. The 45% EBITDA margin represents a 900 basis point improvement from Q4 2024's 36.1%, showcasing operational efficiency gains.

Full Year 2025 Performance

For the complete fiscal year 2025:

• Revenue: $2.2 billion (up 69% from $1.3B in 2024)
• Net Income: $530 million (vs. $484M loss in 2024) — a $1+ billion swing to profitability
• Adjusted EBITDA: $845 million (38% margin)
• Free Cash Flow: $684 million

Reddit's journey from a $484 million loss in 2024 to $530 million profit in 2025 marks one of the fastest turnarounds in recent social media history.

2. User Growth: 121.4M Daily Active Users

Reddit's user metrics demonstrate sustained engagement growth across all key segments.

Global Daily Active Uniques (DAUq)

• Global DAUq: 121.4 million (up 19% YoY from 101.7M)
• U.S. DAUq: 52.5 million (up 9% YoY)
• International DAUq: 68.9 million (up 28% YoY) — now 57% of total daily users

The 28% international user growth significantly exceeds U.S. growth, validating Reddit's international expansion strategy. International users now represent a majority of Reddit's daily active user base for the first time.

Logged-In vs. Logged-Out Users

Reddit's user composition reveals interesting engagement patterns:

• Logged-in DAUq: 50.7 million globally (42% of total, up 10% YoY)
  • U.S. logged-in: 23.0M (5% growth)
  • International logged-in: 27.7M (14% growth)
• Logged-out DAUq: 70.7 million globally (58% of total, up 27% YoY)
  • U.S. logged-out: 29.5M (13% growth)
  • International logged-out: 41.2M (40% growth)

The dramatic 40% growth in international logged-out users reflects Reddit's increasing visibility in Google search results globally, particularly after Google's 2024 algorithm updates that heavily favor Reddit content.

Weekly Active Uniques (WAUq)

Reddit's weekly engagement metrics show similar growth trends:

• Global WAUq: 471.6 million (up 24% YoY)
• U.S. WAUq: 193.4 million (up 12% YoY)
• International WAUq: 278.2 million (up 34% YoY)

The high weekly-to-daily ratio (3.9x) indicates Reddit successfully attracts casual users who visit multiple times per week but may not engage daily — a positive sign for advertising reach.

3. Advertising Business: What's Driving 75% Growth

Reddit's advertising business delivered exceptional results in Q4 2025, with revenue growing 75% year-over-year to $690 million.

Average Revenue Per User (ARPU)

ARPU metrics demonstrate Reddit's improving monetization efficiency:

• Global ARPU: $5.98 (up 42% YoY from $4.21)
• U.S. ARPU: $10.79 (up 53% YoY from $7.04)
• International ARPU: $2.31 (up 38% YoY from $1.67)

The 53% U.S. ARPU growth significantly exceeded the 9% U.S. user growth, indicating Reddit is extracting substantially more value per user through better targeting, increased advertiser demand, and improved ad products.

International ARPU of $2.31 remains significantly below U.S. levels ($10.79), presenting a 4.7x monetization opportunity as international markets mature and Reddit improves localization, ad formats, and sales infrastructure.

Key Growth Drivers

Several factors contributed to Reddit's advertising acceleration:

1. Reddit Max Campaigns: AI-powered campaign automation launched in Q3 2025 drove higher advertiser adoption and improved performance metrics. Early data shows 17% lower CPA and 27% more conversions vs. manual campaigns.
2. Conversation Ads: New ad format that appears within comment threads achieved strong engagement rates, particularly for brands looking to participate authentically in discussions.
3. Advertiser Base Expansion: Reddit added thousands of new advertisers in Q4, with 41% of Q4 advertisers being first-time Reddit advertisers according to leaked data. Many brands shifted budgets from Meta/TikTok to Reddit.
4. AI Search Visibility: Brands increasingly view Reddit ads as a path to visibility in ChatGPT, Google Gemini, and Perplexity results, as covered in our previous analysis.
5. International Ad Sales Infrastructure: Reddit's partnership with Aleph to manage international ad sales is driving growth in Europe, Latin America, and Southeast Asia.

Advertiser Demand Trends

According to Reddit's earnings call commentary:

• Performance marketing advertisers (e-commerce, app installs, lead gen) now represent over 50% of ad revenue, up from 40% a year ago
• Brand advertisers are increasingly using Reddit for awareness campaigns, particularly targeting Gen Z audiences
• Reddit's average deal size increased 38% YoY as enterprise brands allocate larger budgets
• Retention rates for advertisers spending $50K+ per quarter improved to 78% (up from 71% in 2024)

4. International Expansion: The Next Frontier

International markets represent Reddit's most significant growth opportunity, with user growth far outpacing revenue growth — indicating massive monetization headroom.

International Performance Metrics

• International DAUq Growth: 28% YoY (vs. 9% in U.S.)
• International Revenue Growth: 78% YoY (vs. 68% in U.S.)
• International ARPU: $2.31 (vs. $10.79 in U.S.) — 367% monetization gap
• International Share of Users: 57% of DAUq
• International Share of Revenue: 20% — significant mismatch indicating under-monetization

Key International Markets

Reddit highlighted several international success stories during the earnings call:

• United Kingdom: Reddit overtook TikTok to become the UK's 4th most-visited social platform in 2025, reaching 60% of UK internet users. U.K. ARPU is approaching $6-7, nearly 3x the international average.
• Germany: Reddit's German user base grew 45% YoY to an estimated 26-33 million users. German-language content has increased 60% YoY, and localized subreddits like r/de are thriving.
• France: French user growth exceeded 50% YoY, driven by both localized content and Google search visibility. French ARPU remains low ($1.80) but is growing 42% YoY.
• India: While monetization remains minimal, India is Reddit's fastest-growing market by absolute user adds, contributing significantly to logged-out user growth.
• Australia: Australian ARPU ($7.20) is approaching U.S. levels, demonstrating mature-market monetization potential in English-speaking countries.

Localization Initiatives

Reddit is investing heavily in localization:

• Machine Translation: Reddit deployed AI-powered translation for 100+ languages, enabling cross-border content discovery
• Local Sales Teams: Reddit hired dedicated sales teams in Germany, France, UK, Brazil, and Japan
• Payment Localization: Support for local currencies and payment methods in 25+ countries
• Content Recommendations: Algorithm improvements to surface relevant local content to international users

5. $1B Share Buyback: What It Signals

Reddit's announcement of a $1 billion share repurchase program marks a significant milestone, signaling management's confidence in the business and commitment to returning capital to shareholders.

Buyback Details

• Authorization Amount: Up to $1 billion of Class A common stock
• Duration: No expiration date
• Method: Open market purchases, privately negotiated transactions, or other methods
• Flexibility: Can be suspended or discontinued at management's discretion

With approximately 206 million fully diluted shares outstanding and Reddit's stock trading around $180-200 per share post-earnings, the $1B program represents roughly 2.7-3% of market capitalization.

What the Buyback Signals

1. Cash Generation Confidence: Reddit generated $684M in free cash flow in 2025 and expects to generate $800M+ in 2026. The buyback signals management believes this cash generation is sustainable.
2. Valuation Perspective: Management views current share prices as attractive relative to Reddit's growth trajectory and profitability profile.
3. Capital Allocation Strategy: With $2.5 billion in cash and marketable securities, Reddit has ample capital for both growth investments and shareholder returns.
4. Maturation Signal: The buyback marks Reddit's transition from growth-at-all-costs startup to mature, cash-generative platform balancing growth and returns.

Balance Sheet Strength

Reddit's financial position supports the buyback authorization:

• Cash & Marketable Securities: $2.48 billion (up from $1.84B a year ago)
• Total Debt: Minimal (primarily operating leases)
• Stockholders' Equity: $2.93 billion (vs. $2.13B in 2024)
• Q4 Operating Cash Flow: $267 million

6. Q1 2026 Guidance & What to Watch

Reddit provided Q1 2026 guidance that suggests continued strong growth, though at a moderating pace as the company laps tougher comparisons.

Q1 2026 Guidance

• Revenue: $595-605 million (midpoint: $600M)
  • Implies 50-52% YoY growth vs. Q1 2025 revenue of $397M
  • Sequential decline from Q4 is typical seasonal pattern (holiday quarter to Q1)
• Adjusted EBITDA: $210-220 million (midpoint: $215M)
  • Implies 35-37% EBITDA margin
  • Down from Q4's 45% margin due to seasonality and investment spending

What to Watch in 2026

Several key metrics and initiatives will determine whether Reddit sustains its growth trajectory:

1. International ARPU Expansion: Can Reddit narrow the 4.7x monetization gap between U.S. ($10.79) and international ($2.31) markets? Even modest improvements (e.g., international ARPU reaching $3.50) would add $150M+ in annual revenue.
2. Reddit Max Campaign Adoption: What percentage of advertisers adopt AI-powered Max campaigns? Higher adoption should drive better performance metrics and increased spend.
3. User Growth Sustainability: Will the 19% DAUq growth rate continue, or will it moderate as Reddit's user base matures? Watch logged-in user growth particularly — these users are more valuable for advertisers.
4. Data Licensing Revenue: "Other revenue" (primarily data licensing to AI companies like Google and OpenAI) grew only 8% in Q4. Will this accelerate as AI companies train larger models?
5. Advertiser Retention: Can Reddit maintain or improve its 78% retention rate for large advertisers? This is crucial for sustainable revenue growth.
6. Competition from AI: As ChatGPT, Perplexity, and other AI assistants answer questions directly, will users reduce time spent on Reddit? Or will Reddit's community discussions remain irreplaceable?

Full Year 2026 Expectations

While Reddit didn't provide full-year guidance, Street expectations are coalescing around:

• Revenue: $2.8-3.0 billion (27-36% growth)
• Adjusted EBITDA: $1.0-1.1 billion (37-40% margin)
• Free Cash Flow: $900M-1.0 billion

7. What This Means for Advertisers

Reddit's Q4 earnings report contains several important signals for current and prospective advertisers.

Key Takeaways for Advertisers

1. Reddit Is No Longer Experimental: With $2.2B in annual revenue and 121M daily users, Reddit has reached critical mass as an advertising platform. Brands treating Reddit as a "test" channel should reconsider their budget allocation.
2. Competition Is Intensifying: The 41% of Q4 advertisers being first-time Reddit advertisers means your competitors are discovering Reddit. CPMs will rise as demand increases, especially in high-value communities.
3. International Opportunity Window: With international ARPU at just $2.31 vs. $10.79 in the U.S., European, LATAM, and APAC advertisers have a 6-18 month window to establish presence before competition drives up costs.
4. AI Search Synergy: Advertisers increasingly recognize that Reddit ads provide a two-fold benefit: direct engagement on Reddit and increased visibility in AI-powered search results from ChatGPT, Perplexity, and Google Gemini.
5. Performance Marketing Works: Reddit's shift from primarily brand advertising to 50%+ performance marketing indicates the platform now drives measurable conversions, not just awareness.

Recommended Actions

Based on Q4 earnings insights, advertisers should consider:

• Test Reddit Max Campaigns: Early data shows 17% lower CPA and 27% more conversions. These AI-powered campaigns remove much of the complexity of Reddit advertising.
• Expand to International Markets: If you're only advertising to U.S. audiences, consider UK, Germany, France, and Australia where user growth is accelerating but competition remains low.
• Increase Budgets Proactively: With 75% ad revenue growth and increasing advertiser demand, waiting for CPMs to rise before scaling will cost you more long-term. Lock in better pricing now.
• Focus on Community Engagement: Reddit's logged-in users (42% of DAUq) are the most valuable for advertisers. Prioritize subreddits with active, engaged communities over pure reach plays.
• Leverage Conversation Ads: New ad formats that integrate into comment threads allow brands to participate authentically in discussions — particularly valuable for industries where trust matters (finance, healthcare, B2B SaaS).

Budget Benchmarks from Q4 Data

Based on ARPU data and advertiser metrics from the earnings report:

• U.S. Advertisers: Plan for $10-12 ARPU when estimating reach. A campaign targeting 500K users should budget $5,000-6,000 monthly.
• International Advertisers: Budget $2-3 ARPU in most markets (UK/Australia higher at $6-8).
• Enterprise Brands: Average deal size of $50K+ per quarter suggests successful brands allocate $15-20K monthly minimum.
• Performance Marketers: Target 3-5x ROAS in months 3-4 after optimization period. Early data suggests Reddit Max campaigns achieve this faster.

Conclusion: Reddit's Next Chapter

Reddit's Q4 2025 earnings represent a pivotal moment: the platform has transitioned from fast-growing startup to profitable, cash-generative business while maintaining exceptional growth rates.

The 70% revenue growth, 19% user growth, and 45% EBITDA margin demonstrate that Reddit has found the formula for balancing growth and profitability. The $1 billion share buyback program signals management's confidence that this performance is sustainable.

For advertisers, the message is clear: Reddit is no longer a "nice-to-have" experimental channel — it's a must-have platform for reaching engaged audiences, particularly Gen Z and Millennials who increasingly use Reddit for product research, authentic discussions, and community connection.

The next 12-18 months will be crucial as Reddit scales internationally, improves monetization, and navigates competition from AI-powered assistants. Advertisers who establish presence now — before competition intensifies and CPMs rise further — will have a significant first-mover advantage.