Reddit Inc. (RDDT) Earnings & Analysis

Latest quarter

Reddit reported Q2 FY2026 revenue of $804.9 million, which was above the consensus of $743.9 million, while adjusted EPS, as the consensus counts it, was $1.25 versus the $0.99 consensus. The company reported that revenue was 61.1% higher than a year earlier and that diluted EPS rose 177.8% to $1.25.

Reddit’s filing attributes the revenue increase primarily to a $296.8 million, or 64%, increase in advertising revenue, driven by higher ad pricing and more impressions delivered. The filing says ad prices rose by approximately 40% and impressions increased by approximately 17% from a year earlier. Gross margin was 91.3%, compared with 90.8% a year earlier, while operating margin was 28.8%, compared with 13.6%. Free cash flow was $260.7 million, compared with $110.8 million a year earlier.

Reddit reported revenue above its Q2 FY2026 guidance range of $715.0 million–$725.0 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Steve Huffman said Reddit’s priority remains expanding its daily active user base by improving the experience for new users and converting weekly users into more frequent users. Huffman said product work, consumer marketing and improved new-app retention helped daily users while offsetting headwinds from search referrals. He said weekly reach exceeded half a billion people, including more than 130 million daily users, and that new-app user retention rose 50% year over year on a relative basis.

On advertising demand, Chief Operating Officer Jen Wong said advertisers were adopting Reddit’s tools, while improved conversion and click outcomes were making the platform more competitive. Wong said the company’s strategy is to make each impression more valuable, with demand and performance both contributing within its advertising marketplace. She said active advertiser count grew more than 70% year over year, while 11 of 15 verticals grew more than 50%.

Chief Financial Officer Drew Vollero said Q2 revenue growth and margin expansion produced higher cash flow and profitability, while hosting-efficiency programs and incremental revenue offset higher compute usage. Vollero said Reddit added about 100 people during the quarter and evaluates resource needs around opportunities in the consumer product, advertising stack and advertiser coverage. He said marketing is intended to support the company’s user goals, although user-acquisition spending needs improved returns.

Asked about search traffic, Huffman said the company had limited visibility into changes in the search ecosystem and would not quantify their magnitude. Huffman said declines in machine-translated content contributed to international volatility, while Reddit is focused on becoming a destination and increasing direct app traffic. Huffman said Reddit is working on feed recommendations, video experiences and search within the app.

Vollero said the company repurchased about $235 million of stock during Q2 and described its capital priorities as investment in the business, opportunistic acquisitions and share repurchases.

Guidance

Reddit expects Q3 FY2026 revenue of $860.0 million–$870.0 million, compared with its previous Q2 FY2026 revenue guide of $715.0 million–$725.0 million. The company expects Q3 FY2026 adjusted EBITDA of $385.0 million–$395.0 million, compared with its previous Q2 FY2026 guide of $285.0 million–$295.0 million, and said the Q3 midpoint implies a 45.0% adjusted EBITDA margin. Vollero said Reddit lowered its full-year stock-based-compensation expense guide from the high teens to the low to mid-teens as a percentage of revenue. Reddit will stop separately reporting logged-in and logged-out daily active users beginning with Q3 disclosures.