Reddit Earns More From Fewer U.S. Users: Rapid Earnings Reaction

Reddit (RDDT -3.79%) grew third-quarter revenue by 53% to $895 million even as its U.S. daily users shrank 2% from a year ago. Shares fell about 10% in early after-hours trading. All of Reddit’s user growth came from outside the U.S., so in its most valuable market this quarter’s growth came from earning more from each user, not adding new ones.

Key Numbers

• Revenue: $895 million, up 53% year over year
• U.S. daily active uniques (people who visit or open the app daily): 50.7 million, down 2%
• U.S. average revenue per unique (quarterly revenue per daily user): $13.82, up 53%
• Net income: $283 million, up 74%

RDDT – Reddit

$129.60-$5.10 (-3.79%)

NYSE · As of 4:00 PM ET 10/29/26

What It Means

U.S. revenue rose 50% despite a smaller audience, so all of that growth came from making more money from each user. That lever is powerful, but it has a ceiling when the base keeps shrinking.

The leak is in logged-out users, who fell 4% in the U.S. These are often people who land on Reddit from a search such as Google’s, so the traffic depends on a search engine Reddit doesn’t control. Logged-in U.S. users, which the release calls its most engaged and monetizable, grew only 1%. The release says app users grew from last quarter, but it gives no app figures to back that up.

Profit is not the worry here. Total costs grew slower than revenue, and fourth-quarter guidance calls for $1.00 billion to $1.03 billion in revenue, above this quarter’s $895 million. Advertisers clearly still want to reach Reddit’s users, and the open question is how many users there will be.

What to Watch Next

Watch U.S. daily active uniques next quarter, since another decline would leave pricing to carry the whole U.S. story. Also watch whether Reddit backs up its claim about app users with real numbers.

Sharice Wells has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Reddit. The Motley Fool has a disclosure policy.

Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.