Reddit Earns More From Fewer U.S. Users: Rapid Earnings Reaction
Reddit’s revenue jumped 53%, but its U.S. audience shrank 2%, and the traffic that fell is logged-out users, who often arrive through search.
Reddit reported a 53% increase in third-quarter revenue to $895 million, despite a 2% decline in U.S. daily users. The majority of user growth came from outside the U.S., with revenue rising 50% in this market due to higher earnings per user. U.S. revenue grew 50% as well, but this was primarily due to increased earnings per user, not new users.
The company's logged-out users, often those who find Reddit through search engines, declined by 4% in the U.S. Logged-in U.S. users, considered the most valuable and engaged, only grew by 1%. App users grew from the previous quarter, but exact figures were not disclosed. The company's costs grew slower than revenue, and guidance for the fourth quarter anticipates revenue between $1.00 billion and $1.03 billion, an increase from this quarter's $895 million.
Advertisers continue to show interest in reaching Reddit's users, leaving the question of the number of users for future quarters. Monitor U.S. daily active unique users in the next quarter, as a further decline could put pricing pressure on the U.S. story. Additionally, verify if Reddit supports its claim about app users with concrete numbers.
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