NEW YORK, July 31, 2026, 06:04 EDT
- Shares were pointed 9.6% lower at $161 ahead of Friday’s regular trading session.
- Reddit reported a 61% increase in second-quarter revenue to $805 million, surpassing Wall Street expectations.
- International regions contributed 85% of net daily active user increases, yet accounted for just 25% of additional revenue.
Reddit shares dropped in premarket trade on Friday, slipping to $161 after closing at $178.04 on Thursday, even as the company reported earnings that exceeded expectations.
Attention shifted to the origins of Reddit’s expanding user base. Of the 19.9 million net new daily users, 17 million originated from international regions.
The company reported that $76 million of the $305.3 million rise in revenue came from those markets. According to its data, this accounted for 24.9% of additional sales.
International users make up 59.2% of daily active uniques, or DAUq, but contributed only 20.7% of revenue for the quarter. U.S. average revenue per unique, or ARPU, was 5.2 times greater.
Company figures indicate the gap continues even as overseas growth accelerates. Additional shares listed are based on annual changes.
| Q2 2026 metric | U.S. | International |
|---|---|---|
| DAUq | 53.2 million | 77.1 million |
| DAUq increase | 6% | 28% |
| Portion of net DAUq gains | 14.6% | 85.4% |
| Revenue | $638.1 million | $166.8 million |
| Revenue increase | 56% | 84% |
| Portion of overall revenue | 79.3% | 20.7% |
| Percent of net revenue growth | 75.1% | 24.9% |
| ARPU | $11.85 | $2.26 |
Financial results were otherwise solid. Revenue increased by 61% to $804.9 million. Advertising sales jumped 64% to $762 million.
Net income rose to $253 million from $89 million. Adjusted EBITDA surged to $343 million, more than twice the previous figure. The margin increased to 42.6% from 33.4%.
The company’s outlook and its quarterly results both surpassed analyst expectations on Wall Street. Revenue projections are sourced from LSEG, and FactSet provided the profit forecast.
| Metric | Result or guidance midpoint | Consensus | Difference |
|---|---|---|---|
| Q2 revenue | $804.9 million | $730.4 million | 10.2% higher |
| Q2 diluted EPS | $1.25 | $1.01 | 23.8% above |
| Q3 revenue | $865 million | $829.1 million | 4.3% up |
| Q3 adjusted EBITDA | $390 million | $369 million | 5.7% higher |
Reddit projected third-quarter revenue in the range of $860 million to $870 million. The company forecast adjusted EBITDA at $385 million to $395 million.
However, U.S. DAUq declined to 53.2 million from 53.5 million quarter-on-quarter. International DAUq increased by 5.2% to reach 77.1 million.
Monetization offset the decline, with U.S. ARPU rising 23.1% from the prior quarter. U.S. revenue climbed 21.4% even as the daily audience shrank.
The quarterly trend indicates that higher prices counterbalanced weaker U.S. user numbers.
| Metric | Q1 2026 | Q2 2026 | Sequential change |
|---|---|---|---|
| U.S. DAUq | 53.5 million | 53.2 million | -0.6% |
| International DAUq | 73.3 million | 77.1 million | +5.2% |
| U.S. ARPU | $9.63 | $11.85 | +23.1% |
| International ARPU | $2.02 | $2.26 | +11.9% |
| U.S. revenue | $525.6 million | $638.1 million | +21.4% |
| Adjusted EBITDA margin | 40.1% | 42.6% | +2.5 points |
Chief Executive Steve Huffman noted that search referrals were “choppy in the quarter.” He also mentioned that traffic showed increased volatility toward the end of the period. Reuters
Chief Operating Officer Jen Wong stated that “SEO headwinds” surpassed their acquisition efforts. The number of advertisers nevertheless increased by 70%, driven mainly by smaller and overseas clients. Reuters
Cash conversion was robust. Free cash flow amounted to $261 million. Capital expenditures stood at just $1 million, demonstrating Reddit’s capital-light approach.
Reddit bought back 1.5 million shares at an average cost of $157.57 each. The stock was quoted in Friday’s premarket trading just around 2% higher than this price.
Risks: Fluctuations in U.S. traffic could persist due to search modifications. Revenue per international user is still significantly lower compared to the U.S. Meta Platforms NASDAQ:META is pursuing a similar community-based approach, and advertising demand continues to be influenced by cyclical trends.
Friday’s session will challenge investors to decide which signal holds greater importance. The immediate focus is on a rebound in U.S. audience growth, provided pricing does not decline.
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