(Bloomberg) — Reddit Inc. jumped more than 10% in extended trading after reporting quarterly sales that beat analysts’ estimates, impressing investors in its first results as a public company.
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Revenue rose 48% to $243 million in the period ended March 31, the social media company said in a statement Tuesday. Analysts on average estimated $211.9 million, according to data compiled by Bloomberg.
Reddit’s IPO in March was one of the largest on a U.S. exchange this year, raising about $748 million. Its strong debut has been bolstered by the site’s large user base and data licensing deals with artificial intelligence companies, which will allow those companies to use Reddit data to train their AI systems. AI. Reddit first confidentially filed for an IPO in 2021.
The company expects revenue between $240 million and $255 million for the current period ending in June. Analysts on average estimated $227.6 million. Reddit said the growth was driven by investments in making the site easier to use and improvements in its ad targeting technology.
“It was a great start to the year and a milestone quarter for Reddit and our communities,” co-founder and CEO Steve Huffman said in the release. “We view this as the start of a new chapter as we work to build the next generation of Reddit.”
Shares hit a high of $60.40 in extended trading after closing at $49.40 in New York. While the stock received an initial boost on its first day of trading on March 21, bringing the company’s market value to around $8 billion, it has since fallen 2%.
Read more: Seven things to know about Reddit’s unusual IPO
The text-based social media company said it now has more than 82.7 million daily users worldwide – a 37% increase from the previous year – who post several times a day on the company’s forums. site. Reddit was founded in 2005 before being acquired by Condé Nast a year later, then becoming a private company again in 2011.
“Reddit’s high 20-30% growth in average daily users appears sustainable thanks to the steady increase in communities and content on its platform, which has solidified its relevance for training large language models “, Mandeep Singh, Bloomberg Intelligence Senior Analyst. , said in a note after the results were released.
Reddit reported a net loss of $575.1 million in the quarter, compared to a loss of $60.9 million a year earlier. Adjusted earnings before interest, taxes, depreciation and amortization were $10 million, compared with a loss of $50.2 million in the year-ago quarter.
Even though Reddit has been popular among users, it has struggled to achieve profitability. Last year, the company reported a net loss of $91 million on revenue of $804 million. Historically, about 98% of the company’s sales came from advertising.
In the future, Reddit plans to diversify its revenue streams by licensing its data to AI companies and boosting commerce in the marketplace.
