Reddit Earnings: Profit Rises, Buyback Announced
Reddit earnings topped forecasts, showed stronger profitability and a $1 billion buyback, and gave guidance above estimates, spurring after-hours buying.
KEY TAKEAWAYS
- Q4 revenue $726 million, up 70% year-over-year and beating estimates.
- GAAP net income $252 million and adjusted EBITDA $327 million with a 45.1% margin.
- Announced a $1 billion share-repurchase program signaling a shift to capital returns.
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Reddit said in a press release on Feb. 5, 2026, that its earnings topped expectations, boosting profitability and prompting a share-repurchase plan after advertisers increased spending on AI-powered ad tools.
Quarterly Results, Guidance, and Buyback
The company reported fourth-quarter revenue of $726 million, a 70% increase year-over-year that exceeded analyst estimates. GAAP net income rose 255% to $252 million, while adjusted earnings per share reached $1.24, above consensus forecasts. Adjusted EBITDA climbed 112% to $327 million, representing a 45.1% margin.
User engagement and monetization strengthened alongside sales. Daily Active Uniques (DAUq) rose 19% to 121.4 million, with U.S. users increasing 9% to 52.5 million and international users up 28% to 68.9 million. Weekly Active Uniques grew 24% to 471.6 million. Average revenue per user (ARPU) increased 42% to $5.98, with U.S. ARPU at $10.79 and international ARPU at $2.31. U.S. revenue accounted for roughly 80% of the quarter’s sales at $583.3 million, while international revenue reached $142.3 million.
Reddit held $2.47 billion in cash and equivalents as of Dec. 31, 2025. The company announced a $1 billion share-repurchase program, signaling a shift toward returning cash amid improving profitability.
For the first quarter of 2026, Reddit set revenue guidance between $595 million and $605 million and adjusted EBITDA guidance of $210 million to $220 million, both above Street estimates. Management said on the earnings call that AI-driven ad features—including creative copy tools, image-formatting capabilities, and automated "Max" campaign products—have boosted advertiser demand. They also described search as a future monetization channel.
The combination of rising margins, higher ARPU, and the repurchase program marks a clear shift in capital allocation as Reddit moves toward a more consistently profitable operating profile.
