Reddit, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2023 included in our Prospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors” and “Note Regarding Forward-Looking Statements.”

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the year ended December 31, 2024 included in our Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in “Risk Factors” and “Note Regarding Forward-Looking Statements.”

Previous wording

•Daily Active Uniques (“DAUq”) were 97.2 million for the three months ended September 30, 2024, an increase of 47% year over year

Current wording

•Daily Active Uniques (“DAUq”) were 108.1 million for the three months ended March 31, 2025, an increase of 31% year over year

Previous wording

•Average revenue per unique (“ARPU”) was $3.58 for the three months ended September 30, 2024, an increase of 14% year over year

Current wording

•Average revenue per unique (“ARPU”) was $3.63 for the three months ended March 31, 2025, an increase of 23% year over year

Previous wording

•Cash, cash equivalents, and marketable securities were $1.7 billion as of September 30, 2024

Current wording

•Cash, cash equivalents, and marketable securities were $2.0 billion as of March 31, 2025

Previous wording

In the three months ended September 30, 2024, global DAUq grew 47% compared to the prior year period, driven by 51% growth in DAUq in the United States and 44% growth in DAUq in the rest of world. Global DAUq grew 7% compared to the prior quarter period, driven by 6% growth in DAUq in the United States and 7% growth in DAUq in the rest of world. The growth in global DAUq in the three months ended September 30, 2024 compared to the prior year period and prior quarter period was impacted by the combination of third-party search engine and algorithm changes, traction in our growth strategies, and product enhancements.

Current wording

In the three months ended March 31, 2025, global DAUq grew 31% compared to the prior year period, driven by 21% growth in DAUq in the United States and 41% growth in DAUq in the rest of world. Global DAUq grew 6% compared to the prior quarter period, driven by 4% growth in DAUq in the United States and 8% growth in DAUq in the rest of world. The growth in global DAUq in the three months ended March 31, 2025 compared to the prior year period and prior quarter period was driven by the combination of third-party search engine and algorithm changes, traction in our growth strategies, particularly in machine translation, and product enhancements.

Previous wording

In the three months ended September 30, 2024, global WAUq grew 53% compared to the prior year period, driven by 58% growth in WAUq in the United States and 48% growth in WAUq in the rest of world. In the three months ended September 30, 2024, global WAUq increased 7% compared to the prior quarter period, driven by 6% growth in WAUq in the United States and 7% growth in WAUq in the rest of world. For the three months ended September 30, 2024, the proportion of DAUq to WAUq was 27%.

Current wording

In the three months ended March 31, 2025, global WAUq grew 31% compared to the prior year period, driven by 18% growth in WAUq in the United States and 44% growth in WAUq in the rest of world. In the three months ended March 31, 2025, global WAUq increased 6% compared to the prior quarter period, driven by 4% growth in WAUq in the United States and 8% growth in WAUq in the rest of world. For the three months ended March 31, 2025, the proportion of DAUq to WAUq was 27%.

Previous wording

We monetize our business primarily through advertising on our mobile applications and website. In the nine months ended September 30, 2024, we recorded revenue of $872.5 million, as compared to revenue of $554.3 million for the nine months ended September 30, 2023, representing an increase of 57% compared to the prior year period.

Current wording

We monetize our business primarily through advertising on our mobile applications and website. In the three months ended March 31, 2025, we recorded revenue of $392.4 million, as compared to revenue of $243.0 million for the three months ended March 31, 2024, representing an increase of 61% compared to the prior year period.

Previous wording

During the three months ended September 30, 2024, ARPU was $3.58, an increase of 14% compared to $3.14 for the prior year period, United States ARPU was $5.88, compared to $5.27 for the prior year period, and rest of world ARPU was $1.32, compared to $1.14 for the prior year period. The increase in global ARPU compared to the prior year period was due primarily to an increase in advertising revenue driven by an increase in impressions delivered, while pricing was consistent with the prior year period. The increase in global ARPU compared to the prior quarter period was due primarily to an increase in advertising revenue driven by an increase in pricing, and to a lesser extent, an increase in impressions delivered. Additionally, global ARPU increased in both periods as a result of data licensing agreements executed in 2024.

Current wording

During the three months ended March 31, 2025, ARPU was $3.63, an increase of 23% compared to $2.94 for the prior year period, United States ARPU was $6.27, compared to $4.77 for the prior year period, and rest of world ARPU was $1.34, compared to $1.10 for the prior year period. The increase in global ARPU compared to the prior year period was due primarily to an increase in advertising revenue driven by an increase in impressions delivered, and to a lesser extent, an increase in pricing. Additionally, global ARPU increased compared to the prior year period as a result of content licensing agreements executed during the period. The decline in global ARPU compared to the prior quarter period was due primarily to seasonality.

Previous wording

We also generate revenue from data licensing, Reddit Premium subscriptions, and products within our user economy. In our data licensing arrangements, we provide customers with the right to access data from our platform over the contractual period. We recognize data licensing revenue as our data partners consume and benefit from their use of the licensed data, which is generally ratably over the license period. Payments for Reddit Premium subscriptions are received upfront, are non-refundable, and are recognized ratably over the subscription period, which is generally less than one year. Products within our user economy include Reddit Gold and Collectible Avatars. Revenue from Reddit Gold and Collectible Avatars was immaterial for the periods presented.

Current wording

We also generate revenue from content licensing, Reddit Premium subscriptions, and products within our user economy. In our content licensing arrangements, we provide customers with the right to access content from our platform over the contractual period. We recognize content licensing revenue as our content partners consume and benefit from their use of the licensed content, which is generally ratably over the license period. We recognize Reddit Premium subscription revenue ratably over the subscription period, which is generally less than one year. Products within our user economy include Reddit Gold and Collectible Avatars. Revenue from Reddit Gold and Collectible Avatars was immaterial for the periods presented.

Previous wording

Cost of revenue consists primarily of payments to third parties for the cost of hosting and supporting our mobile applications and website. In addition, cost of revenue includes expenses directly associated with the delivery of our advertising and other services, including advertising measurement services and credit card and other transaction processing fees. Cost of revenue also consists of personnel-related costs, including salaries, benefits, and stock-based compensation.

Current wording

Cost of revenue consists primarily of payments to third parties for the cost of hosting and supporting our mobile applications and website. In addition, cost of revenue includes expenses directly associated with the delivery of our advertising and other services, including advertising measurement services and credit card and other transaction processing fees. Cost of revenue also consists of employee-related costs, including salaries, benefits, and stock-based compensation.

Previous wording

Research and development expenses consist primarily of personnel-related costs including salaries, benefits, and stock-based compensation for engineers and other employees engaged in the research, design, and development of new and existing products. Research and development expenses also include consulting services and hosting costs associated with internal research and development activities, as well as allocated facilities and other supporting overhead costs.

Current wording

Research and development expenses consist primarily of employee-related costs including salaries, benefits, and stock-based compensation for engineers and other employees engaged in the research, design, and development of new and existing products. Research and development expenses also include professional services and hosting costs associated with internal research and development activities, as well as allocated facilities and other supporting overhead costs.

Previous wording

Sales and marketing expenses consist primarily of personnel-related costs including salaries, benefits, and stock-based compensation for employees engaged in sales, sales support, business and brand development, marketing, and customer service functions. Sales commissions are expensed as incurred in sales and marketing expenses as the expected period of benefit is one year or less. Sales and marketing expenses also include costs incurred for advertising, market research, branding, professional services, marketing, and promotional expenditures, as well as allocated facilities and other supporting overhead costs.

Current wording

Sales and marketing expenses consist primarily of employee-related costs including salaries, benefits, and stock-based compensation for employees engaged in sales, sales support, business and brand development, marketing, and customer service functions. Sales commissions are expensed as incurred in sales and marketing expenses as the expected period of benefit is one year or less. Sales and marketing expenses also include costs incurred for advertising, market research, branding, professional services, marketing, and promotional expenditures, as well as allocated facilities and other supporting overhead costs.

Previous wording

General and administrative expenses consist primarily of personnel-related costs including salaries, benefits, and stock-based compensation for certain executives as well as employees engaged in finance, legal, human resources, information technology, communications, and other administrative teams. General and administrative expenses also include costs incurred for professional services, including outside legal and accounting services, cryptocurrency impairment, as well as allocated facilities and other supporting overhead costs.

Current wording

General and administrative expenses consist primarily of employee-related costs including salaries, benefits, and stock-based compensation for certain executives as well as employees engaged in finance, legal, human resources, information technology, communications, and other administrative teams. General and administrative expenses also include costs incurred for professional services, as well as allocated facilities and other supporting overhead costs.

Previous wording

Other income (expense), net, consists of interest expense, interest income, realized gains and losses on sales of marketable securities, and foreign currency transaction gains and losses.

Current wording

Other income (expense), net, consists primarily of interest income, interest expense, realized gains and losses on sales of marketable securities, and foreign currency transaction gains and losses.

Previous wording

Revenue for the three and nine months ended September 30, 2024 increased by $140.8 million and $318.2 million, or 68% and 57%, respectively, compared to the prior year periods. The growth in revenue in the three months ended September 30, 2024 was due primarily to an increase in advertising revenue driven by an increase in impressions delivered, while pricing was consistent with the prior period. The growth in revenue in the nine months ended September 30, 2024 was due primarily to an increase in advertising revenue driven by an increase in impressions delivered, partially offset by a decrease in pricing. In addition, other revenues increased in both periods as a result of data licensing agreements executed in 2024.

Current wording

Revenue for the three months ended March 31, 2025 increased by $149.4 million, or 61%, compared to the prior year period. The growth in revenue was due primarily to an increase in advertising revenue driven by an increase in impressions delivered and an increase in pricing. In addition, other revenues increased as a result of content licensing agreements executed during 2024.

Previous wording

Cost of revenue for the three and nine months ended September 30, 2024 increased by $8.2 million and $9.7 million, or 31% and 12%, respectively, compared to the prior year periods. The increase in cost of revenue was primarily attributable to increased hosting usage to support user growth on our platform and an increase in other advertising services, partially offset by hosting cost efficiencies and lower hosting prices.

Current wording

Cost of revenue for the three months ended March 31, 2025 increased by $9.5 million, or 34%, compared to the prior year period. The increase in cost of revenue was primarily attributable to increased hosting usage to support user growth and product enhancements on our platform, partially offset by lower hosting prices.

Previous wording

Research and development expenses for the three and nine months ended September 30, 2024 increased by $58.4 million and $419.7 million, or 54% and 128%, respectively, compared to the prior year periods. The increase in the three months ended September 30, 2024 compared to the prior year period was driven primarily by higher stock-based compensation expense and related taxes post-IPO and an increase in other employee-related costs. The increase in the nine months ended September 30, 2024 compared to the prior year period was driven primarily by higher stock-based compensation expense and related taxes, including the cumulative catch-up upon IPO of stock-based compensation expense and related taxes for RSUs with a liquidity event vesting condition.

Current wording

Research and development expenses for the three months ended March 31, 2025 decreased by $245.8 million, or 56%, compared to the prior year period. The decrease was driven primarily by the cumulative catch-up upon IPO of stock-based compensation expense and related taxes for RSUs with a liquidity event vesting condition recognized in the prior year period, partially offset by an increase in other employee-related costs in the current period.

Previous wording

Sales and marketing expenses for the three and nine months ended September 30, 2024 increased by $19.4 million and $97.8 million, or 35% and 57%, respectively, compared to the prior year periods. The increase in the three months ended September 30, 2024 compared to the prior year period was driven primarily by higher stock-based compensation expense and related taxes post-IPO and an increase in other employee-related costs. The increase in the nine months ended September 30,

Current wording

Sales and marketing expenses for the three months ended March 31, 2025 decreased by $33.4 million, or 27%, compared to the prior year period. The decrease was driven primarily by the cumulative catch-up upon IPO of stock-based compensation expense and related taxes for RSUs with a liquidity event vesting condition recognized in the prior year period, partially offset by an increase in other employee-related costs in the current period.

Previous wording

Other income (expense), net for the three and nine months ended September 30, 2024 increased by $10.3 million and $21.6 million, or 82% and 59%, respectively, compared to the prior year periods. The increase in both periods was primarily due to higher interest earned on our cash and investments driven by higher interest rates and a higher invested balance.

Current wording

Other income (expense), net for the three months ended March 31, 2025 increased by $6.0 million, or 41%, compared to the prior year period. The increase was primarily due to higher interest earned on our cash and investments driven by a higher invested balance.

Previous wording

Income tax expense (benefit) for the nine months ended September 30, 2024 decreased by $2.7 million, or 96%. The decrease in income tax expense was primarily attributable to a decrease in taxable income in the current period.

Current wording

Income tax expense (benefit) for the three months ended March 31, 2025 decreased by $2.1 million compared to the prior year period. The income tax benefit in the current year period was primarily attributable to an excess tax benefit from stock-based compensation in a foreign subsidiary.

Previous wording

We have historically financed our operations primarily through net proceeds from the sale of convertible preferred stock and payments received from our customers. Additionally, in March 2024, we completed our IPO, which resulted in net proceeds of $600.0 million after deducting underwriting discounts and commissions of $31.6 million. Our primary uses of cash are personnel-related costs, the cost of hosting our mobile applications and website, and facility-related costs.

Current wording

We have historically financed our operations primarily through net proceeds from the sale of convertible preferred stock and payments received from our customers. Additionally, in March 2024, we completed our IPO, which resulted in net proceeds of $600.0 million after deducting underwriting discounts and commissions of $31.6 million. We began generating net positive operating cash flows in 2024. Our primary uses of cash are employee-related costs and the cost of hosting our mobile applications and website.

Previous wording

As of September 30, 2024, we had $1.7 billion in cash, cash equivalents, and marketable securities. Our cash and cash equivalents consist of cash in bank accounts, money market accounts, and other highly liquid investments with original maturities of 90 days or less from the date of purchase. Marketable securities consist of U.S. and non-U.S. government securities, investment-grade corporate and government agency securities, certificates of deposit, and commercial paper. As of September 30, 2024, approximately 3% of our cash, cash equivalents, and marketable securities was held outside of the United States.

Current wording

As of March 31, 2025, we had $2.0 billion in cash, cash equivalents, and marketable securities. Our cash and cash equivalents consist of cash in bank accounts, money market accounts, certificates of deposit, and other highly liquid investments with original maturities of 90 days or less from the date of purchase. Marketable securities consist of U.S. government securities, investment-grade corporate and government agency securities, and commercial paper. As of March 31, 2025, approximately 1% of our cash, cash equivalents, and marketable securities was held outside of the United States.

Previous wording

On October 8, 2021, we entered into a five-year, $750.0 million, revolving loan and standby letter of credit facility agreement (“Revolving Credit Facility”) of which $100.0 million can be issued as letters of credit. As of September 30, 2024, we have issued two letters of credit, one of which is denominated in a foreign currency, for an aggregate of $5.0 million, which reduced the letter of credit borrowings available under the Revolving Credit Facility to $95.0 million. The aggregate available balance under the Revolving Credit Facility was $745.0 million as of September 30, 2024.

Current wording

On October 8, 2021, we entered into a five-year, $750.0 million, revolving loan and standby letter of credit facility agreement (“Revolving Credit Facility”) of which $100.0 million can be issued as letters of credit. As of March 31, 2025, we have issued two letters of credit, one of which is denominated in a foreign currency, for an aggregate of $4.9 million, which reduced the letter of credit borrowings available under the Revolving Credit Facility to $95.1 million. The aggregate available balance under the Revolving Credit Facility was $745.1 million as of March 31, 2025.

Previous wording

We believe our existing cash, cash equivalents, and marketable securities and amounts available under our Revolving Credit Facility will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months, though we may require additional capital resources in the future. Our future capital requirements will depend on many factors including our growth rate, headcount, sales and marketing activities, research and development activities, the introduction of new features and products, acquisitions, and continued user engagement.

Current wording

We believe our cash flows from operations, existing cash, cash equivalents, and marketable securities, and amounts available under our Revolving Credit Facility will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and for the foreseeable future. We continuously evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance our future capital needs.

Previous wording

Net cash provided by operating activities was $132.1 million in the nine months ended September 30, 2024, resulting primarily from adjustments for non-cash items, primarily related to stock-based compensation expense of $716.5 million, and an increase in accounts payable and accrued expenses and other current liabilities of $44.6 million due to timing of payments. These increases were partially offset by net loss of $(555.3) million in the nine months ended September 30, 2024, an increase in accounts receivable of $38.9 million due to the increase in revenue, and net amortization of premium on marketable securities of $(31.9) million. Net cash used in operating activities was $(57.7) million in the nine months ended September 30, 2023, resulting primarily from net loss of $(109.4) million, partially offset by adjustments for non-cash items, primarily related to stock-based compensation expense of $32.0 million, and an increase in accrued expenses and other current liabilities of $19.6 million due to timing of payments.

Current wording

Net cash provided by operating activities was $127.6 million in the three months ended March 31, 2025, resulting primarily from net income of $26.2 million in the three months ended March 31, 2025 and adjustments for non-cash items, primarily related to stock-based compensation expense of $85.4 million, a decrease in accounts receivable of $23.4 million due to the timing of cash collections, and an increase in accrued expenses and other current liabilities of $16.1 million due to timing of payments. These amounts were partially offset by an increase in prepaid expenses and other assets of $17.0 million. Net cash provided by operating activities was $32.1 million in the three months ended March 31, 2024, resulting primarily from a decrease in accounts receivable of $30.0 million due to the timing of cash collections, an increase in accrued expenses and other current liabilities of $18.9 million due to the timing of payments, and adjustments for non-cash items, primarily related to stock-based compensation expense of $577.5 million. These increases were partially offset by net loss of $(575.1) million in the three months ended March 31, 2024 and an increase in prepaid expenses and other assets of $13.9 million.

Previous wording

Net cash used in investing activities was $(397.6) million in the nine months ended September 30, 2024, primarily due to additional purchases of marketable securities of $1.4 billion and cash paid for acquisitions, net of cash acquired of $17.1 million, partially offset by maturities of marketable securities of $1.0 billion. Net cash provided by investing activities was $59.7 million in the nine months ended September 30, 2023, primarily due to maturities and proceeds from the sale of marketable securities of $992.8 million, partially offset by purchases of marketable securities of $928.0 million.

Current wording

Net cash used in investing activities was $(27.5) million in the three months ended March 31, 2025, primarily due to additional purchases of marketable securities of $504.8 million, partially offset by maturities and proceeds from the sale of marketable securities of $477.4 million. Net cash provided by investing activities was $114.1 million in the three months ended March 31, 2024, primarily due to maturities of marketable securities of $252.7 million, partially offset by additional purchases of marketable securities of $135.7 million.

Previous wording

Net cash provided by financing activities was $380.2 million in the nine months ended September 30, 2024 and consisted primarily of cash proceeds from the issuance of class A common stock in our initial public offering, net of underwriting discounts and commissions, of $600.0 million and proceeds from exercises of employee stock options of $62.9 million, partially offset by cash payments for taxes related to net share settlement of restricted stock units of $268.1 million. Net cash used in financing activities was $(3.5) million in the nine months ended September 30, 2023 and consisted primarily of cash payments of $4.2 million for taxes paid related to net share settlement of restricted stock units, partially offset by proceeds from exercises of employee stock options of $2.6 million.

Current wording

Net cash used in financing activities was $(26.5) million in the three months ended March 31, 2025 and consisted primarily of cash payments for taxes related to net share settlement of restricted stock units of $36.7 million, partially offset by proceeds from exercises of employee stock options of $10.2 million. Net cash provided by financing activities was $421.2 million in the three months ended March 31, 2024 and consisted primarily of cash proceeds from issuance of class A common stock in our initial public offering, net of underwriting discounts and commissions, of $600.0 million and proceeds from exercises of employee stock options of $23.1 million, partially offset by cash payments of $194.7 million for taxes related to net share settlement of restricted stock units.

Previous wording

Free Cash Flow was $126.7 million for the nine months ended September 30, 2024, and was composed of net cash provided by operating activities, resulting primarily from adjustments for non-cash items and changes in working capital, partially offset by net loss. Free Cash Flow was $(62.8) million for the nine months ended September 30, 2023, and was composed of net cash used in operating activities, resulting primarily from net loss, partially offset by adjustments for non-cash items and changes in working capital. Free Cash Flow also included purchases of property and equipment of $5.4 million and $5.1 million for the nine months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024, the increase in Free Cash Flow as compared to the prior year was driven primarily by the increase in cash provided by operating activities.

Current wording

Free Cash Flow was $126.6 million for the three months ended March 31, 2025, and was composed of net cash provided by operating activities, resulting primarily from net income and adjustments for non-cash items and changes in working capital. Free Cash Flow was $29.2 million for the three months ended March 31, 2024, and was composed of net cash provided by operating activities, resulting primarily from changes in working capital and adjustments for non-cash items, partially offset by net loss. Free Cash Flow also included purchases of property and equipment of $1.0 million and $2.9 million for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025, the increase in Free Cash Flow as compared to the prior year period was driven primarily by the increase in net income.

Previous wording

We have non-cancellable contractual obligations and commitments primarily related to third-party cloud infrastructure agreements under which we are granted access to certain cloud services as well as operating lease agreements. During the nine months ended September 30, 2024, there were no material changes outside the normal course of business to the purchase obligations as disclosed in the audited consolidated financial statements as of and for the year ended December 31, 2023 included in the Prospectus.

Current wording

We have non-cancellable contractual obligations and commitments primarily related to third-party cloud infrastructure agreements under which we are granted access to certain cloud services as well as operating lease agreements. During the three months ended March 31, 2025, there were no material changes outside the normal course of business to the purchase obligations as disclosed in the audited consolidated financial statements as of and for the year ended December 31, 2024 included in the Annual Report on Form 10-K.

Previous wording

There have been no material changes to our critical accounting policies and estimates as described in our Prospectus.

Current wording

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K.