Q2 2024 Reddit Inc Earnings Call

Dot Red ink dot com in the Investor Relations Subrogate or slash, our DDT and now I will turn the call over to Steve.

Speaker Change: Hi, everyone. Thank you for joining and welcome to our second quarter earnings call Q2 was another strong quarter for <unk> and our communities, we kept up our momentum with both strong business performance and progress on the product in Q2, both users and revenue grew over 50% year over year and for the second consecutive quarter, we had.

Unknown Executive: Hi, everyone. Thank you for joining and welcome to our second quarter earnings call. Q2 was another strong quarter for Reddit and our communities. We kept up our momentum with both strong business performance and progress on the product. In Q2, both users and revenue grew over 50% year over year.

Unknown Executive: And for the second consecutive quarter, we had positive cash flow, and we're profitable on an adjusted EBITDA basis. More and more people are coming to Reddit to explore their interests, engage in conversations, and find their community. And increasingly, users are turning to Reddit for answers to their questions via search, recognizing the authenticity and trustworthiness of our content across a wide variety of. We introduced several updates to the AMA feature, making it easier for hosts to schedule in post and easier for users to participate.

Positive cash flow and we're profitable on an adjusted EBITDA basis.

User growth has continued to climb reaching new heights with over 342 million active users and more than 91 million daily active users more.

More and more people are coming to read it to explore their interests engage in conversations and find their communities and increasingly users are turning to red for answers to their questions via search recognizing the authenticity and trustworthiness of our content across a wide variety of topics.

Speaker Change: Our product work is focused on enhancing the user experience to make it faster safer and easier to use conversations are the heart of read it and we've improved our app with near instant comment loading and more intuitive navigation across different post types, including text video and images.

Unknown Executive: As the platform continues to scale, so does our need for safety and moderation. Immersive Machine Translation is now widely available in French, and as a result, France was one of our fastest-growing countries, surpassing growth in the U.S., aiming to make Reddit accessible to everyone, regardless of their native language.

Unknown Executive: Turning to third-party search, we're seeing an evolution in the search ecosystem, where internet search, summarization, and training are blending. We are seeking the right balance between openness and protecting our users and platforms. We're still early in our journey, with many opportunities and opportunities for execution ahead to fulfill our mission. Thank you again for joining us.

Speaker Change: I think Steve Hello, everyone.

Speaker Change: Two was another strong quarter for revenue total revenue grew 54% year over year to $281 2 million an acceleration from the prior quarter and the set up with year over year growth growth rate since Q1 2022.

Speaker Change: The investments we've made across the business continue to pay off and we're pleased with the results in the first half of the year.

Speaker Change: The AD business continues to scale in Q2 accelerated from the prior quarter as we executed on our strategies and saw a stable ad market.

Speaker Change: Revenue grew 41% year over year to $253 $1 million.

Unknown Executive: We made progress scaling and diversifying the business, expanding partnerships, and executing on our ad tech roadmap. Let me discuss our ad review driver with you. We saw double-digit year over year growth in impressions from personalized ad loads, underlying user growth, and product enhancements to drive ad efficiency against the year over year decline in. We continue to diversify our business across channels, verticals, and geographies. The global scale channel, including mid-market and S&B, grew over 50% year-over-year, driven by both new advertiser activation and deepening existing relationships.

Speaker Change: We made progress scaling and diversifying the business expanding partnerships and executing on our AD Tech roadmap.

Speaker Change: Let me discuss our AD revenue drivers, we saw double digit year over year growth in impressions from personalized AD load underlying user growth and product enhancements to drive out efficiencies against the year over year decline in pricing, we continue to diversify our business across channel verticals and geographies.

Speaker Change: The global scaled channel, including Midmarket, and SMB grew over 50% year over year, driven by both new Avatar advertiser activation and by deepening existing relationships strengthen our verticals was led by retail pharma and financial services, which each grew over 50% year over year.

Unknown Executive: Strengthen Our verticals were led by Retail, Pharma, and Financial Services, which each grew over 50% year-over-year. International revenue accelerated from the prior quarter and grew 49% year over year, driven by strength across large and mid market customers in EMEA. And the big six agency relationships were also growth drivers in the quarter. Our Q2 growth was across the full funnel.

Speaker Change: International revenue accelerated from the prior quarter and grew 49% year over year, driven by strength across large and mid market customers in EMEA and the Big six agency relationships were also growth drivers in the quarter.

Unknown Executive: Performance objectives drove more than half of our revenue in the quarter, and we more than doubled the number of clicks again as we continue to enhance the lower funnel capabilities of our full funnel advertising. We made measurable progress against our ad tech roadmap in Q2. We focused on number one, driving performance of our ad solutions; and number two, improving usability for our advertisers and productivity for our sales force. And number three, offering our advertisers Reddit-unique solutions and bringing them closer to our communities.

Unknown Executive: And when we discuss First, driving performance of our ad. We continued building out our conversion API ecosystem with a new partnership with MParticle. This adds to our partnerships with Google Tag Manager and Telium as we execute our one-to-many approach for CappyAdopt.

Unknown Executive: We launched a performance ad solution, Dynamic Product Ads, or DPA, on public data. Early adopters have seen about a 2x higher return on ad spend, or ROAS, compared to other converging campaigns. It's still early for this solution, and we'll continue to invest in improving performance with this new solution.

Unknown Executive: And we recently announced the acquisition of Memorable AI, which helps accelerate our roadmap to bring AI-driven intelligence tools and creative to our advertisers to help drive performance. With this acquisition, we're adding AI foundational models to our ad stack to help optimize creatives, and we are working toward integration beginning to have impact next year. Second, improving usability for our users and productivity for our sales force. We've launched our Reddit Ads API to GA, allowing partners and advertisers to integrate with Reddit's Ad Manager and build customized campaigns and analytics, which help to expand our platform's reach.

Unknown Executive: Sprinklr is the first marketing intelligence platform to integrate with both Reddit's Ads API and Data API, offering advertisers unique insights and capabilities. In Q2, we extended our partnership with DoubleVerify and announced a new partnership with IAS to provide advertisers with brand safety and suitability measurement, complementing our robust first-party brand safety controls and fostering transparency and trust with major brands.

Unknown Executive: Third, offering our advertisers Reddit-unique solutions and bringing them closer to communities. We expanded ad placements on the conversation page, a high-intensity and valuable surface for both our users and advertisers, and where nearly 50% of all screen views occur. We launched the test of ads between comments and a new refreshed set of ad formats for conversation ads that are driving higher click-through rates in early testing. Advertisers using both in-feed and conversation ads experience a lift in action intent compared to those using only in-feed ads.

Unknown Executive: We also invested in bringing new content types to our users and offering businesses and advertisers new ways to reach and engage with communities. In Q2, we launched the next generation version of our Ask Me Anything AMA product, resulting in hundreds of new AMAs created.

Unknown Executive: Businesses are hosting AMAs and promoting them with ads to engage with communities and to share more about their brands and products. We also announced a partnership program that brings sports content to Reddit fan communities, including highlight videos, AMAs, and behind-the-scenes material. This helps drive engagement on the platform and offers new ad formats and placements for our advertisers. Sports is a global interest and a category that our users are deeply passionate about.

Unknown Executive: With over a thousand active sports communities on Reddit, partnering with Sports League was a natural place to start. And we'll see how this program unfolds later this year and consider how we might expand to other verticals and categories in the future. Next, I'll shift to our data licensing business. Other revenue grew by over 690% year-over-year to $28.1 million, primarily driven by data licensing agreements signed in the first half of the year. This market is still evolving, and we are exploring agreements with partners across the landscape who are aligned with our public content and user privacy policies and where there is commercial alignment.

Unknown Executive: The recent partnerships with Sprinklr and OpenAI make Reddit's corpus of authentic conversations available for these partners to access, while also putting guardrails in place that protect our users' privacy and Reddit's content. To date, our data licensing strategy has focused on marketing intelligence platforms and large-scale enterprise technology and search companies, and we've made good progress addressing these markets. We'll continue to explore opportunities with new verticals and potential ways to work with additional large and smaller-scale emerging AI companies.

Unknown Executive: Overall, this was a good first half of the year for Reddit, and we've made a lot of progress. Our focus now turns to the second half of the year as we work to continue growing the business. Now I'll turn the call over to

Unknown Executive: Thank you, Jen, and good afternoon, everyone. Reddit delivered very strong second quarter results across the board, which built on its sound start in 2-1 and rounded out a solid first half of the year. In the quarter, three key financial themes developed first. Our most important growth and cost metrics really shone. Second, our profitability continues to improve rapidly as our business scales. Third, we saw continued traction on important economic drivers like cash flow, CapEx, dilution, and stock-based compensation.

Unknown Executive: Let's speak to each point, starting first with strength and key metrics, specifically users, revenues, gross margins, and op-eds. We saw really solid growth in the quarter, with both user growth and revenue growth exceeding 50% year over year. DAUQ was 91.2 million, up 51%. Logged-in users were about 70% of the in-quarter growth, but total logged in users grew 31% year over year, the fastest rate in the last few years. Revenues were $281 million, up 54%, as impression gains continue to fuel our growth.

Speaker Change: AD revenue grew 41% in Q2, while other revenue grew over 690%, primarily driven by new licensing deals with Google Open AI and others.

Unknown Executive: Ad revenue grew 41% in Q2, while other revenue grew over 690%, primarily driven by new licensing deals with Google, OpenAI, and others. Margin growth also really shines in the; gross margins were nearly 90%, up from 84% in the prior year driven by operating lower pricing from our cloud hosting contracts and the leverage from incremental revenue. For Q2, our 12% adjusted OPEX cost growth is very consistent with the last four quarters, where adjusted OPEX growth has averaged about 9%.

Speaker Change: Margin growth also really shined in the quarter gross margins were nearly 90% up from 84% in the prior year driven by operating efficiencies lower pricing from our cloud hosting contracts and the leverage from incremental revenues.

Speaker Change: For Q2, our 12% adjusted Opex cost growth is very consistent with last four quarters.

Speaker Change: Just in Opex growth has averaged about 9%.

Unknown Executive: The company continues to leverage the organizational scale it's built over the last few years as we targeted modest hiring in the front of house areas like ad tech, machine learning, and sales. Total headcount was up less than 1% sequentially and 3% year over year.

Speaker Change: The company continues to leverage the organizational scale, it's built over the last few years as we targeted modest hiring in the front of house areas like AD Tech machine learning and sales.

Speaker Change: Total head count was up less than 1% sequentially and 3% year over year.

Unknown Executive: So, as you can see, terrific traction on key metrics. Second, let me touch on how profitability is increasing rapidly as the business scales. On a gap basis, our net loss was $10 million, 31 million better than the prior year and very solid progress against our internal goal of reaching gap breakeven. Q2 adjusted EBITDA was nearly $40 million, up $30 million sequentially, and up $75 million year-over-year. Adjusted EBITDA margins reached the mid-double-digit level at 14%, up from 4% in Q1 and negative 19% in the prior year.

Speaker Change: So as you can see terrific traction on key metrics.

Speaker Change: Second let me touch on how profitability is inflicting rapidly as the business scales.

On a GAAP basis, our net loss was $10 million.

Speaker Change: $31 million better than prior year, and very solid progress against our internal goal of reaching GAAP breakeven.

Speaker Change: Q2, adjusted EBITDA was nearly $40 million up $30 million sequentially and up $75 million year over year.

Speaker Change: Adjusted EBITDA margins reached the mid double digit level at 14% up from 4% in Q1 and negative 19% in the prior year.

Speaker Change: The key to our significant gains and profitability continue to be both execution and our strong economic model.

Unknown Executive: The keys to our significant gains and profitability continue to be both execution and our strong economic model. Revenue grew over five times as fast as total adjusted costs in Q2, similar to Q1, as revenues grew 54% year-over-year, and total adjusted costs grew slightly less than 11% year-over-year. That's well ahead of our long-term internal goal of revenue growth twice as fast as total adjusted cost growth. Additionally, our incremental adjusted EBITDA margins were 76% for the quarter, slightly higher than our last four-quarter average of 73%.

Speaker Change: Revenue grew over five times as fast as total adjusted costs in Q2, similar to Q1 as revenues grew 54% year over year and total adjusted costs grew slightly less than 11% year over year.

Speaker Change: Well ahead of our long term internal goal of revenue growth twice as fast as total adjusted cost growth.

Speaker Change: And Relatedly, our incremental adjusted EBITDA margins were 76% for the quarter slightly higher than our last four quarter average of 73%.

Unknown Executive: In Q2, we saw a $75 million positive change in adjusted EBITDA on a $98 million change in. Now, to the third point, we're not only seeing good traction in areas like growth and cost but also on important metrics like cash flow, capex, stock-based compensation, and dilution. Operating cash flow was $28 million in Q2, an $82 million positive change from Q2 of 2023. For the first half of the year, positive operating cash flow was $60 million.

Speaker Change: In Q2, we saw a $75 million positive change in adjusted EBITDA on a $98 million change in revenue.

Speaker Change: Now to the third point, we are not only seeing good traction in areas like growth in costs, but also on important metrics like cash flow capex stock based compensation dilution.

Speaker Change: Operating cash flow was $28 million in Q2, and $82 million positive change from Q2 of 2023.

Speaker Change: For the first half of the year positive operating cash flow was $60 million.

Speaker Change: Our capex remains very light about $1 million in the second quarter less than 1% of revenue.

Unknown Executive: Our capex remains very light, about $1 million in the second quarter, less than 1% of revenue. Stock-based compensation, including related taxes, was $67 million, down substantially from the last quarter due to the recognition of IPO-related stock expenses. Stock-based compensation was about 24% of revenue for the quarter. Share count movements were modest in Q2, as basic shares outstanding were $166 million, up 1% sequentially, but fully diluted shares were 205 million

Speaker Change: Stock based compensation, including related taxes was $67 million down substantially from last quarter due to the recognition of IPO related stock expenses stock.

Speaker Change: Stock based compensation was about 24% of revenue for the quarter.

Speaker Change: Share count movements were modest in Q2 as basic shares outstanding were $166 million up 1% sequentially, but fully diluted shares were $205 million down sequentially.

Unknown Executive: On the other hand, cash was $1.7 billion, which gives us a lot of flexibility as our business scales into profitability and positive cash. In the medium-term, we believe the right amount of cash on hand for the business today is around $800 million to $1 billion. The company will look to deploy capital where it makes sense over time, with capital priorities being first investing in our business, M&A, and share reporting. As Jen mentioned, we recently completed and announced the acquisition of Memorable AI, an ad creative optimization platform to help drive lower final performance for our advertisers. The preliminary purchase price consideration was $19.9 million, including $17.1 million of cash.

Speaker Change: On the other hand cash was $1 7 billion.

Speaker Change: Which gives us a lot of flexibility as our business scales into profitability and positive cash flow.

Speaker Change: Medium term, we believe the right amount of cash on hand for the business today is around $800 million to $1 billion.

Speaker Change: The company will look to deploy capital where it makes sense over time with capital priorities being first investing in our business M&A and share repurchases.

Speaker Change: As Jen mentioned, we recently completed and announced the acquisition of memorable AI.

Jen: And AD creative optimization platform helped drive lower funnel performance for our advertisers.

Jen: The preliminary purchase price consideration was $19 $9 million, including $17 1 million of cash.

Unknown Executive: The deal closed in late July and will be reflected in the Q3 financial statement. As we look ahead, we'll share our internal thoughts on revenue and adjusted EBITDA for the third quarter, where we have the greatest visibility. For the third quarter of 2024, we estimate revenue in the range of $290 million to $310 million and adjusted EBITDA in the range of $40 million to $60 million. These estimates include the anticipated benefits from the recently signed content partnerships with sports. We anticipate these deals will contribute modestly to revenue this year, more in Q4 than Q3, and should have a greater financial impact in 2025.

Jen: The deal closed in late July and will be reflected in the Q3 financial statements.

Speaker Change: As we look ahead, we will share our internal thoughts on revenue and adjusted EBITDA for the third quarter, where we have the greatest state of visibility.

Jen: For the third quarter 2024, we estimate revenue in the range of $290 million to $310 million and adjusted EBITDA in the range of 40 million to $60 million.

Speaker Change: These estimates include the anticipated benefits from the recently signed content partnerships with the sports leagues we.

Speaker Change: We anticipate these deals will contribute modestly to revenue this year more in Q4 than Q3.

Speaker Change: And should have a greater financial impact in 2025 and beyond.

Unknown Executive: So to summarize, the strength and consistency of the numbers were nice to see throughout the first half of 2024. Both Q1 and Q2 were solid quarters for Reddit. That said, our business historically scales seasonally, and we've turned our attention and focus to the back half of 2020. Now, I'll turn the call over to you.

Jen: So to summarize this.

Speaker Change: Strength and consistency of the numbers were nice to see throughout the first half of 2020 for both Q1 and Q2 were solid quarters for Red <unk>.

Jen: That said our business historically scale seasonally and we've turned our attention and focus to the back half of 2024.

Jen: Now, let me turn the call over to Steve.

Steve: Thanks for your thanks, Jen Okay, we're going to do two questions from our community and then we'll open it up to everybody else first question in past interviews you have mentioned using large language models to translate <unk> content into other languages to better connect credits communities internationally. It is something that is being actively bill or just a vision for a distant future.

Unknown Executive: Thanks, Drew. Thanks, Jen.

Unknown Executive: Okay, we're going to do two questions from our community, and then we'll open it up to everybody else. First question: in past interviews, you mentioned using large language models to translate Reddit's content into other languages to better connect Reddit's communities internationally. Is this something that is being actively built, or just a vision for a distinction? So it's something that's being built, and it's in testing, and for French, which was our first language for doing this, it's now in GA or general availability, which means if you're in France and speak French minus a small holdout group, you can see the full immersive real-time translation experience. And it's working very well. So now we're kicking off German, Spanish, and Portuguese, with our aim to get those out later this year as well. Long story short, the test was successful.

Speaker Change: So its something Thats thing.

Speaker Change: Built its testing for.

Speaker Change: French was which was our first language for doing that it's now in GAA or general availability, which means if you're in France speaking French minus a small holdout group you can see the full immersive real time translation experience and it's working very well so now we're kicking off.

Jen: German Spanish and Portuguese with our aim to get those out later this year as well.

Speaker Change: Sure. It's a touch with successful this is a really promising future and so it's real and I think it should have an impact in the short term.

Unknown Executive: This is a really promising feature, and so it's real, and I think it should have an impact in the short term. Advertising is the prime Source of Revenue for Reddit. To increase this revenue, do you plan to focus on increasing the quantity, number of ads, or quality, profit generated per ad, of ads featured on Reddit?

Speaker Change: Second question I'll read.

Speaker Change: And this one is for Gen advertising is the prime source of revenue for <unk> to increase this revenue do you plan to focus on increasing the quantity number of ads or quality profit generated per AD of ads featured on <unk>.

Speaker Change: Let's see.

Unknown Executive: I see. So what's important to growing revenue in our auction is that advertisers find the outcomes they want at the volumes and prices they want. And our ads platform and marketplace is still early; it's still young. So we do see opportunity to drive more demand and performance, which can drive more value per ad or CPM cost per 1,000 impressions. Adload on Reddit, where there are ads today, like in the feed, for example, is light compared to peers, and the best we can tell outside is about half of the peer platforms.

Speaker Change: And what's important to growing revenue in our auction is that advertisers find the outcomes. They want at the volumes and price stay warm.

Speaker Change: And our ads platform and marketplace. It is still early still young.

Speaker Change: So we do see opportunity to drive more demand and performance, which can drive more value per ad or CPM cost per thousand impressions.

Speaker Change: AD load on Brent It where there are ads today like in the <unk>. For example is light compared to peers and the best we can tell are tightening of that half of peer platforms.

Jen: But there are still many places on run rate without ads today.

Unknown Executive: But there are still many places on Reddit without ads today, so we're more focused on designing ads for spaces where users are spending more time versus increasing ad load in existing spaces. So, for example, 50% of screen views are now on conversation pages. Okay, thanks, Jen.

Speaker Change: We're more focused on designing ads per spaces, where users are spending more time versus increasing ad load in the existing spaces.

Jen: So for example, 50% of screen views there now on compensation pages, that's an opportunity.

Ken: Okay. Thanks, Ken.

Unknown Executive: Okay, thanks, Jen. So the community questions: Jen, Drew, and I will record answers to the rest of them and post them tomorrow. Okay, Jesse, back to you.

Christa: So the community questions Jen drew and I will record answers to the rest of them and post them tomorrow. Okay. Just effective alright. Thanks, Steve. Thanks, Jen Christa why don't we open up the line and take some questions from the folks that are online now I appreciate it.

Unknown Executive: Absolutely. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. And we ask that you limit yourself to one question. Your first question comes from the line of Doug Anmuth with JP Morgan. Please go ahead.

Speaker Change: Absolutely if he would like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

Speaker Change: If you'd like to withdraw that question again press star one and we ask that you limit yourself to one question.

Christa: Our first question comes from the line of Doug Anmuth with Jpmorgan. Please go ahead.

Doug Anmuth: Great. Thanks for taking the questions one for drew and one for Steve.

Unknown Executive: Great, thanks for taking the questions. One for Drew and one for Steve.

Unknown Executive: Drew, I was hoping you could provide some more color on the 3Q guide, in particular, any more insight into the ad market and its health in the third quarter. It looks like the revenue outlook is either very conservative, or perhaps you're seeing something in the business, because if you back out OpenAI, incremental contribution, and then perhaps even some of the Sports League benefits as well, doesn't suggest much sequential growth in revenue.

Doug Anmuth: Drew I was hoping you could provide some more color on the <unk> guide in particular any more insight into the AD market and the health in the third quarter just it looks like the revenue outlook is either very conservative or perhaps youre seeing something in the business because if you back out open AI incremental contribution and then perhaps.

Speaker Change: Even some of the sports league benefits as well.

Unknown Executive: So just checking if there's anything to call out there. And then Steve, you talked about testing new search results pages. Can you just elaborate on that? Is this going to be done all internally, or are you partnering with third-party providers here as well? Thanks.

Speaker Change: It doesn't suggest much sequential growth.

Speaker Change: In revenue. So I was just checking if there is anything to call out there and then Steve you talked about testing new search results pages can you just elaborate there is going to be done all internally or are you partnering with.

Steve: Third party providers here as well.

Speaker Change: Yes.

Unknown Executive: Okay, on the guide, Doug, here, we got a 290 to 310. Take the midpoint of that year over year growth, and it's in the mid 40s. We think that's a good number. We think that's differentiated versus the pure set.

Speaker Change: Okay on the on the guide Doug here, we guided $290 to 310, let's take the midpoint of that year over year growth is mid Forty's, we think thats a good number.

Speaker Change: We think that's differentiated versus the peer set if you look over the last four quarters, we have been growing in the mid to high <unk>. So we feel like it's a differentiated number I take your point that Youre measurements take is a bit different youre looking just only at the second quarter. So I take your point there in terms of the revenue drivers that you're looking at sort of the increments of them look I think that the.

Speaker Change: Sports deals or something Thats, probably a bigger idea for us in 2025 and beyond we have to get that sold through our salesforce et cetera. So I would look for a very modest impact in Q3, I think we'll have a little bit more particularly with the NFL in the fourth quarter, that's kind of that.

Speaker Change: Main part of the NFL season, So I think that that incrementals in the third quarter will be pretty modest as it relates to kind of open AI, we saw about half the benefit of the deal in the second quarter. So there will be a little bit incrementally already to your point, but but overall I think the guide feels good are there particular things that were.

Speaker Change: We're looking at in the third quarter that we can put our finger on no there isn't anything that's particularly different than what we've seen now for the full year. There still are some macro uncertainty and particularly in the fourth quarter around elections. So I think that's a little bit in the background, but I think overall in the third quarter I think the guide feels good to where the businesses right now feels better than where we've been over the last four.

Unknown Executive: If you look over the last four quarters, we've been growing in the mid to high 30s, so we feel like it's a differentiated number. I take your point that your measurement stick is a bit different.

Speaker Change: <unk>, but I do take your point, it's a little bit lower than we've been in the second quarter, but I think we take a little broader length of that.

Unknown Executive: You're looking just at the second quarter. So I take your point there. In terms of the revenue drivers that you're looking at, sort of the incrementality of them. Look, I think that the sports deals are, you know, something that's probably a bigger idea for us in 2025. And beyond, you know, we have to get that sold through our sales force, etc.

Speaker Change: Okay.

Unknown Executive: So I would look for a very modest impact in Q3. I think we'll have a little bit more, particularly with the NFL in the fourth quarter, that's kind of the main part of the NFL season. So I think that that incrementality in the third quarter will be pretty modest. As it relates to kind of open AI, we saw about half the benefit of the deal in the second quarter. So there will be a little bit of incrementality to your point.

Unknown Executive: But overall, I think the guy feels good. Are there particular things that we're looking at in the third quarter that we can put our finger on? No, there isn't anything that's particularly different from what we've seen. Now, for the full year, there still is some macro uncertainty, and particularly in the fourth quarter around elections. So I think that's a little bit in the background. But I think overall, in the third quarter, I think the guy feels good about where the business is right now and feels better than where we've been over the last four quarters. But I do take your point, it's a little bit lower than we were in the second quarter. But I think we should take a little wider lens.

Speaker Change: Thanks to the second question about search so we're talking about.

Speaker Change: On Red at search.

Steven Huffman: Okay, thanks Doug. Second question about search. So we're talking about Reddit search. A lot of our work over the last couple of years has been on the back end, so improving the actual results, so the speed and relevance of those results. Some of that is on first-party technology; some of that is third-party technology. We're also beginning to enhance the results with AI. Again, some of those are first-party models, and some of those will be third-party models.

Speaker Change: A lot of our work over the last couple of years has been on the backend.

Speaker Change: So improving the actual results so the speed and relevance of those results. Some of that is on first party technologies some of that as third party technology.

Speaker Change: We're also be.

Speaker Change: Turning to enhance the results with AI against some of those are first party models. Some of those will be third party models.

Speaker Change: And what I was really referring to in my script is.

Steven Huffman: And what I was really referring to in my script is that, for the rest of this year, we'll start to see the front end product actually change. So the user experience and how we package these results, because that's gone unchanged for a long time. Search on Reddit is a huge opportunity. Many new users want to search. You've heard me talk about onboarding, helping connect users to their interests on Reddit. For many users, they're literally typing into a box exactly what they're interested in.

Speaker Change: The rest of this year, we'll start to see the <unk>.

Speaker Change: Front end product actually change so the user experience.

Speaker Change: How we package these results because thats gone unchanged for a long time.

Speaker Change: Search on radio is a huge opportunity in many new users want to search you've heard me talk about onboarding.

Speaker Change: Helping connect users to their interests on Reddit for many users that are literally typing into a box exactly what they are interested in and.

Steven Huffman: So it's a really important consumer product service area. And then, of course, over the long term, there's significant advertising potential there as well. But really, what I'm referring to here is our in-house efforts to improve the presentation of that.

Speaker Change: So.

Speaker Change: I think really important consumer product surface area, and then of course over the long term.

Speaker Change: There is significant advertising potential there as well.

Speaker Change: But really what I'm, referring to here is it'll.

Speaker Change: It'll be our in house efforts to improve the presentation of that product.

Speaker Change: Your next question comes from the line of Laura Martin with Needham <unk> Company. Please go ahead.

Unknown Executive: Your next question comes from the line of Laura Martin with Needham and Company. Please go ahead.

Unknown Executive: Your next question comes from the line of Laura Martin with Needham and Company. Please go ahead. I will obey your request to only have one question. So I'm going to ask one of Steve. Put on your protector of culture hat, Steve.

Laura Martin: I will obey youre requested to only have one question I'm going to ask just wanted to see.

Speaker Change: Putting on your protector culture hat.

Speaker Change: Historically these are conversations and there hasnt been a hidden agenda about earning money and.

Speaker Change: And you guys are going to try to earn money now for people and creators on the platform, which sort of moves it more towards the Twitter and Youtube in my mind.

Speaker Change: Do you protect this wonderful unique culture.

Speaker Change: Read it at the same time youre going to let people make money from these conversations thank you.

Steven Huffman: Thank you, Laura. Great question. So yeah, I think one of the truly special and honestly almost magical things about Reddit is the amount of time and effort people spend helping each other. Giving advice, helping people through decisions, sometimes small decisions, like what should I watch tonight? Sometimes big decisions, like, you know, should I go through this breakup?

Speaker Change: Thank you Laura Great question. So, yes, I think one of the truly special and.

Speaker Change: Honestly almost magical things about read it.

Speaker Change: Is the amount of time and effort people spend helping each other.

Speaker Change: Giving advice, helping people through decision.

Speaker Change: Decisions, sometimes small decisions what should I watch Tonight, sometimes big decisions like should I go through this breakup.

Unknown Executive: It's really, I think, truly profound. Your question is, if we start to include other incentives in there, like monetary incentives, does that change? In my experience on Reddit, whenever we add basically a new way of using Reddit, what happens is it expands Reddit, but we've not seen it cannibalize existing Reddit users. And so I think the existing altruistic free version of Reddit will continue to exist and grow and thrive just the way it has.

Speaker Change: It's really I think truly profound.

Speaker Change: Your question is if we start to include other incentives in there like monetary incentives does that change.

Speaker Change: And my experience on Red it whenever we add basically a new way of using credits.

Speaker Change: What happens is it expands read it but we've not seen it cannibalize existing rent it and so I think the existing altruistic free version of Red It.

Speaker Change: We will continue to exist and grow and thrive just the way it has but now we will unlock the door for new use cases.

Unknown Executive: But now we will unlock the door for new use cases, new types of subreddits that can be built that may have exclusive content or private areas, things of that nature. A good example of this, for example, is Reddit: We didn't host images back in the past. It was all text and links, and images were links, so we'd link to other websites or platforms for images. When we added image hosting, all of a sudden, there were a ton of new communities built around that feature, but the existing text and link-based Reddit also continued to grow.

Speaker Change: New types of subreddits that can be built.

Speaker Change: That may have exclusive content or private areas things of that nature.

Speaker Change: Good example of this for example is.

Speaker Change: Read it we didn't host images.

Speaker Change: Back in the past it was all text and links and images.

Speaker Change: We're linked so it's linked to other websites are platforms for images when we added image hosting.

Speaker Change: All of a sudden there is a ton of new communities built around that feature but the existing text based read it also continued to grow.

Unknown Executive: So I'd look at this as an opportunity for expansion, as opposed to one that is going to cannibalize the existing Reddit, which, as I said, is magical. It's something that we think is truly precious. And so we'll, of course, watch these things closely. But that's how I see it.

Speaker Change: Look at this as an opportunity of expansion as opposed to one that is going to cannibalize the existing read it.

Speaker Change: Which.

Speaker Change: As I said is magical it's something that we think is truly precious and so we will of course watch these things closely but that's how I see it playing out.

Speaker Change: Your next question comes from the line of Ron Josey with Citi. Please go ahead.

Unknown Executive: Your next question comes from the line of Ron Josey with Citi. Please go ahead.

Ron Josey: Alright, Thanks for taking the question I wanted to ask on usage and advertising, Steve I think we saw log in da user up 32%, maybe amongst the fastest growth in past couple of years and we saw comments also comments viewed I think up as well so wanted to hear about the changing with team has made.

Unknown Executive: Great, thanks for taking the question. I wanted to ask about usage and advertising. Steve, I think we saw logged-in DAUs up 32%, maybe amongst the fastest growth in the past couple years. And we saw comments also, comments viewed, I think, up as well. So I wanted to hear about the changes the team has made on the site itself, whether it be shredding, new onboarding processes that have driven this, and I'm really curious about the lasting implications here.

Ron Josey: On the site itself, whether it be shredded new onboarding processes that have driven this and really curious about the lasting implications here and then John you mentioned the stable ad market.

John: We saw each other a few weeks back over Com and just wanted to hear how your conversations with advertisers have evolved really over the past few months.

Unknown Executive: And then Jen, you mentioned the stable ad market. You know, we saw each other a few weeks ago at a convention and just wanted to hear how your conversations with advertisers have evolved really over the past few months, just in terms of how the dynamic has changed in terms of advertising on Reddit. Thank you.

Speaker Change: Just in terms of how the dynamic has changed in terms of advertising on Reddit. Thank you.

John: Okay, Hey, Ron Thank you for the questions.

Unknown Executive: Okay, hey, Ron, thank you for the questions. Yes, as you observed, logged in, DAU is up, up over 30% from last year. That is indeed our fastest growth rate among that segment in years. So we're very happy with that. And you answered your own question.

Ron Josey: Yes, as you observed.

Speaker Change: Logged in via U is up.

Speaker Change: <unk> up over 30% in last year that is indeed, our fastest growth rate among that segment in years.

Speaker Change: So we're very happy with that.

Speaker Change: And you answered your own question.

Unknown Executive: Improved onboarding, Shred It, which represents web performance. I would say broadly, a general push around, maybe 15 years of our life. And now, what happens is we get you into the community onboarding experience. And so we try to find the interests specific to you.

Speaker Change: Improved onboarding shred, it which represents web performance I would say broadly general push around.

Speaker Change: Quality on Reddit has helped a lot and then there is a structural change that we've been going through over the last couple of years, which is it used to be when you are a new user to read it.

Speaker Change: <unk>.

Speaker Change: Putting you into.

Speaker Change: Basically global feed so we call that the popular feet today that was the core <unk> product for the first.

Speaker Change: Maybe 15 years of our life and now what happens is we get you into the community on boarding experience and so we try to find that the interest specific to you and then we put you in a home feed that has those communities and subreddits and we grow from there and so.

Unknown Executive: And then we put you in a home feed that has those communities and subreddits, and we grow from there. That first user experience has gotten much more dialed in and relevant to new users, which has been driving meaningful improvements in new user retention. And of course, that compounds the problem. And so the story of Reddit, I think, for a long time, is that we've had this very big pop-up funnel from third-party search and word-of-mouth.

Speaker Change: That first user experience has gotten much more dialed in and relevant to new users, which has been driving meaningful improvements to new user retention and of course that compounds on that growth and so the story of Red I think for a long time as we've had this very big top of funnel.

Speaker Change: From third party search and word of mouth.

Speaker Change: And the question is when can we retain those users because we get so many shots on goal every day, so really over the last year, we've gotten much better at.

Unknown Executive: And the question has been, can we retain those users? Because we get so many shots on goal every day. So really, over the last year, we've gotten much better at retaining new users. And we've been growing over a million users a month, more or less, since the spring of last year.

Speaker Change: Retaining new users and we've been growing over 1 million users a month more or less since spring of last year.

Speaker Change: Your next question the second question on the stable Ad market.

Unknown Executive: Jen, there's a second question about the stable ad market.

Unknown Executive: Yeah, I think we saw a stable ad market in Q2, Ron. I'd say Post can, I think, first of all, I think Post can has a very strong sentiment Post can with working with Reddit, so very, very positive.

Speaker Change: And I think we saw stable AD market in Q1.

Ken: Yes, I'd say post can I think first of all as I think Ken.

Speaker Change: Very strong.

Ken: Sentiment post can working with right, it's a very very positive.

Speaker Change: Watching things, we're watching and placing geopolitics elections, I will say a few things one there are real election, we did see some pauses in the UK around the snap election, you saw pauses.

Unknown Executive: We're watching a few things. We're watching inflation, geopolitics, and elections. I will say a few things.

Unknown Executive: One, there are real election jitters. We did see some pauses in the UK around the snap election. We saw pauses around the time of the Trump rally shooting.

Speaker Change: Around the time, the Trump rally shooting, so I think theres a lot of caution.

Speaker Change: Yeah.

Speaker Change: I will also say that recently agency signaled a little bit.

Unknown Executive: So I think there's a lot of caution. I will also say that recently, agencies have signaled a little bit of back half caution on budgets being more flattish versus growing. So I think there is caution from some of the large hold pros. And, you know, we're not a big player in political ads, which some might have a political bond with, but that's not something that we participate in. That's kind of how I think about the back half. So overall, I think there's still a little bit more caution, but I think we're still welcome.

Speaker Change: Back half caution on budgets being more flattish versus growing.

Speaker Change: So.

Speaker Change: I think there is caution from some of the large host close.

Speaker Change: And we're not a big big player in political Ad spend.

Speaker Change: Some might have a political bumps, but that's not something that we play in that's kind of how I think about the back half. So overall I think it is.

Speaker Change: Yes, there's still a little bit more caution.

Speaker Change: But I think where we're still well positioned.

Speaker Change: Your next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.

Unknown Executive: Your next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.

Unknown Executive: Great. Thanks for taking my questions.

Speaker Change: Great. Thanks for taking my questions. Let me go back to the AD markets. Gen can you talk to us about sort of what youre seeing on your branded advertisers spend are you still seeing your advertisers who are most of your brand. Its been are they spending more on the branded side and if so sort of what what's driving that.

Unknown Executive: Let me go back to the ad markets, Jen. Can you talk to us about sort of what you're seeing on your branded advertiser spend? Are you still seeing your advertisers who are mostly spending on the branded side? And if so, sort of what's driving that? Then just sort of any update you can give us. I remember the pre-IPO days. Walk us through some sort of progress on growing your advertiser count, growing your advertiser spend, and your advertiser spend per advertiser over time. And can you kind of help us kind of, you know, what's going on actually beneath the headlines driving this really strong ad growth in the three quarters?

Speaker Change: And then just sort of any update you can give us that.

Speaker Change: Pre IPO of walk us through sort of progress on growing your advertiser count.

Speaker Change: Growing your advertiser spend your advertiser spend per advertiser over time, and you can kind of help us kind of what's going on actually beneath beneath the headlines on driving that really strong ad growth in the <unk>.

Unknown Executive: Sure, I'm happy to. So just on your question about brands, branding as an objective was growing really nicely for us. And in fact, I think, you know, brand. We've seen both folks come into the auction, so fitting against brand objectives, as well as using our takeover product, which is a reserved product where they can align themselves against specific subreddits. So specifically, category takeovers; you can buy a category like sports, etc. We've seen brand advertisers come into both of those products, as well as a nice adoption of some of the Reddit unique formats like AMAs that have been refreshed in the free format. So the brand has actually been solid as an objective.

Speaker Change: Sure happy to.

Speaker Change: No.

Speaker Change: Just wondering a question on on brand brand as an objective.

Speaker Change: Growing really nicely for us and in fact I think.

Speaker Change: Brand we've seen both.

Speaker Change: Folks coming to the auction so fitting against brand objectives.

Speaker Change: As well as using our takeover product, which is a reserve product where they can align again.

Speaker Change: Separately, so specifically the category takeovers and by category and exports et cetera.

Speaker Change: We think brand advertisers coming into both of those products as well as nice adoption of some of them already unique formats like <unk>.

Speaker Change: That had been refreshed in the print format. So brand has actually been solid.

Unknown Executive: And there's really diversified spend across brand and performance. In terms of the underlying values of our business, I think it's really healthy in a number of ways. So number one is we've been growing the number of active advertisers, particularly in the managed segment, you know, that targets large customers and mid-market and managed SMB. And those are really seeds for the future, because you start small, and you can grow those advertisers into more products and more objectives. So that, I think, allows us to plant seeds for the future.

Speaker Change: As an objective and there is really diversified across static brand and performance.

Speaker Change: In terms of the underlying pieces of our business.

Speaker Change: It is really healthy and a number of ways. So number one is we've been growing the number of active advertisers, particularly in the manage segment and it has.

Speaker Change: For large customers in mid market and managed F&B and those are really seeds for the future and because you start small and you can grow those advertisers and some of our products in more objectives.

Speaker Change: So that that I think allows us to plant seeds for the future. The second is we had a number of growth drivers across our business.

Unknown Executive: The second is we had a number of growth drivers across our business. The scaled part, mid-market SMB growing over 50%, international becoming a growth driver, 49% year-over-year. Vertical diversification. So it used to be that our tech group was our number one vertical group. This quarter, it actually was the group that included retail, pharma, financial services, and CPG.

Speaker Change: <unk> part mid market SMB growing over 50% international becoming a growth driver 49% year over year.

Speaker Change: Vertical diversification so.

Speaker Change: It used to be at our Tech group.

Speaker Change: It was our number one vertical group this quarter. It actually was the group that included retail pharma financial services CPG. So really interesting diversification continues in our book and it is actually changing the face.

Unknown Executive: So really interesting that diversification, you know, continues in our book and it's actually changing the face of our book, I think, which has been really positive. And so, and then the final thing I'll say is we've been investing in the lower funnel and specifically, you know, conversion. And that has accelerated growth as an objective in our auction. So that's really nice to see because as that objective delivers more performance, you know, that allows more advertisers, particularly in scale.

Speaker Change: Of our book I think which has been really positive.

Speaker Change: And so and then the final thing I'll say is we've been investing in the lower funnel.

Speaker Change: And the.

Speaker Change: <unk> conversion.

Speaker Change: And that has.

Speaker Change: Accelerated in growth as an objective in our auction.

Speaker Change: It's really nice to see because as that objected delivers more performance.

Speaker Change: That allows and unlock for more advertisers.

Speaker Change: Particularly in the scale channel. So I think the business is really healthy.

Unknown Executive: I think the business is really healthy. We're doing a good job retaining at high rates our managed advertisers, as well as adding new advertisers to the book because of the new platform capability. Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead. Thanks so much for taking the question. The topic really is memorable AI. Can you talk a little bit about why?

Speaker Change: We're doing a good job retaining at high rates are managed advertisers as well as adding new advertisers to the book because of the new platform capabilities.

Speaker Change: Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Unknown Executive: Your next question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Eric Sheridan: Thanks, so much for taking the question topic really is memorable AI can you talk a little bit about why you felt that was the right asset for you as a team to acquire.

Speaker Change: How you thought about building organically around that broader theme versus maybe accelerating the path to market and going down the acquisition route and how we should be thinking about that asset being integrated and having an impact on the business in the years ahead. Thanks, so much.

Speaker Change: Sure.

Unknown Executive: Sure, so one of the layers in our ad stack that we want to develop and that was on our roadmap is around creative, both insights and optimization, and then creative generation. We know that that can be really valuable for driving performance and also just making an easier, more automated, scalable experience for advertisers. It is something that we had on our roadmap that we could build but acquiring memorable, which is one of the leaders in the market.

Speaker Change: But one of the layers in our AD stack that we want to develop and that was on our roadmap is around creative both insights and optimization and and then creative generation. We know that that can be really valuable for driving performance and also just making easier more automated scalable experience for <unk>.

Speaker Change: Advertisers it is something that we had on our roadmap that we could build but acquiring memorable which is one of the leaders in the market and then all of our deals you just showed how much customers value their technology and insight. It just accelerates our ability to come to add part of the of the AD stack.

Unknown Executive: I mean, all of our due diligence just shows how much customers value their technology and insight. It just accelerates our ability to add this part of the ad stack. So we're integrating; we get technology and talent with the acquisition. And we're doing that integration work in the back half of this year to start having an impact next year. But it'll really accelerate our ability to deliver performance at the lower end of the funnel, in particular. I mean, it'll help all performance, but particularly at the lower end of the funnel, where ad formats and creative can have a lot of impact on click-through rates and conversion.

Speaker Change: So we're integrating we get technology and talent.

Speaker Change: With the acquisition.

Speaker Change: And we'll be doing that integration work in the back half of this year to start having impact next year, but it will really accelerate our ability to deliver performance at the lower end of the funnel in particular I mean, it will help all of the performance, particularly at the lower end of the lower funnel where.

Speaker Change: AD formats, and creative can have a lot of impact on click through rates and conversions.

Speaker Change: Your next question comes from the line of Rich Greenfield with light shed. Please go ahead.

Unknown Executive: Your next question comes from the line of Rich Greenfield with Light Shed. Please go ahead.

Unknown Executive: Hi, thanks. I've got a couple of questions.

Speaker Change: Hi, Thanks, I had a couple of questions.

Rich Greenfield: Steve you talked about sort of the improving engagement and sort of that upper funnel, which I assume youre talking about sort of how search drives people into the platform, but youre D are you.

Speaker Change: Sure Youre weekly users are still growing faster than your daily users and I guess the question is.

Unknown Executive: You know, Steve, you talked about sort of improving engagement and sort of that upper funnel, which I assume you're talking about sort of how search drives people into the platform. But your DA, your weekly users are still growing faster than your daily users. And I guess the question is, you know, how do you close that gap over time? Is it product changes? Like, it's obviously great that you have all of these people coming and touching Reddit every single day, but how do you get them to be addicted and become daily active users? What is that?

Speaker Change: How do you close that gap over time is it.

Speaker Change: Product changes like it's obviously, great that you have all of these people coming and touching every single week, but how do you get them to be addicted and become daily active users. What is that is there something that you've seen historically that sort of convert somebody from.

Unknown Executive: Like, is there something that you've seen historically that sort of converts somebody from, you know, either a search-based user or someone who comes in once in a while to an actual daily user? And then just to follow up on, I think you made a comment about CPMs pricing being down. Is that the same issue that you sort of are seeing in ARPU? Is it simply that the users are growing too quickly, and you can't keep up with the overall growth of the platform? Any just color on, given how early you are, what's happening on the CPM side of pricing on the advertising side from Jen would be great.

Speaker Change: Neither a search based user someone who comes in once in a while to it an actual daily user and then just to I wanted to follow up on <unk>.

Speaker Change: You made a comment about cpm's pricing being down is that the same issue that you are seeing in <unk>.

Speaker Change: Is it just simply that the users year over year, just growing too quickly and you can't keep up.

Speaker Change: With the overall growth of the platform any just color on given how early you are what's happening on the CPM side of pricing on the advertising side from Gen would be great.

Unknown Executive: Great. Okay. Hey, Rich.

Speaker Change: Great. Okay, Hey, rich thanks, I'll take the first half Jen I'll take the second half so look.

Speaker Change: Let's first things first we're happy with growth.

Speaker Change: Weekly is growing daily as growing logged in logged out growing.

Speaker Change: So I think we're in a good position there.

Jen: I think your observation is correct.

Jen: Police and of course months lease even more so.

Speaker Change: Can be more volatile because they can be more affected by third party search.

Speaker Change: Or events in the news and what have you.

Speaker Change:

Speaker Change: And of course, we want to grow.

Speaker Change: Dailies and Thats really how we operate the company is growing dailies.

Speaker Change: But we don't think necessarily about how do we convert weekly the dailies.

Speaker Change: We think about it.

Speaker Change: A little bit differently, which is how do we retain the dailies that we see on our platform every day.

Speaker Change: Both the new users.

Speaker Change: Many of them to come back at all in the core users getting them to come back more.

Speaker Change: It's hard work, but it's easy to explain relevancy ml onboarding product quality.

Speaker Change: Do you see something a very some question do you see something in your first session on rebate that is uniquely engaging.

Speaker Change: Yeah.

Speaker Change: One assumption that I would caution against making is that search users third party search users. Many of them are core users. So they are using.

Speaker Change: Other search engines to effectively navigate rep and I include myself in that cohort.

Speaker Change: But there are a number of.

Speaker Change: Blogged out users or new potential users that come from search.

Speaker Change: And I think of.

Speaker Change: That experience is as they're learning that read it over time has the answers to their questions.

Speaker Change: You may not be in that session looking to join a community.

Speaker Change: Maybe a little bit of a heavier experience, but eventually we get them through the front door.

Speaker Change: They'll download our app, but I'll come to the website and then that's where everything I mentioned around relevancy and product quality come into play to retain those users.

Speaker Change: Growing retention and we're growing via use of are happy.

Speaker Change: We're happy with that.

Speaker Change: Our result, and then there is another interesting dynamic on Reddit, which is.

Speaker Change: The longer somebody has their account the more time, they actually spend on rabbit, they joined more communities and they go deeper and deeper and so users on Reddit.

Speaker Change: Where they maybe on other platforms age out they actually age into red and spend more time over the course of years. So I think it's a really.

Speaker Change: <unk> trend okay.

Unknown Executive: Thanks. I'll take the first half, Jen. I'll take the second half.

Speaker Change: John the second half of the question was the interplay between users and <unk> and users and CPM.

Unknown Executive: So look, first things first, we're happy with growth. Weekly growth, daily growth, logged in, logged out growth. So I think we're in a good position there. And I think your observation is correct.

Speaker Change: Sure.

Unknown Executive: Weekly and, of course, monthly, issues can be more volatile because they can be more affected by third-party search or events in the news and what have you. And, of course, we want to grow dailies, and that's really how we operate the company, growing dailies. But we don't necessarily think about how we convert weeklies to dailies.

Speaker Change: So Richard look nobody manager in the company. Our total we managed to revenue growth and <unk> growth.

Unknown Executive: We think about it a little bit differently, which is how do we retain the daily dailies that we see on the platform every day? Both the new users, getting them to come back at all, and the core users, getting them to come back more. And our work there is hard work, but it's easy to explain: relevance, ML, onboarding, product quality. Do you see anything in your first session on Reddit that is uniquely engaging?

Unknown Executive: One assumption that I would caution against making is that search users, third-party search users, many of them are core users. So they're using other search engines to effectively navigate Reddit, and I include myself in that cohort. But there are a number of, you know, logged out users or new potential users that come from search. And I think of that experience as their learning that Reddit, you know, over time has the answers to their questions. They may not be in that session looking to join a community, so that's maybe a little bit of a heavier experience.

Speaker Change: We're in the I think fortunate position of having really strong revenue and user growth with users being a little bit more and Thats why <unk> was down but I think when I look at the headroom that we have.

Speaker Change: I think we've been growing share in the top grow around the revenue side and I think continue to have headroom on ARPA. So.

Speaker Change: I think it's the.

Speaker Change: First class problem that we have in the map a barcode on the CPM side, what's really driving the decline in CPM is the placement on the conversation page. So that's a newer unit that and then.

Speaker Change: And so right now we're still building demand for that unit and there are a couple of things we're doing to do that so one is educating the market about that unit, it's very unique very different than anything else and market. In fact, most people don't most platforms don't have an AD and comment.

Speaker Change: Partially because the comments aren't the best part of their platform. They are the best part of Brexit, but there are some re education to be done. The second is that we've actually refreshed that format. So that it has broader set of creative capability.

Speaker Change: One of the things that our advertisers wanted is just a little more functionality in that format. We recently released that and there'll be able to take advantage of it I think that can increase demand.

Speaker Change: And then finally, we are testing.

Speaker Change: Inside the comments so that adds some more inventory to that page that theres very low demand for it because it's been testing with very new it's just experimental. So obviously you wouldnt have ICP Ms in our unit yet.

Speaker Change: So when you look at the page I think I mentioned earlier that 50% of screen views are now on the conversation. So the traffic is really going back page, which is a great high intent highly contextual cage.

Speaker Change: But we have to match the demand to the flow of the AD impressions on that page. So we'll continue to grow and the demand on the new unit I think it is a really good unit high performing but it'll take time for the demand to catch up with the supply that can generate it. That's why you see the differential in People's lives.

Speaker Change: Yeah.

Speaker Change: Your next question comes from the line of Andrew Boone with JMP Securities. Please go ahead.

Andrew Boone: Thanks, so much for taking my questions.

Andrew Boone: You guys have seen an influx of new users.

Speaker Change: Searches mobile attrition improved product.

Steve: Steve You mentioned this earlier about the maturation of new user cohorts and how people spend more time are you seeing anything different with new users more recently and then Jen retail is just a massive opportunity can you talk about ppas and what you guys need to do to unlock the retail advertising opportunity more acutely. Thanks, so much.

Steve: Okay.

Speaker Change: Thanks, Andrew Let me first then Jan.

Speaker Change: Okay. So the question was are we seeing anything in the latest cohort.

Speaker Change: Thank you.

Speaker Change:

Speaker Change: Broadly we are seeing new user retention go up that's one of our core internal operating metrics and I think that's really a measurement of us onboarding working as the performance ml relevance all of those things working.

Unknown Executive: But eventually, we get them through the front door. You know, they'll come, they'll download our app, or they'll go to the website. And then that's where everything I mentioned around relevancy and product quality comes into play to retain those users. And we're growing retention, and we're growing DAU. So we're happy with that result. And then there's another interesting dynamic on Reddit, which is that the longer somebody has their account, the more time they actually spend on Reddit, they join more communities, and they go deeper and deeper.

Speaker Change: And so we've actually seen over the last.

Unknown Executive: And so users on Reddit, where they maybe on other platforms age out, they actually age into Reddit and spend more time over the course of years. So I think this is a really powerful, Okay, Jen. The second half of the question was the interplay between users and ARPU and users and CPM. Sure.

Speaker Change: Couple of quarter steady improvement in user retention, which we're very happy with my experience I read it that is the hardest number to move.

Unknown Executive: Um, Richard, look, nobody manages our pool in the company. We managed revenue growth, and we managed to do growth. And we're in the, I think, fortunate position of having really strong revenue and user growth with users being a little bit more. And that's why our pool is down.

Unknown Executive: But I think, when I look at the headroom that we have, I think we've been growing share and have been a top grower on the revenue side, and I think we will continue to have headroom on our food. So you know, I think it's maybe a first class problem that we have in the math of our pool. On the CPM side, what's really driving the decline in CPM is the placement on the conversation. So that's a newer unit that, and then, and so there is, right now, we're still building demand for that unit.

Speaker Change: Because you can't always see it in an individual experiments.

Speaker Change: So you have to kind of let these product improvements.

Speaker Change: Run for a while.

Speaker Change: But our strategy of just make it better.

Speaker Change: Simpler faster safer easier to use that's been working for the last year, So happy with the new user retention, particularly among that new cohort.

Unknown Executive: And there are a couple of things we're doing to do that. So one is educating the market about that unit. It's very unique, very different than anything else in the market. In fact, most people don't most platforms don't have an ad in the comments, partially because the comments aren't the best part of their platform. They are the best part of Reddit.

Unknown Executive: But there's some re-education to be done. The second is that we've actually refreshed that format so that it has a broader set of creative capabilities. One of the things that our advertisers wanted was just a little more functionality in that format, so we recently released that, and they'll be able to take advantage of it. I think that could increase demand. And then, finally, we were testing ads inside the comments. So that adds some more inventory to that page that there's very low demand for it because it's in testing. It's very new. It's just an experiment.

Unknown Executive: So obviously, that wouldn't have high CPMs in that unit yet. So when you look at the page, But I think I mentioned earlier that 50% of screen views are now on the conversation page. So the traffic is really going to that page, which is a great, high-intent, highly contextual page. But we have to match the demand to the flow of the ad impressions on that page. So, you know, we'll continue to grow the demand for this new unit. I think it's a really good unit, highly performing, but it'll take time for the demand to catch up with the supply that's been generated. That's why you see the differential.

Unknown Executive: Your next question comes from the line of Andrew Boone with JMP Securities. Please go ahead. Thanks so much for taking my questions. You guys have seen an influx of new users just recently.

Speaker Change: John The question was about the retail opportunity on right.

Unknown Executive: Your next question comes from the line of Andrew Boone with JMP Securities. Please go ahead.

Unknown Executive: Thanks, Andrew. Me first, then Jen.

John: Getting the question is about the EPA.

Speaker Change: Look I think this is a really big opportunity given the commercial intent on Reddit.

Unknown Executive: Okay, so the question was, are we seeing anything in the latest cohort of Unknown Speaker 0.0.0.0. Broadly, we're seeing new user retention go up. That's one of our core internal operating metrics, and I think that's really a measurement of whether onboarding is working, is performance ML relevance, all of those things working. And so we've actually seen over the last couple of quarters steady improvement in new user retention, which we're very happy with. In my experience at Reddit, that is the hardest number to move. Because you can't always see it in an individual experiment.

Speaker Change: But it's also one of the hardest right in any industry diner.

Unknown Executive: So you have to kind of let these product improvements run for a while. But our strategy of just making Reddit better, simpler, faster, safer, easier to use, that's been working for the last year. So happy with the new user retention, particularly among that new cohort. Jen, the question was about the retail opportunity on Reddit.

Unknown Executive: Yeah, I think the question is about DPA. Look, I think this is a really big opportunity given the commercial intent on Reddit, but it's also one of the hardest, right, in the industry. Dynamic Product Ads have their own, it's its own objective. It has its own models and prediction models. And it has its own end-to-end workflow from ingesting catalogs all the way to how measurement is done at a detailed level to feedback, you know, product level information for targeting and retargeting. So, it is a big ecosystem unto itself.

Speaker Change: Dynamic product ads they have their own.

Speaker Change: One objective it has its own models and prediction models and it has its own end to end workflow from ingesting catalog all the way to how measurement is done at a detailed level to feedback product level information for the targeting and re targeting so so it is a big ecosystem unto itself.

Unknown Executive: So what we're working on is one, improving our models for driving performance. Number two, CAPI, the conversion API, incredibly important for signal and feeding signals into the models for better and better performance. Third, is enabling first-party data from an advertiser to match into our platform for targeting. And then, obviously, on the measurement side, they have very specific audiences, maybe loyalty programs, in some cases, like retail media networks, that they want to be able to target again.

Speaker Change: So we're working on is one improving our models and we're driving performance number two Kathy so conversion API incredibly important for signal and feeding signal into the models for better and better performance.

Speaker Change: Third is.

Kathy: Enabling first party data from an advertiser to match into our platform for targeting.

Kathy: And then obviously on the measurement side, but they have very specific audience is maybe loyalty programs for some cases like retail media networks that they want to be able to target against.

Unknown Executive: And then finally, just continually to improve both the format and the catalog ingest. So we can ingest catalogs today, but we want to make that process easier and even more scalable. So we are working across all of these areas to continue to improve DPA. I will just say it is, our goal for this year is to test it with a handful of partners and really build the foundations of DPA so that it can be a more material contributor to the business in 25 and beyond.

Speaker Change: And then finally, just continually to improve both the format and the catalog and Jeff. So we can adjust catalogs today.

Jeff: But we want to make that process easier and even more scalable. So we are working across all of these areas to continue to improve DPA.

Speaker Change: I'll just say it is our goal for this year is to test with a handful of partners and really build the foundations of DPA. So that it can be a more material contributor to the business in 'twenty five and beyond it is a longer road, but I think a big opportunity.

Unknown Executive: It is a longer road, but I think it is a big opportunity. Your next question comes from the line of Tom Champion with Piper Sandler. Please go ahead. Good afternoon. Steve, you've talked in the past about the most reliable way

Speaker Change: Your next question comes from the line of Tom Champion with Piper Sandler. Please go ahead.

Unknown Executive: Your next question comes from the line of Tom Champion with Piper Sandler. Please go ahead.

Tom Champion: Good afternoon, Steve you've talked in the past about the most reliable way to grow is to make it better. So I'm just curious between sports content.

Tom Champion: Subreddit functionality search ex translation the laundry list of things you guys are working on what do you think has the potential to be.

Speaker Change: The most impactful from a customer experience perspective. Thanks.

Steve: Thanks, Tom Good question.

Unknown Executive: Thanks, Tom. Good question. I'd say there are, broadly, two dimensions to this, or kind of two ways I think about it.

Speaker Change: Okay.

Speaker Change: I'd say there are broadly.

Speaker Change: To.

Speaker Change: Two dimensions to this or kind of two ways I think about it. So the first just like the general quality and so.

Unknown Executive: So the first is general quality, and so this is called the Search Experience Onboarding Ease of Use. And mature markets like the US are actually still one of our fastest growing markets, so product quality has an outsized impact.

Speaker Change: This is a.

Speaker Change: Call it the search experience onboarding ease of use.

Speaker Change: In mature markets like the U S is actually still one of our fastest growing markets.

Speaker Change: Product quality has an outsized impact.

Speaker Change:

Unknown Executive: Because the content is already there. If you speak English, if you live in America, I guarantee you have a home on Reddit. Your interests, your passion, whatever you're into or going through is on Reddit somewhere. So the question is, can we reveal it? So anything we do around onboarding and relevance more effectively reveals that. And so that's driving a lot of the growth in the U.S. Now, outside of the U.S., we need the content base.

Speaker Change: Because the content is already there.

Speaker Change: If you speak English if you live in America I guarantee you have a home underwriting your interest your passion, whatever you're into or going through is on read it somewhere and so the question is can we reveal that and so.

Speaker Change: Anything we do around Onboarding and relevance more effectively reveals that and so that's driving a lot of the growth in the U S. Now outside of the U S.

Speaker Change: We.

Speaker Change: Neither content base to grow so machine translation is one of the best opportunities we've ever seen to rapidly.

Unknown Executive: So machine translation is one of the best opportunities we've ever seen to rapidly grow the content base outside of English. And so I've mentioned this over the last couple of quarters; our tests in French went very well. We're expanding to other languages, so I think this is a very exciting opportunity. Now, of course, all of the quality and onboarding efforts that work, that will work in every market, but you have to have the content base and the community base to recommend people to.

Speaker Change: Grow the content base outside of English. So I've mentioned this over the last couple of quarters, our tests in French that went very well, we're expanding to other languages. So I think this is a very exciting opportunity now of course, all of the quality and Onboarding efforts.

Speaker Change: That works that will work in every market, but you have to have the content based the community based to recommend.

Speaker Change: People too.

Unknown Executive: And so that's where machine translation is really effective. So to summarize, in the U.S., it's the block and tackle product quality work, and outside of the U.S., it's machine translation to get them to the point where quality can be like a multiplier effect on top of that.

Speaker Change: That's where the machine translation is really effective so to summarize in the U S. It's the block and tackle product quality work.

Speaker Change: Outside of the U S. It's the machine translation to get them to the point, where the quality.

Speaker Change: Can be a.

Speaker Change: Like a multiplier effect on top of that.

Speaker Change: Your next question comes from the line of Dan Salmon with New Street Research. Please go ahead.

Unknown Executive: Your next question comes from the line of Dan Salmon with New Street Research. Please go ahead.

Unknown Executive: All right, great. Good afternoon, everyone. You've talked a lot about search and third-party search and the relationship with model training and the investor data licensing business. You also talked about beginning to restrict access to Reddit content. In some cases, we have seen news reports that that includes Microsoft Bing. I'm sure you don't want to speak too much in detail about one potential partner, but is that an example of the type of back and forth that's beginning to happen with some of your potential partners? Or, just more broadly, can you take us a layer deeper into those conversations and tell us a little bit more about the variables that tend to be the more important ones in those dialogues?

Dan Salmon: Alright, great good afternoon, everyone.

Dan Salmon: Steve you've talked a lot about search and third party search and the relationship with model training and Investor data licensing business.

Speaker Change: You also talked about beginning to restrict access to read it content in some cases, we have seen news reports that includes Microsoft being.

Speaker Change: I'm sure you don't want to be too much in detail about one potential partner, but is that an example of the type of back and forth. That's beginning to transpire with some of your potential partners or just more broadly can you.

Speaker Change: It's a layer deeper in those conversations and post a little bit more about the variables that tend to be the more important ones in those dialogues.

Unknown Executive: Thanks.

Dan Salmon: Sure. Thanks, Dan So look the.

Speaker Change: <unk> content on Red It is super valuable.

Speaker Change: The old status quo. So search engines crawl US index has put us in search.

Unknown Executive: Thanks, Dan. So, look, the corpus of content on Reddit is super valuable. The old status quo, so search engines crawl us, index us, put us in search, everybody wins in that. The consumer finds content, we get some users, and the search businesses grow.

Speaker Change: Everybody wins.

Unknown Executive: Reddit in that era was the most open. By the way, I think Reddit is still the most open of our peers. But what's changed is folks are crawling Reddit for training and other use cases that we can't see. And so we can no longer assume intent or what Reddit's data is being used for. And so we went from a situation of being open by default to default blocking crawlers. Now, we're still open for users. You don't even have to have an account to use Reddit.

Speaker Change: The consumer finds content, we get some users search businesses grow.

Speaker Change: Read it in that era was the most open by the way I think read it is still the most open of our peers.

Speaker Change: But what's changed is folks are calling read it for training and other use cases that we can't see.

Speaker Change: And so we can no longer assume intense or what read its data is being used for and so we went from a situation of being default open to default blocking crawlers now we're still open for users you don't even have to have an account to see read it.

Speaker Change: And we still make our corpus available for free for noncommercial use.

Unknown Executive: And we still make our corpus available for free for non-commercial use. Our preference is for Reddit content to be out there, to be open and indexed, but it has to come with important terms. We created a public content policy, and we released that a couple of months ago, and it basically speaks to user privacy, not using Reddit data to identify users or target ads to them. You can't resell the data because, again, we want to know where Reddit data is going and what it's being used for. And so those are the terms of engagement. Now, we've had some big players sign up for that. We've had some medium and small players sign up for that as well.

Speaker Change: But our preference is for red at content to be out there to be open and indexed but it has to come on.

Speaker Change: With important terms.

Speaker Change: We created a public content policy, we really spent a couple of months ago.

Speaker Change: Basically speaks to user privacy not using.

Speaker Change: Read it data to identify users our target ads to them you can't resell the data because again, we want to know where read it that is going and what it's being used for and so those are the terms of engagement now we've had some big players sign up for that we've.

Speaker Change: We've had some medium and small players sign up for that as well and we still make credit available for free for our researchers and noncommercial use.

Unknown Executive: And we still make Reddit available for free for researchers and non-commercial use. But the ecosystem has changed. I'd say it's a dynamic market for sure. All of our conversations are ongoing. Look, I think, as I said many times, our preference is to have relationships with everybody, but we need to be very considerate of where Reddit data goes and what it's used for. Your next question comes from the line of Benjamin Black with Deutsche Bank; please go ahead. Great. Thanks for the question. So on the developer platform, opening it up to monetization is coming earlier than we anticipated.

Speaker Change: But the ecosystem has changed I would say, it's a dynamic market for sure all of our conversations are ongoing.

Speaker Change: Look I think.

Speaker Change: As I said many times, our preference is to have a relationships with everybody, but we need to be very considered of where we're at at that goes and what it's used for.

Speaker Change: Your next question comes from the line of Benjamin Black with Deutsche Bank. Please go ahead.

Unknown Executive: Okay. Yes. Thanks, Ben.

Unknown Executive: Your next question comes from the line of Benjamin Black with Deutsche Bank. Please go ahead.

Benjamin Black: Great. Thanks for the questions.

Benjamin Black: On the developer platform opening up the monetization is coming earlier than we anticipated. So can you talk a little bit more about the results from the public beta in.

Speaker Change: Surprise you to the upside for instance, and then real quickly on margin.

Speaker Change: The flow through was I think 76% the last couple of quarters. The midpoint of your guide implies a bit of a step down.

Speaker Change: The difficult comparisons and built in or maybe just more broadly targeted swing factors embedded in your EBITDA guide. Thank you.

Benjamin Black: Okay.

Unknown Executive: First question on the platform. So the data is going nicely. So we're in closed data for most of this year. We're still iterating on the technology. It's one of the more complex things we've built because we're effectively running user code both on our servers and on the client side. That's in a public beta now.

Speaker Change: Thanks, Ben first question on that platform.

Speaker Change: The data is growing nicely. So we are in close beta for most of this year, we're still iterating on.

Speaker Change: The technology, it's one of the more complex things, we felt because we're effectively running user code both on our servers and on the client side.

Speaker Change: That's in a public beta now we've got a few hundred developers playing with it there's some cool stuff in the works.

Unknown Executive: We've got a few hundred developers playing with it, and there's some cool stuff in the works. So I'm excited to see where users take it. Our aim for this year is to both get some of these dev platform apps kind of at scale out there. And we've seen some fun ones with scoreboards, stock tickers, and Wall Street bets, things like that. I'd love, I'd be very excited to see some of these more interactive ones.

Speaker Change: Hum.

Speaker Change: Excited to see where users take at our aim for this year is to both get.

Speaker Change: Some of these <unk> platform apps kind of at scale out there we've seen some fun ones the scoreboard stock Tickers on wall Street that things like that.

Speaker Change: <unk> I'd be very excited to see some of these more interactive ones.

Unknown Executive: And I'll be very, very excited to see somebody build something that we didn't anticipate, which is kind of a common story on Reddit about users surprising us. So one milestone we're looking for is that surprise. And then the other milestone we're looking for is just to connect the dots on the monitor, and so really getting an end-to-end prototype where a user can basically buy something through a developer platform app written by another user.

Speaker Change: And I'll be very very excited to see somebody built something that we didn't anticipate.

Speaker Change: Which is kind of a <unk>.

Speaker Change: Common story of read it as user surprising us so one milestone or looking for is that that surprise and then the other milestone. We're looking for is just to connect the dots on monetization.

Speaker Change: And so really getting an end to end the prototype where a user can actually buy something through a developer platform Apple written by another user and so.

Unknown Executive: So I can't promise scale or anything like that this year, but getting to that kind of end-to-end proof of concept will be, I think, a really important milestone. But we're making nice progress towards that end. Drew, the second question was about margin and flow through Q3. Yeah.

Speaker Change: So I can't promise scale or anything like that this year, but getting to that kind of end to end.

Speaker Change: Proof of concept will be I think a really important milestone, but we're making nice progress towards that.

Speaker Change: To your second question.

Speaker Change: Was about our margin and flow through Q3, Yeah look it's really been a good run for US last four quarters. As you mentioned, 73% 76 last quarter, but theres nothing enormous going on there's a couple of things on the margin. When the guide itself sort of has a I think an incremental margin in more than $60 range.

Unknown Executive: Look, it's really been a good run for us, the last four quarters, as you mentioned, 73 percent, 76 last quarter. Look, there's nothing enormous going on. There are a couple of things on the margin. I mean, the guide itself sort of has, I think, an incremental margin in more of the 60s range. There are a couple of things in between that are happening. I mean, I think, again, incremental revenues are our friends. The guide's a little higher than where we were in the second quarter, at 281.

Speaker Change: A couple of things in between that are happening I mean, I think again incremental revenues of our friends the guys a little higher than where we were in.

Speaker Change: In the second quarter 281, so we'll pick up something there, which is nice I think theres a couple of things to think about as you think about our margin structure, but again, just small stuff on the margin a nice benefit that we got over the last 12 months has been contract prices on hosting and so we sign those contracts in kind of mid third quarter last year.

Unknown Executive: So we'll pick up something there, which is nice. I think there are a couple of things to think about as you think about our margin structure. But again, just small stuff on the margin. A nice benefit that we got over the last 12 months has been contract prices on hosting. And so we signed those contracts in kind of mid-third quarter last year. We've enjoyed kind of a full year of those benefits.

Speaker Change: We've enjoyed kind of a full year of those benefits you remember our gross margins were up 500 basis points in the second quarter.

Unknown Executive: If you remember, our gross margin was about 500 basis points in the second quarter. We'll start to lap that contract pricing now here in the third quarter. So that'll be a little bit of a, you know; we won't see the benefit that we have seen over the last four quarters on that. Again, a couple other small things in the margin. The company pays raises typically in the third quarter. So there'll be a little bit more in the cost structure there, again, on the margin. And we also hire a bit more in the third quarter. Historically, we have a lot of folks that come in; the folks that we've hired from universities typically start during that time.

Speaker Change: We'll start to lap that contract pricing now here in the third quarter, so that'll be a little bit of we won't see the benefit that we have seen over the last four quarters on that again, a couple of other small things on the margin the company pays raises typically in the third quarter, so there'll be a little bit more on the cost structure. There again on the margin small stuff and then also we.

Speaker Change: Higher a bit more in the third quarter. Historically, we have a lot of folks that come in the folks that we've hired from universities and typically start during that time, so it's a little bit on the margin again, so nothing huge maybe a couple of points lower we will see sort of you can do the math around kind of what the guide margin is but overall theres nothing significant in the.

Unknown Executive: So it's a little bit on the margin again. So nothing huge. Maybe a couple of points lower; we'll see. You can do the math around kind of what the guide margin is. But overall, there's nothing significant in the quarter. There's also a little bit in the model for business translation, right? So we're starting to translate, as Steve said, some of the markets into foreign languages. There are some hosting costs associated with that as well.

Speaker Change: Quarter Theres, a little bit also in the model for business translation right. So we are starting to translate as Steve said.

Steve: Some of the markets into foreign languages.

Speaker Change: Some hosting costs associated with that as well so those are things, but no huge change right now in the margin structure.

Unknown Executive: So those are things, but there are no huge changes right now in the margin structure. Our final question today comes from Alan Gould with Loop Capital. Please go ahead. Thanks for taking the question. So I've got two. First, what impact does it have?

Speaker Change: Our final question today comes from Alan Gould with loop capital. Please go ahead.

Unknown Executive: Our final question today comes from Alan Gould with Loop Capital. Please go ahead.

Alan Gould: Hi, Thanks for taking the question so I've got two first.

Alan Gould: What impact has the Olympics and political historically had for you on users' engagement I'm, assuming not much on revenue and the second one for drew is that cash guide that you are the cash goal of 800 million $800 million to $1 billion is significantly less than what you have now I'm, assuming that's a multi year period.

Speaker Change: You get to that.

Alan: Okay. Thanks Alan.

Unknown Executive: Okay, thanks Alan. First question, maybe Jen and I will tag team that real quick.

Speaker Change: First question, maybe 10 on our testing that real quick.

Speaker Change:

Unknown Executive: There are certainly moments in the world that are huge, right? Olympics, elections, you know, major sporting events like the Super Bowl have been a big one on Reddit. What we've seen, and we've seen this for a long time, is there's always some subreddit on Reddit that's having a moment, that's twice as large as it was yesterday or sometimes significantly more. But when you zoom out, our traffic doesn't fluctuate that much because there are many thousands of subreddits.

Speaker Change: There are certainly moments in the world that are huge Olympics elections.

Speaker Change: Major sporting events like the Super Bowl, it's been a big one on rebate.

Speaker Change: We've seen and we've seen this for a long time.

Speaker Change: There's always some sublet it on red it that's having a moment.

Speaker Change: That's.

Speaker Change: Twice as large as they were yesterday or sometimes significantly more.

Speaker Change: But when you zoom out our traffic doesn't fluctuate that much.

Speaker Change: There are many thousands of subreddits and so if somebody is always having a moment somebody is always growing but our traffic is actually pretty steady.

Unknown Executive: And so somebody is always having a moment. Someone is always growing. But our traffic is actually pretty steady despite, you know, kind of feeling that activity on the internet or even feeling it on Reddit. Jen, is there anything to add from a kind of revenue point of view around these events?

Speaker Change: Despite kind of feeling that activity on the internet or even ceiling.

Speaker Change: On.

Jan: Jan is there anything to add from a revenue point of view around these events.

Unknown Executive: No, I mean, we don't play in political ads, so there's not a bump from that, it's not a focus for us. And something like the Olympics, I think, tracks to see what you just said, which is that there are always these moments happening on Reddit, but overall, they kind of smooth out. And that's how it reflects in revenue. Those are opportunities, sales opportunities, but they tend to smooth out because there are moments happening in different parts of Reddit throughout the year, and the final question was Drew. Yeah,

Speaker Change: No we don't see any political ads, so theres not a bump from that but I want to focus for us.

Speaker Change: And something I don't want to implement exciting track to see what you just said, which is there is always these moments happening already but overall, they kind of smoothed out and thats how it reflected in the revenue there is our opportunity.

Speaker Change: Sales opportunities, but they tend to smooth out because they are at the moment is happening in different parts of it read it and throughout the year.

Speaker Change: Okay and then final question was true yes.

Unknown Executive: The final question was through. Yeah, on the cash side, you're right, Alan. Thanks for the question. 800 billion is how we think about things over the medium term. We wanted to dimensionalize the cash that we have on the balance sheet right now at billion seven. It gives you a sense, in kind, of the cash flow over the last couple of quarters, which has been positive and nice. So the cash is starting to build.

Alan Gould: On the cash side, you're right Alan Thanks for the question 800 room at $1 billion is how we think about things over the medium term we wanted to dimensionalize. The cash that we have in the balance sheet right now at $1. Seven I gave you a sense in kind of the cash flow over the last couple of quarters, which has been positive and nice. So the cash is starting to build we also wanted to give you a sense on how we think about the priorities here in the first.

Unknown Executive: We also wanted to give you a sense of how we think about the priorities here. The first priority will be and continues to be investing in the business. There aren't any huge ideas right now from a capital investment perspective. And so we're also starting to look at M&A. You saw us tuck in memorable in the quarter.

Speaker Change: Priority will be and continues to be investing in the business there aren't huge ideas right now from a capital investment perspective, and so we're also starting to look at M&A you saw us tuck in memorable in the quarter. So there is money available for that and then sort of start to think about share repurchases as we as we move forward as well so those are sort of the capital prior.

Unknown Executive: So there's money available for that. And then, sort of, you know, we'll start to think about share repurchases as we move forward as well. So those are sort of the capital priorities. I think of 800 million to a billion is sort of how we look at our business from a stress test perspective. We think that's the right amount of cash, and obviously, we have a credit facility behind it too. So I think the company has a lot of capitalization and certainly has the liquidity to do what it wants. But I wanted to dimensionize it a little bit for you. How we think about what cash might be available for things like M&A and share repurchases in the future.

Speaker Change: <unk> I think of $800 million to $1 billion is sort of how we look at our business from a stress test perspective, we think that's the right amount of cash obviously, we have a credit facility behind it too. So I think the company has a lot of capitalization and certainly has the liquidity to do what it wants but I wanted to start to Dimensionalize a little bit for you. How we think about what cash might be available for things like M&A and.

Speaker Change: Share repurchases in the future.

Speaker Change: Great. Thanks, Christopher Thanks, everyone for joining we'll look forward to keeping the dialogue open.

Speaker Change: Take care I appreciate it. Thank you and this concludes today's conference call. Thank you for your participation and you may now disconnect.

Unknown Executive: This concludes today's conference call. Thank you for your participation, and you may now disconnect.

Speaker Change: Okay.

Speaker Change:

Speaker Change:

Speaker Change: Yeah.