Q1 2025 Reddit Inc Earnings Call

Kelvin: Good afternoon, my name is Kelvin and I will be your conference operator today.

Good afternoon. My name is Calvin and I will be your conference operator today at this time I would like to welcome everyone to read this Q1 kind of 25 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. He would like to ask a question. During this time.

Kelvin: At this time, I would like to welcome everyone to Reddit's Q1 2025 Earnings All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answers. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star 1 again.

<unk> simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question. Please press star one again.

Jesse Rose: I would now like to turn the conference call over to Jesse Rose, Head of Investor Relations. You may begin your conference call.

Speaker Change: I'd now like to turn the conference call over to Jessie Rose head of Investor Relations you May begin your conference.

Steve Huffman: Thanks, Kelvin.

Jessie Rose: Thanks, Kelvin. Thank you and good afternoon, everyone. Welcome to <unk> first quarter 2025 earnings Conference call. Joining me today are Steve Hoffman, British co founder and CEO, Jen Wong <unk> COO, Andrew Valero <unk> CFO.

Steve Huffman: Thank you and good afternoon, everyone. Welcome to Reddit's first quarter 2025 earnings conference call. Joining me today are Steve Huffman, Reddit's co-founder and CEO, Jen Wong, Reddit COO, and Drew Vollero, Reddit CFO. Before we get started, I'd like to remind you that our remarks today will include forward-looking statements, and actual results may vary materially from those contemplated by these forward-looking statements. Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filing. These forward-looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward-looking statement.

Speaker Change: Before we get started I'd like to remind you that our remarks today will include forward looking statements and actual results may vary materially from those contemplated by these forward looking statements infill.

Speaker Change: Information concerning risks uncertainties and other factors that could cause these results to differ is included in our SEC filings.

Speaker Change: These forward looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward looking statements.

Steve Huffman: During this call, we will discuss both GAAP and non-GAAP financial measures. Reconciliation of GAAP and non-GAAP financial measures is set forth in our letter to shareholders.

Speaker Change: During this call we will discuss both GAAP and non-GAAP financial measures reconciliation of GAAP to non-GAAP financial measure measures is set forth in our letter to shareholders. Our first quarter letter to shareholders and accompanying earnings press release are available on our Investor Relations website, investor Dot Red ink Dot com.

Steve Huffman: Our first quarter letter to shareholders and accompanying earnings press release are available on our investor relations website, investor.redditinc.com and investor relations subreddit r slash rddt.

Speaker Change: And Investor Relations subreddit or slash our DDG.

Steve Huffman: And now I'll turn the call over to Steve. Hi, everyone. Thank you for joining our Q1 earnings call.

Steve: Now I'll turn the call over to Steve.

Steve: Hi, everyone. Thank you for joining our Q1 earnings call next month's read it turns 20, that's two decades of building something special on the Internet user powered platform, where you can be your honest self and connect over topics you care, most about whether popular niche or personal.

Steve Huffman: Next month, Reddit turns 20. That's two decades of building something special on the internet, a user powered platform where you can be your honest self and connect over topics you care most about, whether popular, niche or personal. We've endured a lot of change over the years. The rise of smartphones, social media, and now AI, a global pandemic, and countless trends in how people connect online. But one thing has always held true. The world needs community and shared knowledge, and that's what we do best. Millions of people have contributed to Reddit being the eclectic and thriving place it is today, and as a result, we have over 100,000 enduring communities.

Steve: We've endured a lot of change over the years, the rise of smartphones, social media and now AI, a global pandemic and countless trends and how people connect online, but one thing has always held true the world needs community and shared knowledge and that's what we do best millions of people have contributed to rent it being the eclectic and thriving play.

Steve: It is today and as a result, we have over 100000 enduring communities.

Steve Huffman: 20 years after our founding, we still have many opportunities and much to do. We took a big step forward last year, becoming a public company, and I think we delivered strong results in our first year. We carried that momentum into 2025 with another solid quarter of growth and profitability. Revenue was $392 million, up 61% year over year, marking our third consecutive quarter of growth over 60%. We ended the quarter with 401 million weeklies and 108 million dailies, both up 31% year over year, and we continue to scale efficiently while investing in the future.

Steve: 20 years after our founding we still have many opportunities and much to do we took a big step forward last year, becoming a public company and I think we delivered strong results in our first year, we carried that momentum into 2025 with another solid quarter of growth and profitability revenue.

Steve: Revenue was $392 million up 61% year over year, marking our third consecutive quarter of growth over 60%. We ended the quarter with 401 million weeklies and $108 million dailies, both up 31% year over year, and we continue to scale efficiently.

Steve: While investing in the future there's a lot to be excited about as we make progress on our core product and AD business and we look forward to walking you through those updates today.

Steve Huffman: There's a lot to be excited about as we make progress on our core product and ad business, and we look forward to walking you through those updates today. Ever-shifting macro environments like these create both challenges and opportunities. We've grown through challenging times before. People need connection and information just as much in uncertain times, and we're well positioned to meet this moment. Our unique advantage is that people come to Reddit with intent. They're not just scrolling, they're also seeking. They come to Reddit for real opinions from real people. When you ask a question online today, whether it's about a product, decision or life choice, you're not looking for generic answers or sanitized summaries.

Steve: Ever shifting macro environments like these create both challenges and opportunities we've grown through challenging times before people need connection and information just as much in uncertain times, and we're well positioned to meet this moment.

Steve: Our unique advantage is that people come to read it with intense theyre not just scrolling are also seeking they come to read it for real opinions from real people. When you ask a question online today, whether it's about a product decision or life choice Youre not looking for generic answers are sanitized summaries youre looking for Lyft.

Steve Huffman: You're looking for lived experience from personal recommendations, which is why Reddit is the number one platform for finding, quote, possible solutions to people's needs or situations. and it's where half of all product conversations online take place. For seekers, Reddit's open nature is essential. It allows our content to surface across the open web and be easily found in search.

Steve: <unk> from personal recommendations, which is why write it as the number one platform for finding quote possible solutions to people's needs or situations.

Steve: And it's where half of all product conversations online take place.

Steve: We're seekers Reddits open nature is essential it allows our content to surface across the open web can be easily found in search.

Steve Huffman: We remain one of the last major platforms that doesn't require you to sign in to learn something because we believe that by giving everyone access to knowledge, we are helping fulfill the purpose of the Internet. This openness broadens visibility, drives awareness, and brings us new users. But it also means that some of our traffic from external sources is variable. Ultimately, short-term shifts don't affect our long-term strategy or opportunity. We control our own destiny.

Steve: We remain one of the last major platforms that doesn't require you to sign and to learn something because we believe that by giving everyone access to knowledge. We are helping fulfill the purpose of the internet. This openness broadens visibility drives awareness and brings us new users, but it also means that some of our traffic from external sources as variable Ulf.

Steve: Only short term shifts don't affect our long term strategy or opportunity, we control our own destiny.

Steve Huffman: On the core product side, we're focused on making it a seamless experience to create, contribute to, and discover communities. Here's how we're realizing that vision through our product roadmap. First, using Search to help people find what they're looking for on Reddit. Search will help new users opening the app for the first time find their home on Reddit, and it will help visitors from external search find the answers they're looking for. We're upgrading Reddit Search and better integrating it throughout our product. Reddit Answers, our version of AI Search, has reached 1 million weekly users, and last month we began its global expansion, beginning with Australia and the UK.

Steve: On the core product side, we're focused on making it a seamless experience to create contribute to and discover communities here's how we're realizing that vision through our product roadmap.

Steve: First using search to help people find what they're looking for on Rabbit search will help new users opening the app for the first time find their home on rabbit and it will help visitors from external search find the answers they're looking for we're upgrading reddit search and better integrating it throughout our product right answers our version of AI search has reached one.

Steve: Weekly users and last month, we began its global expansion, beginning with Australia and the U K. We are now working to integrate it into <unk> core search experience to further streamline the path from question to answer on <unk>.

Steve Huffman: We are now working to integrate it into Reddit's core search experience to further streamline the path from question to answer on Reddit.

Steve Huffman: Next, becoming a truly global platform by growing outside of the US. Machine translation is now available in 13 languages with more on the way. The focus markets where we've implemented our international playbook, including France, Spain and Brazil, are growing nearly twice as fast as total international use. For us, internationalization isn't just a way to grow, it's essential to our mission of providing community and knowledge to everyone in the world.

Steve: Next becoming a truly global platform by growing outside of the U S. Machine translation is now available in 13 languages with more on the way the focus markets, where we've implemented our international playbook, including France, Spain, and Brazil are growing nearly twice as fast as total international users for us internationalization.

Steve: Is it just a way to grow it is essential to our mission of providing community and knowledge to everyone in the world.

Steve Huffman: And finally, making Reddit more fun and easy to use. We're continuing to make it simpler and easier to contribute to community. In March, we released a set of tools to streamline the contribution process for users, including post and comment guidance, which provides real-time suggestions to improve your post Post Insights, and Community Suggestions. These improvements not only help users, but also meaningfully reduce the burden on moderators as the content people contribute is of higher quality and better aligns with community rules. We also have 400,000 people playing games and other interactive experiences built on our developer platform in Q1, showing that interactive experiences can thrive on Reddit.

Steve: And finally, making right up more fun and easy to use we're continuing to make it simpler and easier to contribute to communities.

Steve: In March we released a set of tools to streamline the contribution process for users, including posting comment guidance, which provides real time suggestions to improve your post.

Steve: Insights and community suggestions these improvements not only helped users, but also meaningfully reduce the burden on moderators. If the content people contribute is of higher quality and better aligns with community rules.

Steve: We also have 400000 people playing games and other interactive experiences built on our developer platform in Q1, showing that interactive experiences can thrive on read it and we have more big ideas to drive engagement and premium content, which will rollout later this year.

Steve Huffman: And we have more big ideas to drive engagement and premium content, which will roll out later this year.

Steve Huffman: None of this happens without our communities. They are the heart of Reddit, from our Minecraft, to our Witchcraft, to our Craft Beer. Every subreddit is a world of its own, built by the people who use it. And this unique community model isn't just our history. It's our future.

Steve: None of this happens without our communities. They are the heart of read it from our minecraft to our witchcraft to our craft beer every sub right. It is a world of its own built by the people who use it.

Steve: And this unique community model isn't just our history, it's our future we're not looking to imitate any other platform. We're looking to make red at the best version of Red hat by being faster easier and better to use.

Steve Huffman: We're not looking to imitate any other platform. We're looking to make Reddit the best version of Reddit by being faster, easier, and better to use. On Reddit, it's not about perfection. It's about participation, not about broadcasting, but belonging.

Steve: And read it it's not about perfection, it's about participation not about broadcasting, but belonging that's why 20 years, and we're still growing still resonating and still real property. Thanks again for being with US on this journey and I'll hand, it over to our CFO Jen Wong Thanks, Steve Hello, everyone. It was another strong <unk>.

Steve Huffman: That's why 20 years in, we're still growing, still resonating, and still real, proudly. Thanks again for being with us on this journey.

Jen Wong: I'll now hand it over to our COO, Jen Wong. Thanks, Steve. Hello, everyone. It was another strong quarter and a good start to the year for Reddit. We continued our momentum from last year and grew total revenue 61% year over year to $392 million in Q1. Our unique proposition and core platform improvements continue to drive differentiated growth and positive outcomes for advertisers. In Q1, the advertising business grew 61% year over year to $359 million, driven by broad-based strength across objectives, channels, verticals, and geographies.

Speaker Change: Water and a good start to the year for Red. It. We continued our momentum from last year and grew total revenues, 61% year over year to $392 million in Q1.

Jen Wong: A unique proposition in core platform improvements continue to drive differentiated group growth and positive outcomes for advertisers and.

In Q1, the advertising business grew 61% year over year to $359 million driven by broad based strength across objectives channels verticals and geographies.

Jen Wong: Let me discuss our ad review drive. Our strategy is to be a multi-objective ads platform, and in Q1, we continue to see growth across all objectives. Top of the Funnel Brand Objectives accounted for about 40% of total ad revenue consistent with prior quarters. Mid and Lower Funnel Performance Revenue accounted for about 60% of total ad revenue and was a major growth driver in the quarter. Across Channels, our scaled business, which includes mid-market and SMB advertisers, continues to be a revenue and active advertiser growth driver. The total number of active advertisers, including large, mid-market, and SMB, grew over 50% year-over-year in Q1.

Jen Wong: Let me discuss our AD revenue drivers.

Jen Wong: Our strategy is to be a multi objective ads platform and in Q1, we continued to see growth across all objectives.

Jen Wong: Top of the funnel brand objectives accounted for about 40% of total AD revenue consistent with prior quarters.

Jen Wong: Mid and lower funnel performance revenue accounted for about 60% of total AD revenue and was a major growth driver in the quarter.

Jen Wong: Across channels, our scaled business, which includes mid market and SMB advertisers continues to be a revenue and active advertiser growth driver.

Jen Wong: The total number of active advertisers, including large mid market and SMB grew over 50% year over year in Q1, we.

Jen Wong: We saw broad growth across verticals, with 10 of our top 15 verticals growing over 50% year over year, led by pharma, retail, auto, telecom, and finance categories.

Jen Wong: We saw a broad growth across verticals with 10 of our top 15 verticals growing over 50% year over year led by pharma retail auto telecom and finance categories.

Jen Wong: across geographies. U.S. ad revenue grew 56% year-over-year and international ad revenue grew 83% year-over-year, the fastest growth rate in three years. For impressions and pricing, ad revenue was driven by year-over-year growth in impressions from underlying user growth, ongoing smart ad load work, increases in engagement, and improved monetization of the conversation page. The ads and comments placement contributed about 6% of impressions in the quarter, and we're seeing healthy advertiser adoption and performance outcomes with this placement. Ad pricing was up year-over-year. We are delivering more valuable impressions, and advertisers are benefiting from efficiency improvements.

Jen Wong: Across geographies U S AD revenue grew 56% year over year and international AD revenue grew 83% year over year, the fastest growth rate in three years.

Jen Wong: For impressions and pricing AD revenue was driven by year over year growth in impressions from underlying user growth ongoing smart AD load work increases in engagement and improved monetization of the conversation page.

Jen Wong: The ads and comments placement contributed about 6% of impressions in the quarter and were seeing healthy advertiser adoption and performance outcomes with this placement.

Jen Wong: AD pricing was up year over year, we are delivering more valuable impressions and advertisers are benefiting from efficiency improvements.

Jen Wong: Now moving to our ad stack, we're focused on three things, driving performance across objectives, improving usability for our advertisers and productivity for our sales force, and offering our advertisers Reddit-unique solutions in ad form. We made meaningful progress against each of these areas in Q1. First, driving performance of our ads. The lower funnel investments that we delivered last year, including ML optimizations, measurement adoption, and format optimization, continue to drive positive outcomes and performance. In Q1, we delivered more outcomes to advertisers through meaningful year-over-year increases in conversion and click volume. We improved our ML optimization models and enhanced signal fidelity for our first party pixel to improve tracking accuracy.

Jen Wong: Now moving to our AD stack, we're focused on three things driving performance across objectives, improving usability for our advertisers and productivity for our sales force and offering our advertisers ready to unique solutions and ad formats.

Jen Wong: Meaningful progress against each of these areas in Q1.

Jen Wong: First driving performance of our AD solutions.

Jen Wong: The lower funnel investments that we delivered last year, including NL optimizations measurement adoption in format optimization continue to drive positive outcomes and performance in Q1, we delivered more outcomes to advertisers through meaningful year over year increases in conversion and click volume.

Jen Wong: We improved our MLR optimization models and enhanced signal fidelity for our first party pixel to improve tracking accuracy.

Jen Wong: We're encouraged with our progress, driving adoption of our measurement tools, including our Pixel and Conversion API. Lower funnel conversion revenue covered by CAPI tripled year-over-year in Q1. Over 90% of our managed advertisers have adopted our Pixel, and we recently launched an integration between our Pixel and Google Tag Manager, enabling easier adoption for new customers. On format, we're excited about the progress to date with our shopping ad unit, Dynamic Product Ads, or DPA, which is currently in beta testing. In the quarter, we improved our DPA format in two areas, performance and ease of use, and we're excited about the roadmap for the rest of the year.

Jen Wong: We incurred we're encouraged with our progress driving adoption of our measurement tools, including our pixel and conversion API Kathy.

Jen Wong: Lower funnel conversion revenue covered by Kathy tripled year over year in Q1 over.

Jen Wong: Over 90% of our manage advertisers have adopted our pixel and we recently launched the integration between our pixel and Google Tag manager, enabling easier adoption for new customers.

Jen Wong: On format. We're excited about the progress to date with our shopping AD unit dynamic product ads or DPA, which is currently in beta testing in the quarter, we improved our DPA format in two areas performance and ease of use and we're excited about the roadmap for the rest of the year.

Jen Wong: We're continuing to deploy conversion and click prediction model improvements, enabling advertisers to onboard larger product catalogs with millions of products to deliver more relevant ads. In Q1, DPAs delivered an average of over 90% higher ROAS compared to campaigns run last year.

Jen Wong: We're continuing to deploy conversion and click prediction model improvements and enabling advertisers to onboard larger product catalogs with millions of products to deliver more relevant ads in.

Jen Wong: In Q1, PPA has delivered an average of over 90% higher ROE as compare to campaigns run last year.

Jen Wong: Now second, improving usability for our advertisers and productivity for our sales force. We launched IAS brand safety and viewability in Q1, providing advertisers post-campaign measurement in addition to our pre-bid integration that we launched last year. We also invested in AI enhancements for our sales teams that enabled them to 10X the number of insights reports that inform campaign decisions and saw substantially higher revenue for campaigns with these insights.

Jen Wong: Now second improving usability for our advertisers and productivity for our sales force we.

Jen Wong: We launched Ias brand safety and view ability in Q1, providing advertisers post campaign measurement. In addition to our pre bid integration that we launched last year. We also invested in AI enhancements for our sales teams that enable them to 10 X. The number of insights reports that inform campaign decisions and so substantially higher revenue for campaigns with these <unk>.

Jen Wong: Insights.

Jen Wong: Third, Offering Advertisers Reddit Unique Solutions and Formats. We're leveraging Reddit's community intelligence, including insights and signals from real conversations about almost every product and service to help businesses inform their strategy, learn more about their customers, and drive more performance. We've also launched enhancements to our upper funnel offerings. In Q1, we began a series of upgrades to our premium takeover ad products to simplify the sales process and drive more value for advertisers globally. And specifically for category takeovers, which allow advertisers to own placement for contextually relevant communities, we're testing a more visually impactful format and elevated placement.

Jen Wong: Third.

Jen Wong: Offering advertisers Reddit unique solutions and formats.

Jen Wong: We're leveraging <unk> community intelligence, including insights and signals from real conversations about almost every product and service to help businesses inform their strategy learn more about their customers and drive more performance.

Jen Wong: <unk> also launched enhancements to our upper funnel offerings. In Q1, we began a series of upgrades to our premium takeover AD products to simplify the sales process and drive more value for advertisers globally, and specifically for category takeovers, which allow advertisers to own placements for contextually relevant communities, we're testing more visually impactful format and elevated place.

Jen Wong: And we'll be working on more enhancements in this area in the coming quarter. Coming off of our launch in Q4 of Reddit Pro Trends, the number of companies using Reddit Pro grew over 2x from Q4 with healthy engagement around the toolset.

Jen Wong: And we will be working on more in Hatton enhancements in this area in the coming quarters.

Jen Wong: Coming off of our launch in Q4, <unk> pro trends the number of companies using <unk> pro grew over <unk> from Q4 with healthy engagement around the tool set.

Jen Wong: Overall, I'm proud of our progress. And there's a lot to be excited about. Reddit is a differentiated platform and company. And we believe we are well positioned with our roadmap and our go to market strategy to continue making more businesses successful on Reddit.

Jen Wong: Overall, I'm proud of our progress and Theres a lot to be excited about.

Jen Wong: Read it is a differentiated platform and company and we believe we are well positioned with our roadmap and our go to market strategy to continue making more businesses successful on Friday.

Drew Vollero: Now I'll turn the call over. Thank you, Jen. And good afternoon, everyone. Q1 was a solid start to the year for Reddit, with strong results quite similar to each quarter since becoming a public company last year. building on that thought, Q1 revenues were up 61%, consistent with revenue growth of the prior four quarters, which is averaged about Similarly, Q1 total adjusted costs were up 19%. consistent with the second half of 2024, where adjusted costs grew about 20.

Chip: Now I will turn the call over to chip.

Chip: Thank you Jane and good afternoon, everyone Q1 was a solid start to the year for <unk> with strong results quite similar to each quarter since becoming a public company last year.

Chip: Building on that thought Q1 revenues were up 61% consistent with revenue growth of the prior four quarters, which has averaged about 60%.

Chip: Similarly, Q1 total adjusted costs were up 19% consistent with the second half of 2024, where adjusted cost grew about 20%.

Drew Vollero: The financial performance for Q1 was again defined by the five financial strategies that have been consistent over the past several quarters, highlighting the company's solid fundamentals and scalable model. These headlines include, one, differentiated revenue growth. In Q1, we delivered strong growth of 61% despite the tougher comps, well above most peers. Second, Scaling Profitably. Justin Ibada hit $115 million in Q1 and Gap Net Income reached $26 million. That's good progress to be Gap Profitable in our historically slowest seasonal quarter of the year. We're also now Gap Profitable on a trailing 12-month basis.

Chip: The financial performance for Q1 was again defined by the five financial strategies that have been consistent over the past several quarters highlighted the company's solid fundamentals and scalable model. These headlines include one differentiated revenue growth in Q1, we delivered strong growth of 61% despite the tougher comps.

Speaker Change: Well above most peers.

Chip: Scaling profitably.

Chip: Adjusted EBITDA hit $115 million in Q1, and GAAP net income reached $26 million.

Chip: That's good progress to be GAAP profitable in our historically slowest seasonal quarter of the year.

Chip: We're also now GAAP profitable on a trailing 12 month basis.

Drew Vollero: 3. Expanding margins. Adjusted EBITDA margin reached 29%, up over 2,500 basis points year-over-year, and the net income margin was 7%, up from a loss last year. Our incremental adjusted EBITDA margin was 70% plus for the fifth consecutive quarter. On the product side, gross margins expanded 190 basis points to 90.5%.

Chip: Three expanding margins.

Chip: Adjusted EBITDA margin reached 29% up over 2500 basis points year over year.

Chip: And the net income margin was 7% up from a loss last year.

Chip: Our incremental adjusted EBITDA margin was 70% plus for the fifth consecutive quarter on.

Chip: On the product side gross margins expanded 190 basis points to 95%.

Drew Vollero: 4th, generating positive cash flow. Operating cash flow exceeded $100 million for the first quarter, ending at $128 million, our highest ever, and our operating cash flow margin was 33% of revenue.

Chip: Fourth generating positive cash flow.

Chip: Operating cash flow exceeded 100 million for the first quarter, ending at 128 million, our highest ever and our operating cash flow margin was 33% of revenue.

Drew Vollero: 5th, Minimizing Dilution. Total diluted shares fell again sequentially to $206 million in Q1 as we continue to thoughtfully manage our share price.

Chip: Fifth minimizing dilution total diluted shares fell again sequentially to $206 million in Q1, as we continue to thoughtfully manage our share count.

Drew Vollero: I'll provide a bit more color on these headlines. First, total revenue of $392 million was driven by our advertising revenue, which grew 61% year-over-year to $359 million and continues to scale rapidly across channels, verticals, and geographies. Other revenue, which includes revenue from our data license business, reached $34 million, growing 66% year over year. regionally. Revenue grew 57 and 82% year over year in the US and international respectively. International revenue growth accelerated to the fastest growth in over three years, as we deepened and expanded our advertising relationships in important markets, including the UK and EMEA.

Chip: I'll provide a bit more color on these headlines first total revenue of $392 million was driven by our advertising revenue, which grew 61% year over year to $359 million and continues to scale rapidly across channels verticals and geographies.

Chip: Other revenue, which includes revenue from our data license business reached 34 million growing 66% year over year.

Chip: Regionally revenue grew 57% and 82% year over year in the U S and international respectively.

Chip: International revenue growth accelerated to the fastest growth in over three years, as we deepened and expanded our advertising relationships in important markets, including the U K and EMEA.

Drew Vollero: In the quarter, we saw three encouraging revenue growth drivers. First, performance revenue drove more than half the dollar growth in the quarter. Second, our scale channel, including mid-market and S&P advertisers, was also a growth driver, contributing more than half the dollar growth in the And third, Impressions continues to be the primary driver and consistent with other quarters, but new for this quarter, we also saw a nice tailwind from pricing in the We believe the gains in pricing reflect the progress from our investments in performance and targeting in the middle and lower funnel. We're delivering more clicks and conversions, which is driving more efficient ad spend and higher returns for our advertiser.

Chip: In the quarter, we saw three encouraging revenue growth drivers.

Chip: <unk> performance revenue drove drove more than half the dollar growth in the quarter.

Chip: Second our scaled channel, including mid market and SMB advertisers was also a growth driver contributing more than half the dollar growth in the quarter.

Chip: And third impression continues to be the primary driver and consistent with other quarters, but new for this quarter. We also saw a nice tailwind from pricing in the quarter, we believe the gains and pricing reflect the progress from our investments in performance and targeting in the middle and lower funnel, we're delivering more clicks conversions, which.

Chip: Is driving more efficient ad spend and higher returns for our advertisers.

Drew Vollero: Now moving to costs, we continue to scale revenue, as we continue to scale revenue, our investments are focused in two areas, hiring and technology. hiring is focused on sales and engineering, which is primarily expanding customer coverage on the sales side. And for engineering, we're adding resources in ad tech, machine learning, and The traction from those investments has been strong, and we found a sweet spot where we have both accelerated revenue growth and kept high incremental adjusted EBITDA margins well above our long-term target of 50%. In Q1, total adjusted cost growth was up 1% sequentially and 19% year-over-year, less than a third the rate of revenue growth.

Chip: Now moving to costs, we continue to scale revenue as we continue to scale revenue our investments are focused in two areas hiring and technology.

Chip: <unk> is focused on sales and engineering, which is primarily expanding customer coverage on the sales side and for engineering, we're adding resources and AD Tech machine learning in search.

Chip: The traction from those investments has been strong and we found a sweet spot, where we have both accelerated revenue growth and kept high incremental adjusted EBITDA margins well above our long term target of 50%.

Chip: In Q1 total adjusted cost growth was up 1% sequentially and 19% year over year less than a third the rate of revenue growth.

Drew Vollero: Costs of revenue remained efficient, with gross margins exceeding 90% for Q1, up 190 basis points year over year. Gross margin benefited from incremental revenue growth, and we saw lower contract pricing from our hosting providers from the new contracts we signed late last year. That said, we reinvested some of those savings back across many important areas, such as supporting user and ad revenue growth, using more machine learning, scaling search, accelerating machine translation from international markets, and better optimizing our site speed and performance across the world. OPEX growth was consistent with prior quarters, up 17%, as total headcount was up 13% year-over-year.

Chip: Cost of revenue remained efficient with gross margins exceeding 90% for Q1 up 190 basis points year over year.

Chip: Gross margin benefited from incremental revenue growth that we saw lower contract pricing from a hosting providers from the new contracts, we signed late last year.

Chip: That said, we reinvested some of those savings back across many important areas such as supporting user and AD revenue growth using more machine learning.

Chip: Scaling search accelerating machine translation from international markets, and better optimizing our site speed and performance across the world.

Chip: Opex growth was consistent with prior quarters up 17% as total head count was up 13% year over year.

Drew Vollero: We ended the quarter with slightly more than 2,300 people, up 3% sequential. GNA headcount was down 5% sequentially, reflecting our strategy to lever back up house expenses.

Chip: We ended the quarter with slightly more than 2300 people up 300 back up 3% sequentially.

Chip: G&A head count was down 5% sequentially, reflecting our strategy to lever backup house expenses.

Drew Vollero: I noted on the fourth quarter call that we're focused on scaling profitably and turning differentiated revenue growth, high margins and low capex into meaningful cash flow generation. We delivered on those dimensions in Q1. Pre-cash flow for Q1 was $127,032,000 of revenue. Our CapEx remained light, less than 1 million in the quarter. Cash and Investments ended at $1.95 billion, up over $110 million sequentially. That's a healthy gain. SBC was $107 million, about 27% of revenue, down substantially versus prior year, which reflected the catch-up SBC expense from the IPO. Net income was $26 million or $0.14 per basic share and $0.13 per delivery.

I noted on our fourth quarter call that we're focused on scaling profitably and turning differentiate revenue growth high margins and low capex in the meaningful cash flow generation, we delivered on those dimensions in Q1.

Chip: Free cash flow for Q1 was 127 million 32% of revenue.

Chip: Our capex remained light less than 1% less than $1 million in the quarter.

Chip: Cash and investments ended at 195 billion up over $110 million sequentially, that's a healthy gain.

Chip: SBC was $107 million about 27% of revenue down substantially versus prior year, which reflected the catch up SBC expense from the IPO.

Chip: Net income was $26 million or <unk> 14 per basic share and 13 per diluted share.

Drew Vollero: As we look ahead, we'll share our internal thoughts on revenue and adjusted EBITDA for the second quarter, which is where we have the greatest visibility. In the second quarter of 2025, we estimate revenue in the range of $410 million to $430 million, representing 46 to 53% year-over-year revenue growth, with a midpoint of about 50%. adjusted EBITDA in the range of 110 to 130 million, representing approximately 180% to 230% year over year growth. So it's good to see Reddit off to a strong start in 2025. Our financial goal remains to continue to deliver consistent, strong, and differentiated.

Chip: As we look ahead, we will share our internal thoughts on revenue and adjusted EBITDA for the second quarter, which is where we have the greatest visibility.

Chip: In the second quarter 2025, we estimate revenue in the range of $410 million to $430 million, representing 46% to 53% year over year revenue growth with a midpoint of about 50%.

Chip: Adjusted EBITDA in the range of $110 million to $130 million, representing approximately 180% to 230% year over year growth.

Chip: So it is good to see read it off to a strong start in 2025, our financial goal remains to continue to deliver consistent strong and differentiated performance in.

Drew Vollero: In the end, we'll measure that differentiated financial performance primarily with cash.

Chip: And we'll measure that differentiated financial performance, primarily with cash flow.

Drew Vollero: That concludes my comments.

Jesse Rose: Let me turn the call back over to Thanks Drew.

Chip: That concludes my comments, let me turn the call back over to Steve.

Speaker Change: Thanks drew we're.

Steve Huffman: We're going to start as usual with taking one of the questions received from the community. That question was The core value proposition of Reddit is its meaningful human answer. How is the Reddit team protecting data quality from fake accounts or bots? It's super easy to make an account right now, which I love, but does that not run a trade-off of more bot accounts?

Speaker Change: We're going to start as usual with taking one of the questions Steve from the community that question was.

Speaker Change: The core value proposition of read it as its a meaningful human answers how is the <unk> team protecting data quality from fake accounts or box, it's super easy to make an account right now which I love.

Speaker Change: It doesn't but does that not run a tradeoff of more accounts.

Steve Huffman: First, let's start at the top. We fully agree. That's the value prop of Reddit. Authentic content from humans. And that's what we want to preserve. It has long been an area of work for us, which is preventing the abuse or manipulation of Reddit. And this is a new frontier in that fight, right with AI and smarter agents. And it is very much top of mind for us. And that work continues.

Speaker Change: First let's start at the top we fully agree that thats the value prop of read it.

Speaker Change: Authentic content from humans and Thats, what we want to preserve it has long been an area of work for us, which is preventing the abuse or manipulation of read it and this is a new frontier in that fight with AI and smarter agents and.

Speaker Change: It is very much top of mind for us.

Speaker Change: And.

Steve Huffman: And we agree that some aspects of Reddit, like our historically permissive account creation, will need to evolve, I think, during this time. So very important.

Speaker Change: That work continues and we agree that some aspects of <unk> like our historically permissive account creation will need to evolve I think during this time.

Steve Huffman: Thank you for the question.

Speaker Change: Important thank you for the question.

Jesse Rose: Okay, back over to Jesse. Great, thanks, Steve, Jen, Drew.

Jessie Rose: Back over to Jesse Great. Thanks, Steve Gen grew.

Kelvin: Kelvin, why don't we open up the line and take some questions from the folks on the line now? Thank you. I would like to remind everyone to ask a question. Please press star followed by the number one on your telephone keypad.

Jessie Rose: Tell them why don't we open up the line and take some questions from the folks on the line now thank you.

Thank you I would like to remind everyone to ask a question. Please press star followed by the number one on your telephone keypad.

Josie: The first question comes from the line from Josie of City. Please go ahead. Great. Thanks for taking the question.

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

Speaker Change: Thanks for taking the question two please first just on Jefferies, where Jim and I had a question for you on the advertising front I know you mentioned broad based strength earlier in the call, but talk to us about what Youre seeing currently from a macro perspective, and how you see the AD market today, and maybe a macro might impact the business that that's question one and then Steve.

Josie: I have two, please.

Jen Wong: First, just with Jen, I had a question for you on the advertising front. I know you mentioned broad-based strength earlier on the call, but talk to us about what you're seeing currently from a macro perspective and how you see the ad market today and maybe how macro might impact the business. That's question one.

Steve Huffman: And then, Steve, why don't you get your thoughts on DAUQs and users overall, more specifically your sense and how you see user growth for the remainder of the year going forward? And I ask you this only because I think we've seen two or so Google algorithm changes since December. And so any thoughts on user base would be very helpful. Thank you. Okay, thanks, Ron. I'll take the first one. We ended Q1 with momentum. And as of April, we're off to a good start. And I think we're well positioned with our roadmap and our go to market.

Speaker Change: Wanted to get your thoughts on <unk> and users overall.

Speaker Change: More specifically your sense and how you see user growth for the remainder of the year going forward and I ask you. This only because I think we've seen two or so Google algorithm changes since December and so any thoughts on user base would be very helpful. Thank you.

Ron Josey: Okay. Thanks, Ron I'll take the first one.

Ron Josey: We ended Q1 with momentum and as of April we're off to a good start and I think we're well.

Ron Josey: Well positioned with our roadmap and our go to market and I will acknowledge there is a lot of uncertainty in the market.

Jen Wong: And I will acknowledge there's a lot of uncertainty in the market. But so far, it's mostly business as usual. We're delivering more profitable outcomes for customers with our road map work, and that's important in this moment. And we're staying close to our customers to help them through the volatility by sharing insights on consumer trends that inform their strategy based on things that we're seeing on Reddit. One thing I'll note is that in moments like this that are volatile or uncertain, Reddit's a really important resource for users, for people who are just trying to figure out, should I buy this now?

Ron Josey: But so far it's mostly business as usual.

Ron Josey: And we're delivering more profitable outcomes for our customers with our roadmap work and that's important in this moment.

Ron Josey: And we're staying close to our customers to help them through the volatility by sharing insights on consumer trends.

Ron Josey: That inform their strategy based on things that were seeing on <unk>. One thing I'll note is that in moments like this that are volatile are uncertain read it's a really important resource.

Ron Josey: For users for people, who are just trying to figure out should I buy this now or are becoming more considered about their purchases because of the uncertainty.

Steve Huffman: Or are becoming more considerate about their purchases because of the uncertainty? So they come to Reddit to navigate that, and Reddit is an important partner to brands and businesses who are trying to understand how their consumers might be changing their behavior. So I think we're well positioned for moments like this.

Ron Josey: I come to read it to navigate that and.

Ron Josey: But it is an important partner to brands and businesses, who are trying to understand how their consumers might be changing their behavior.

Ron Josey: So I think we're well positioned for moments like this.

Steve Huffman: me? Oh, sorry. Okay. All right. Thanks, Jen. Thanks, Ron, for the question. You know, users in Google. So look, we're happy with the start to the year. Q1, we had 108 million dailies, 400 million weeklies. So that's 31% each year over year. And we believe we're in great shape, you know, over the medium and longer term. But ultimately, we drive growth when we make improvements to the product, which is where our focus is. So things like onboarding, search, machine translation, they all drive growth over the long term. Now, look, remember, we're an open platform, and we want people to find Reddit's content in search.

Speaker Change: Oh, sorry, Okay, alright. Thanks.

Ron Josey: Thanks, Ron for the question.

Ron Josey: <unk>.

Ron Josey: Users in Google So look we're happy with the start to the year in Q1, we had 108 million daily is 400 million weekly so that's 31% each year over year and we believe we're in great shape over the medium and longer term look ultimately we drive growth when we make improvements to the product, which is where our focus is so things like onboarding. So.

Ron Josey: Search machine translation, they all drive growth over the long term.

Ron Josey: Now, let's remember, we're an open platform and we want people to find right its content and search.

Steve Huffman: Being open drives awareness and visibility. It can also create variability. And we do expect some bumps along the way from Google, because we've already seen a few this year. This is expected in any year. But given that the search ecosystem is under heavy construction, the near term could be more bumpy than usual. To give you an early read on Q2, through the month of April, we're seeing total DAUs growing in the high teens range year over year. But the short term bumps don't affect our long term strategy or opportunity. We're in control of our own destiny.

Ron Josey: <unk> opened drives awareness and visibility it can also create variability and we do expect some bumps along the way from Google because we've already seen a few this year. This is expected in any year, but given that the search ecosystem is under heavy construction in the near term to be more bumpy than usual to give you.

Ron Josey: The early read on Q2 through the month of April we're seeing total da use growing in the high teens range year over year, but the short term bumps don't affect our long term strategy or opportunity, we're in control of our own destiny and I.

Steve Huffman: And I think the question behind the question is, is there long-term risk to Reddit here? And in my view, the answer is no. In fact, I think there's opportunity. There's no doubt LLMs will evolve search on the internet. We can all see that, and it's awesome. And sometimes people will want the summarized, annotated, sterile answers from AI, and we're even building this ourselves in Reddit Answers. But other times they want the subjective, authentic, messy, multiple viewpoints that Reddit provides. So in the same way that Reddit for the last decade has been an alternative to social media, social media being performative and manicured, and Reddit being the opposite.

Ron Josey: I think the question behind the question is is there long term risk to read it here and in my view. The answer is no. In fact, I think there is opportunity. There is no doubt llm's will evolve search on the Internet, we can all see that and it's awesome.

Ron Josey: <unk> people will want the summarized annotated sterile answers from AI and we're even building this ourselves and read it answers.

Ron Josey: But other times they want the subjective authentic messy multiple viewpoints that read it provides so in the same way that read it for the last decade has been an alternative to social media social media being performative in manicured and read it being the opposite right.

Steve Huffman: Reddit communities and conversation will be an alternative to AI search. And furthermore, people want what Reddit has. And when they search, they search for Reddit by name. In the last 90 days, the word Reddit was the sixth most searched word on Google between news and Trump, which incidentally also says something about our position in the media landscape. The Google algorithm serves users what they want and what they ask And of course, we have had a long and symbiotic relationship with Google. So in summary, expect some bumps, and expect us to continue to improve the product and lay the foundation for more consistency in the back half of the year and beyond.

Ron Josey: At communities in conversation will be an alternative to AI search answers and.

Ron Josey: And Furthermore, people want what read it has and when they search the search for Red It by name in the last 90 days. The word read it was the sixth most searched word on Google between news and Trump, which incidentally also says something about our position in the media landscape.

Ron Josey: The Google algorithm serves users what they want and what they ask for.

Ron Josey: And of course, we have had a long and symbiotic relationship with Google.

Ron Josey: So.

Ron Josey: Summary, expect some bumps and expect us to continue to improve the product and lay the foundation for more consistency in the back half of the year and beyond and our opportunity remains huge community is universal our knowledge base is unparalleled.

Steve Huffman: And our opportunity remains huge. Community is universal. Our knowledge base is unparalleled.

Ron Josey: Thanks.

Ron Josey: Yeah.

Andrew Boone: Your next question comes from the line of Andrew Boone of JMP Securities. Please go ahead. so much for taking my questions.

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

Andrew: Thanks, So much for taking my questions Jim I wanted to ask about pricing just given the fact that the first time also has really come through as a part of revenue growth.

Andrew Boone: Jen, I wanted to ask about I'm just giving the fact that this is the first time this has really come to as a part of Retina . . Um, can you speak to the drivers of that? And then stepping back, how do you think about pricing and maybe ROAS at large compared to other platforms?

Andrew: Can you speak to the drivers of that and then stepping back how do you think about pricing and maybe as low as it compared to other platforms or is that not the right way to think about pricing as a formula.

Steve Huffman: Or is that not the right way to think about pricing as a formula of average And then Steve, in terms of answers, it's great to see that answers is now being tested in terms of the default search.

Andrew: Having a large.

Steve: And then Steve.

Steve: In terms of answers, it's great to see that answers is now being tested in terms of the default search can you talk about that evolution in how you view answers overtime and additionally, how where people actually asking questions operator today and how do you view that volume in the future. Thanks, so much.

Steve Huffman: Can you talk about that evolution and how you view answers over time?

Steve Huffman: And additionally, how are people actually asking questions of Reddit today and how do you view that evolving in the future? Thanks.

Jen Wong: I can take the first one on pricing. Pricing is an outcome of the supply and demand in the market, but the work that we're doing to drive more outcomes, clicks, conversions, app installs, makes each impression more valuable. We've been consistently delivering more outcomes to our advertisers, and more advertisers are using those objectives to get those outcomes. So, you know, when advertisers can find the outcomes they want, the prices they want, they can continue, you know, to spend. And I'd say we're seeing a combination of pricing has been an output of more demand in the marketplace and more value from each impression from those, you know, increasing outcomes that we're delivering.

Speaker Change: Sure I can take the first one on pricing.

Steve: So we.

Steve: We don't pricing as an outcome of the supply and demand in the market.

Steve: But the work that we're doing to drive more outcomes.

Steve: Clicks conversions App installs.

Steve: Each impression more valuable and we think consistently delivering more outcomes to our advertisers and more advertisers are using those objectives to get those outcomes. So.

Steve: When advertisers can find the outcome they want at the prices. They want they can continue to spend and I'd say, we're seeing a combination of pricing has been an output of more demand in the marketplace and more value from each impression from those increase in outcomes that we're delivering and I think we've.

Jen Wong: And I think, you know, we've consistently continued to deliver that and we'll continue. I think there's more on our roadmap to delivering more value to advertisers.

Steve: Consistently continued to deliver that and will continue I think there is more on our roadmap to deliver even more value to advertisers, where we are compared to peers is sometimes hard to see theres not its not we hear this from our advertisers.

Jen Wong: Where we are compared to peers is sometimes hard to see. There's not, you know, we hear this from our advertisers that we are competitive. We're able to deliver market competitive outcomes for a lot of our advertisers, either on a CPA, a cost per acquisition basis, or on a cost per click basis, or on a return on ad spend basis. So, I do think we've made progress there and are market competitive in a wide variety for a wide variety of customers. I think there's a balance between that and also scale. So, what happens is when they're able to see those outcomes, some of that comes back in, comes back in, you know, kind of their pocket, their return, and some of that comes back in share.

Steve: That we are competitive we're delivering able to deliver market competitive outcomes for a lot of our advertisers.

Steve: Either on a CPA cost per acquisition basis on a cost per click basis or on a return on AD spend basis. So I do think we've made progress there are market competitive.

Steve: Wide variety for a wide variety of customers.

Steve: I think there's a balance between that and also scale. So what they what what happens is when they are able to see those outcomes.

Steve: Some of that comes back in.

Steve: Back in kind of an air pocket that return and some of that comes back in share to us. So like I said, we don't optimize for pricing is an output of the marketplace, but.

Jen Wong: So, like I said, we don't optimize for pricing. It's an output of the marketplace, but we're very encouraged by the movement in pricing. I do think, the other thing I'll note that's important is that the marketplace, we want it to be consistent in delivering outcomes, and outcomes at a certain price for our customers. So, pricing growth is, you know, fine within a certain level, but we want it to be consistent.

Steve: We're very encouraged by the movement in pricing I do think the other thing I will note that is important is that in the marketplace. We wanted to be consistent and delivering outcomes and outcomes in a certain price for our customers. So pricing growth is.

Steve: Fine within a certain level, but we want it to be consistent let's say.

Steve: Yeah.

Steve Huffman: Okay, on answers. So, okay, for context, answers, we built relatively quickly, and we put it in the app. So today, answers lives in the nav bar of the app, as its kind of own separate experience. Now, it's up to a million weekly users, which is which is great. But we want to integrate it with Reddit search. And then we want to integrate search more deeply into Reddit. So, so what does that mean? Integrating into Reddit search means we want one search box. And so that'll be the primary search box. And we type your query in there, you'll get potentially your answers answer, or, you know, more of a traditional Reddit response, depending on what you're searching for.

Steve: Okay.

Steve: On answers so.

Steve: Okay for context.

Steve: Answers, we built relatively quickly and we put it in the App. So today.

Steve: Answers lives in the NAV bar of the App.

Steve: It's kind of a one separate experience and now it's up to a million weekly users, which is which is great.

Steve: But we want to integrate it with red at search and we want to integrate searched more deeply into rep. So so what does that mean integrating an erratic search means we want one search box.

Steve: And so that would be the primary search box and we typed aquarian there you'll get potentially your answers answer or more of a traditional response, depending on what you're searching for.

Steve Huffman: And then integrating it more deeply into Reddit means I think there will be at least three that I can think of entry points for search. The first is the one we have with the search box, but the two other ones I think are really interesting. One would be at the beginning of the user journey. So you're a new user opening Reddit for the first time, I think using answers to see what's in Reddit and learn that Reddit almost certainly has what you're looking for. And then the other is for users coming from external sites. I'm helping them get a a more summarized or easy-to-parse version of the answer on Reddit.

Steve: And then integrating them more deeply in the red It means I think there will be.

Steve: At least three that I can think of entry points for search.

The first is the one we have with a search box.

Steve: But the two other ones I think a really interesting one would be at the beginning of the user journey. So you're a new user opening run it for the first time I think using answers to see what's and read it and learn that read it almost certainly has whats youre looking for and then the other is for users coming from external search help.

Steve: Helping them get a.

Speaker Change: More like to summarize our easy to parse.

Speaker Change: Version of the of the answer on Reddit, and so I think there's lots of opportunities here.

Steve Huffman: And so I think there's lots of opportunities here.

Steve Huffman: And it's how the questions are evolving is itself a really good question. I think it is... Unlocking a New Type of Query on the Internet. And that is a question with a subjective answer. So it's really good. Things that I've done in the last month, I've asked it to give me a reading guide for an author I'm interested in. And so it just gives a very practical guide there and then also recommends a few related subreddits. I've asked it for an intro to a new hobby, and it basically prints out a new starter guide. And I think what's cool about Answers is everything it says, every bullet is a verbatim comment from Reddit.

Speaker Change: How the questions are evolving is itself a really good question.

Speaker Change: <unk>.

Speaker Change: <unk>.

Speaker Change: It is.

Speaker Change: Unlocking a new type of query on the Internet and that is a.

Speaker Change: Question with a subjective answer.

Speaker Change: So it's really good I, just things that I've done.

Speaker Change: In the last month I have asked Nick to give me a reading guy for an author I'm interested in.

Speaker Change: It just gives a very practical guide there and then also recommends a few related subreddits.

Speaker Change:

Speaker Change: I've asked six four and intro through a new hobby and it basically printout of new starter guide.

Speaker Change: And I think what's cool about answers is everything it says every bullet is a.

Steve Huffman: So you can click or tap any of those and get into the Reddit conversation about that thing. So lots to come. Everything I've described, we're working on right now. So we hope to have that in the app this year. And of course, there'll be, I'm sure, plenty of iteration. But I think really interesting things we're seeing so far.

Speaker Change: Verbatim comments from read it. So you can click our tap any of those and get into the red It conversation about that thing so.

Speaker Change: Lots to come everything Ive described we're working on right now.

Speaker Change: So we hope to have that in the App this year.

Speaker Change: And of course there'll be.

Speaker Change: I'm sure plenty of iteration, but I think really interesting things, we're seeing so far.

Speaker Change: Yeah.

Benjamin Black: Question comes from the line of Benjamin Black of Deutsche Bank. Please go ahead. Thank you for taking my question, Steve. You spoke about making Reddit easier to use and touched on making it sort of easier to contribute. I'd be curious to hear how contribution rates have actually trended as you've grown your user base. And, you know, in the past, How have improving contribution rates actually impacted the business? You know, does it have an impact on time spent, DAU to WOW improvement? Yeah, any color there would be helpful.

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

Benjamin Black: Great and thanks for taking my question, Steve you spoke about making it easier to use and touch on making it easier to contribute.

Benjamin Black: I'd be curious to hear how contribution rates have actually trended as you've grown your user base and in.

Benjamin Black: In the past.

Benjamin Black: Hub improving contribution rate has actually impacted the business you know does it have an impact of the time spent you too Wow improvement.

Benjamin Black: Color there would be would be helpful. And then and then one on the data licensing side of the business you know.

Benjamin Black: And then one on the data licensing side of the business, you know, you're now entering your second year of your larger LLM sort of day deals. And investors are starting to think about the renewal process. You know, can you maybe talk about your and also your partner's appetite to renew?

Benjamin Black: Entering your second year of your larger.

Benjamin Black: <unk>.

Benjamin Black: Investors are starting to think about the renewal process. You know can you maybe talk about your and also your partner appetite to renew and how should we be generally thinking about the sustainability of the current data licensing revenue. Thank you.

Steve Huffman: And how should we be generally thinking about the sustainability of the current data? Okay, question one, contribution rights. So, It's a little bit of a complex system here, that part of it that we have been focused on and moving is what we call a contribution success. And so that is, whether you're a new or core user, the post that you submit, it's surviving, right? So it not being removed by a mod, because I think this is one of the most important education moments for new users. So when we talk about post success or post guidance, I can give you a scenario.

Benjamin Black: Okay question one.

Contribution rates so.

Benjamin Black: Yeah.

Benjamin Black: It's a little bit of a complex system here that part of it that.

Benjamin Black: We have been focused on and moving is what we call a contribution success and so that is whether you are a new or core user.

Benjamin Black: Post that you submit it surviving right so it not being removed by Ahmad.

Speaker Change: Because I think this is one of the most important education moments for new users. So when we talk about post success our post guidance.

Speaker Change: I can give you a scenario you renewed or at it you've been trained on social media.

Steve Huffman: You're new to Reddit. You've been trained on social media. You're on a community for the first time. You ask a question in a subreddit that, for some reason, is in violation of its rules, but you don't even know there's rules. So you submit that post, and then it ends up getting removed. Really bad user experience. The user didn't do anything wrong. They're just new. And so that's work for the mod, bad experience for the new user. So what we're doing now is we catch that post at submit time. So the user hits submit, and then you get a little pop-up that says, hey, you're on a subreddit.

Speaker Change: Youre on a community for the first time you ask a question in a sub right at that for some reason is in violation of its rules, but you don't even know there's rules.

Speaker Change: So you submit that post and then it ends up getting removed really bad user experience user didn't do anything wrong. There just new and so that's worked with them on that experience for the end user. So what we're doing now is we catch that post at submit time. So these are hit submit and then get a little pop up that says hey, Youre on a sub right. This is a community there is a re.

Steve Huffman: This is a community. There's a rules. In particular, there's this rule, and this post doesn't work. And you can fix it. It turns a bad user experience into an educational moment. And so that sort of thing has been really meaningful. I don't have the number off the top of my head, but moving post success rate, we've been successful in that. And that just makes the whole ecosystem healthy.

Speaker Change: <unk> in particular, there's this rules in this post doesn't work.

Speaker Change: And you can fix it.

Speaker Change: It turns a bad user experience into an educational moment and so that sort of thing has been really meaningful I don't have that number off the top of my head, but moving post success rate we've been successful in that and that just makes the whole ecosystem healthier so.

Steve Huffman: So we're going to keep, you know, we're going to keep pulling the thread because it also reduces the burden on moderators and it just makes moderation Okay, data licensing, I think too early to talk about renewals. But as far as I've heard, they love Reddit data, I can tell you, I mean, I see a lot, right, when I use their respective platforms, I see, you know, our little SNHU mascot all over the place. And so I think it's a mission accomplished there.

Speaker Change: We're going to keep we're going to keep pulling the start because also reduces the burden on a moderate and it just makes a moderation of our funds okay.

Speaker Change: Okay data licensing I.

Speaker Change: I think too early to talk about renewals.

Speaker Change: But as far as I've heard they love right at data I can tell you I mean, I see a lot right when I use their respective platforms I see our little <unk> mascot all over the place.

Speaker Change: So I think I'd say mission accomplished there.

Speaker Change: And look I think our early premise was correct, which is any search company any AI company needs, an ongoing supply of new information, especially new relevant information. So our strategy is still the same.

Steve Huffman: And look, I think our early premise was correct, which is any search company, any AI company needs an ongoing supply of new information, especially new relevant information. So our strategy is still the same, which is, let's do everything. Let's be open and open for business. Let's build our own products on top of our own corpus, and do our best to make sure the Reddit information is accessible, and as many verticals as possible.

Speaker Change: Which is let's do everything.

Speaker Change: Let's be open and open for business, let's build our own products on top of our own corpus.

Speaker Change: And do our best to make sure the information is accessible and.

Speaker Change: And as many verticals as possible so thanks for the questions.

Tom Champion: Thanks for the question. Your next question comes from the line of Tom Champion of Piper Zander. Please go ahead. Hi, good afternoon. Steve, I'm wondering if you could share some thoughts about how. Google, and The Index treats machine-translated content. highly ranked in the index is as unique, you know, kind of UGC, or is it perceived to be AI generated, which which could be ranked lower? Any comments would be helpful. And then, Drew, a question for you on cost growth, obviously, really strong results since the IPO. Oh, and The 19% cost growth is impressive in the context of 60% top line growth.

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

Speaker Change: Hi, good afternoon.

Speaker Change: Steve I'm wondering if you could share some thoughts about how.

Speaker Change: Google and.

Speaker Change: The index treats machine translated content is this.

Speaker Change: <unk>.

Speaker Change: Highly ranked in the indexes is unique.

Speaker Change:

Speaker Change: Kind of UGC or is it perceived to be AI generated which which could be.

Speaker Change: Ranked lower just any comments would be helpful and then.

Speaker Change: Drew.

Speaker Change:

Speaker Change: Question for you on cost growth, obviously really strong results since the IPO and.

Speaker Change: The 19% cost growth is.

Speaker Change: Impressive in the context of 60% topline growth and so I guess the question is why not invest more is there anything you could invest in or be doing on the hiring side where performance side.

Drew Vollero: And so I guess the question is, why not invest more? Is there anything you could invest in or be doing on the hiring side or performance side? In light of that extremely strong top line growth is, you know, why is a 70% incrementally to DOM margin optimal?

Speaker Change:

Speaker Change: In light of that extremely strong topline growth.

Speaker Change: Why is the 70% incremental EBITDA margin optimal thank you.

Drew Vollero: Thank you. What great questions! All right, let's start with Google. Machine translation, good question. We had the same question ourselves when we started on this, and so we just, I think, did the sensible thing and asked Google, hey, because we're basically the first person to do this at scale, is this cool? They said yes. They've actually been helping us with it. We use Gemini for the translation. So I think it's just a, it's a really nice, I think this is a great example of the symbiotic relationship. We can put more UGC in the index, now in more languages, and use that as a channel for new users around the world.

Speaker Change: What's great questions.

Speaker Change: [laughter] alright lets start with Google.

Speaker Change: Machine translation. Good question, we had the same question ourselves when we started on this and so we just I think that the sensible thing and ask Google Hey, because were basically the first person to do this at scale as this call. They said, yes, they've actually been helping us with it we use Gemini for the translation.

Speaker Change: So it's I think it's just a really nice I think this is a great example of a symbiotic relationship.

Speaker Change: Right.

Speaker Change: We can put more UGC in the index now in more languages.

Speaker Change: And use that as a channel for new users around the world. So it's totally sanctioned and it's been working great and then drew sure why can't we invest more we can say, we certainly have the money to do that I think overall, Tom thanks for the question.

Steve Huffman: So it's totally sanctioned, and it's been working great.

Drew Vollero: And then, Drew, why can't we invest more? Well, we can see we certainly have the money to do that. I think, overall, Tom, thanks for the question. The north star here is revenue growth twice as fast as costs, so that's how we think about it. You're right that over the last few quarters, we certainly have done better than that. We didn't take 70% and draw it up on the dark board and say this is what we want. That's just where we are currently. We're having a lot of success with the investments, which I think is probably the reason why you're having the question that you're asking.

Speaker Change: North Star here is revenue growth twice as fast as costs. So that's how we think about it you're right that over the last few quarters, we certainly have done better than that we didnt take 70% and draw it up on the Dart Board and say this is what we want and that's just where we are currently we're having a lot of success with the investments, which I think is probably the reason why you are having the question that Youre <unk>.

Drew Vollero: So we're really investing in hiring, and we're investing in technology, right? So a lot of investments in the P&L and machine learning, in search and answers, machine translation across the globe. Like, all those are investments. They're paying really solid dividends. It's helping accelerate our growth rate. I think those are the ideas that we're thinking about.

Speaker Change: Asking so we're really investing in hiring and we're investing in technology right. So a lot of investments in the P&L and machine learning in search and answers machine translation across the globe like all of those are investments that are paying really solid dividends is helping accelerate our growth rate I think those are the ideas that we're thinking about I think some of the new ideas that are.

Drew Vollero: I think some of the new ideas that are potentially on the plate we're starting to discuss is really marketing. How do you build community both inside the U.S. and outside the U.S.? Potentially user acquisition. Those are things that we're going back and forth on. I think we're disciplined, and we realize great companies are profitable companies. We want to do that. But I think revenue twice as fast as costs is how we think about the business going forward. We have been doing better than that. If we do come up with the ideas that we think will make sense for our users and for our shareholders, we're more than happy to invest it.

Speaker Change: On the plate, we're starting to discuss is really marketing how do you build community both inside the U S and outside the U S. Potentially user acquisition. Those are things that are things that we're going back and forth on I think we are disciplined and we realized great companies are profitable companies, we want to do that but I think revenue twice as fastest cost is how we think about the business going forward, we have been doing better than that.

Speaker Change: We do come up with the ideas that we think will make sense for our users and for our shareholders. We're more than happy to invest it. We certainly have the cash as well to do it we have over $1 billion nine in cash so but right now most of the investments that we're looking at are generally a lot cheaper than that they are in the $10 million to $20 million range and so we're making a lot of them. The good news is the revenue has been growing extremely fast here and so we've been able to them.

Steve Huffman: We certainly have the cash as well to do it. We have over $1.9 billion in cash. But right now, most of the investments that we're looking at are generally a lot cheaper than that. They're in the $10 million to $20 million range, and so we're making a lot of them. The good news is the revenue has been growing extremely fast here, and so we've been able to afford those. We've reached that sweet spot that I talked about in my script where we've been able to accelerate revenues and have strong incremental margins. But I think if you think about our business in the long term, I think revenue growth twice as fast as cost growth is kind of what we're managing to, and we'll see as the ideas come across what we want to invest in.

Speaker Change: For those we met we've reached that sweet spot that I talked about in my script, where we've been able to accelerate revenues and have strong incremental margins, but I think as you think about our business in the long term I think revenue growth twice as fast as cost growth is kind of what we're managing to and we'll see as the ideas come across what we want to invest in.

Steve Huffman: I'll just add 10 seconds onto that, which is sometimes I like to tease Drew, but I think the discipline around cost growth has probably been our single most important management lever over the last few years. And I think we've gotten good at being able to build what we want to build in a sustainable way.

Speaker Change: I'll, just add 10 seconds onto that which is sometimes I'd like to tease through but I think the.

Speaker Change: Disciplined around cost growth has probably been our single most important management lever over the last few years.

Speaker Change: And I.

Speaker Change: I think we've gotten good at being able to build what we want to build in a.

Ken Gawrelski: And so it's something we put a lot of effort into, but it's something we're, I think, proud Next question comes from the line of Ken Gawrelski of Wells Fargo. Please go ahead. Hi, thank you very much for the question. Appreciate it. I want to go back to the DAU point you made about being up high teens in April and the volatility. Could you just give us a bit more color on both U.S. versus international and kind of logged out versus logged in? Can you just give us a bit more color to understand the trend in April?

Speaker Change: Sustainable way and so it's something we put a lot of effort into but it's something we're.

Speaker Change: I think proud of.

Speaker Change: Okay.

Ken: Your next question comes from the line of Ken <unk> of Wells Fargo. Please go ahead.

Ken: Alright. Thank you very much for the question I appreciate it.

Speaker Change: I wanted to go back to the <unk>.

Speaker Change: Paul you made about being up high teens in April and the volatility could you just give us a bit more color on.

Speaker Change: <unk> U S versus international and kind of logged out versus logged in could you just give us a bit more color.

Speaker Change: Understand.

Steve Huffman: And was there any disruption that you saw kind of in the March time period that may have impacted the 1Q reported DAU number? Thank you. So, look, we're focused on the product and building longer term. Search traffic is mostly logged out, but it's some logged in too. It's more U.S. than not, simply because that's where we've had the content base. That's the biggest content base and we've had it the longest. So, look, we'll see where it goes. As I said, we expect some bumps. Some bumps are normal. It's probably more bumpy than typical because of the evolution.

Speaker Change: The trend in April and was there any disruption that you saw kind of in the March time for time period that may have impacted the <unk> reported <unk> number. Thank you.

Speaker Change: So look we're focused on the products and building longer term search traffic is mostly locked out.

Speaker Change: But at some locked into.

Speaker Change: It's more U S than not simply because that's.

Speaker Change: That's where we've had the content base, that's the biggest content based on where it's at.

Speaker Change: The longest.

Speaker Change: So look we'll see where it goes as I said, we expect some bumps some bumps are normal it's probably more bumpy than typical because of the evolution. So we'll share more with you next quarter.

Steve Huffman: So, we'll share more with you next quarter.

John Colantuoni: Next question comes from the line of John Colantuoni of Jeffreys. Please go ahead. Great. Thanks for the questions. First, when thinking about all the various drivers of your advertising revenue over the medium term, whether it be improved targeting, new ad formats, etc., can you give us your perspective on how you're thinking about the relative contributions to growth from all those various initiatives in the next 12 to 24 months? We've obviously got a lot going on, so I think that perspective would be helpful. And second, on dynamic product ads specifically, talk about your progress in marrying predictive analytics and conversion insights along with building other necessary capabilities to begin scaling that product more meaningfully this year.

Speaker Change: Your next question comes from the line of John <unk> of Jefferies. Please go ahead.

Speaker Change: Great. Thanks for the questions.

Speaker Change: When thinking about all the various drivers.

Speaker Change: Your advertising revenue over the medium term, whether it be improved targeting new AD formats et cetera can you give us your perspective.

Speaker Change: On how you're thinking about the relative contributions to growth from all of those various initiatives in the next 12 to 24 months, you've obviously got a lot going on so I think that perspective would be helpful and second on dynamic product ads, specifically talk about your progress in marrying predictive analytics and conversion insights.

Speaker Change: Along with building the necessary capabilities to begin scaling that product more meaningfully this year. Thanks.

Jen Wong: I can take that. It's hard, it's hard to break down each piece. We, you know, we obviously are investing across a lot of areas. But the growth drivers that we're seeing now, I think, have more opportunity and roadmap. So in the go-to-market. Scaled Channel for Mid-Market and SMB. just has so many more advertisers that can be on Reddit, that aren't on Reddit today. So that is, there's just thousands of advertisers globally across every vertical in that segment that can be on Reddit. So you know, that has been our highest growth channel, and I think has a lot of runway and opportunity.

Speaker Change: That can take that.

Speaker Change: It's hard it's hard to break down each piece, we obviously are investing across a lot of areas.

Speaker Change: The growth drivers that we're seeing now I think have more opportunity and roadmap and then so in the go to market scale channel for mid market in SMB.

Speaker Change: Just has so many more advertisers that can be on Reddit.

Speaker Change: That aren't on credit today. So that is there's just thousands of advertisers globally across every vertical in that segment that can be an umbrella. So.

Speaker Change: That has been our highest growth channel and I think has a lot of runway and opportunity.

Jen Wong: The second is the performance objective for us. So it's actually specifically the, you know, conversions, installs, and soon adding DPA or dynamic product ads to it, has been our highest growing objective. And that's a young objective. That's something we've been working on over the last what's called 18 to 24 months. We're so early in that journey. And I think that has a lot of roadmap to continue to delivering more value for advertisers at higher scale. I'll talk about, and then the final one I'll just say is I think we're very early in our international journey, just given that more than half of our audience is outside of the U.S., but it's only 20% of our business today, and there's a lot of opportunity there.

Speaker Change: The second is the performance objective for us so it's actually specifically.

Speaker Change: Conversions installs and soon adding DPA or dynamic product ads to it has been our highest growing objective and and Thats a young objective that's something we've been working on over the last let's call. It 18 to 24 months or so early in that journey.

Speaker Change: And I think that has a lot of roadmap to continue.

Speaker Change: Delivering more value for advertisers at higher scale.

Speaker Change:

Speaker Change: I'll talk about and then the final one I'll just say is I think we're very early in our international journey, just given that more than half of our audiences outside of the U S. But it's only 20% of our business today.

And are there is a lot of opportunity there. So those are three things I would point to.

Jen Wong: So those are three things I would point to. From a DPA perspective, it's in beta testing. It is early. It is a complicated product. It is end-to-end, just everything from the formats, the product ingestion, and it gets its own ML models. It benefits greatly from convergent API pixel from the measurement and the real-time data and signals. So there's a lot of work that goes into it. So we're very, very early. I'd say we've updated our ML model for DPA, and as I mentioned, we saw a 90% ROAS gain, and we're very early in our journey.

Speaker Change: <unk>.

Speaker Change: From a DPA perspective, it's been beta testing. It is early it is a complicated product it is and and just everything from the format the product ingestion and it gets its own ml models. It benefits greatly from conversion API. It takes it from the measure.

Speaker Change: A man in the real time data and signals so.

Speaker Change: There's a lot of work that goes into it and.

Speaker Change: So we're very very early but.

Speaker Change: I'd say, we have a we've updated our ml model.

Speaker Change: For GPA and as I mentioned, we saw 90% row asking.

Speaker Change: Very early in our journey. So I think we feel very encouraged by the testing that we're seeing from the advertisers for the early adopters here.

Jen Wong: So I think we feel very encouraged by the testing that we're seeing from the advertisers who are the early adopters here. But we'll want to add capabilities to have even more products ingested into the catalog, and we'll want to continue doing even more work on ML, and our models will get better as we lay down more signals and get more signal from more adopters of conversion APIs. So I think we feel very encouraged by the results, but we're very early in the process.

Speaker Change: Look we will want to add capabilities to have even more products ingested into the catalog will want to continue doing.

Speaker Change: Even more work on it now in our models, we will get better as we lay down more signal and get more signals from more adopters of conversion API. So I think we feel very encourage by the results, but we're very early in that process.

Eric Sheridan: Question comes from the line of Eric Sheridan of Goldman Sachs. Please go ahead. Thanks so much for taking the questions. Maybe two if I could. Steve, maybe a bigger picture question. I think a lot of what you've talked about today is sort of the roadmap for the future of Reddit. Where do you see the biggest sort of opportunity set to put more structure on the activity levels and the content being created on Reddit that could create either improvements in the user conversion dynamic or the user funnel, but also open up the biggest monetization opportunities over the next couple of years?

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

Eric Sheridan: Thanks, so much for taking the questions maybe two if I could Steve maybe a bigger picture question I think a lot of what you've talked about today is sort of the the roadmap for the future of Red It where do you see the biggest sort of opportunity set to put more structure on the activity levels in the content creator I read it that could create either.

Speaker Change: Sure.

Speaker Change: Improvements in the user conversion dynamic or the user funnel also opened up the biggest monetization opportunities over the next couple of years and Jim would you think about the evolution of marrying engagements with ads.

Steve Huffman: And Jen, when you think about the evolution of marrying engagements with ads, any update on richer media formats and how you continue to make progress on elements of video and other elements that could amplify both the engagement side and the monetization side back to the conversations you have with the advertising community? Thank you. Thanks, Eric. Let me see if I get the first question. I think this points to the kind of framing we've been using the last two quarters about scrollers and seekers. Scrollers being the users who come to Reddit for the core product that we know and love, community, conversation, http://www.reddit.com And so, you know, like very specifically If you come to Reddit from Google, you land on a comment page, or what we sometimes call a post details page.

Speaker Change: Pete on richer media formats, and how you continue to make progress on the elements of video and other elements that could amplify both the engagement side and the monetization side back to the conversations you have with the advertising community. Thank you.

Thanks, Eric.

Speaker Change: If I get the first question.

Speaker Change: I think I think this points to the kind of framing we've been using the last two quarters about scrollers and seekers.

Speaker Change: <unk> being the users who come to read it for the core product that we know and love community conversation.

Speaker Change: Great Thats more of engaging in the topics you care about the things youre going through or the things you're into.

Speaker Change: It's really that community conversation product versus the seekers where up.

Speaker Change: Up until very recently, we haven't built a product for them. These are the people either coming to read it or ending up on rate with a question that they didnt enhancer for us.

Speaker Change: So it's like very specifically.

Speaker Change: If you come to read it from Google you land on a comment page or what we sometimes call. It post details page that page was built for the <unk>. It's built for consuming comp conversations for seeing that back and forth. It's not actually designed to give you an answer or a summary, or anything like that and so but those users are not coming to run it for a community in that moment, we're coming.

Steve Huffman: That page was built for the scrollers. It's built for consuming conversations, for seeing that back and forth. It's not actually designed to give you an answer or a summary or anything like that. But those users are not coming to Reddit for a community in that moment, they're coming for an answer. So I think we can embrace the use case that the user is bringing us and be more effective at solving it. I think that'll make users happier and then, of course, should improve engagement, retention, all of those things. So I think this is, let's call it product 101, give the user what they want.

Speaker Change: For an answer so I think we can.

Grace: Thank you Grace.

Grace: Use case, but the users, bringing us and be more effective at solving it I think that will.

Grace: I think that'll make users happier and then of course.

Grace: Should improve engagement retention and all of those things and so I think this is let's call. It product one I want to give the user what they want.

Jen Wong: Okay, and then Jen, the question was about richer media formats. I'll take that. So Reddit has some of the deepest engagement of any platform. And that's, you know, video aside, just because of the nature of the platform and the mindset people come to the platform. And our ad platform really consistently delivers strong results in terms of resonance and outcomes. And that's with call it, you know, 40 ish percent being in a video format and the rest being maybe a visual or text driven. So, you know, I think Reddit in delivering outcomes is kind of media agnostic.

Speaker Change: Okay, and then Jan the question was about richer media formats.

Speaker Change: Yeah, I'll take that so.

Grace: So rate has.

Speaker Change: Some of the deepest engagement of any platform and Thats you know video aside just because of the nature of the platform and the mindset people clinical platform and.

Speaker Change: Our AD platform really consistently deliver strong resolve in terms of residence and in outcomes.

Speaker Change: And Thats with call. It you know 40 ish percent being in a video format and the rest being maybe a visual or tax driven.

Speaker Change: So.

Speaker Change: I think Randy in delivering outcomes is kind of.

Speaker Change: Media agnostic and this is both on the consumer side and on the AD side.

Jen Wong: This is both on the consumer side and on the ad side. We are working on, you know, making it easier to port existing video assets into the ad stack where we might automatically re-crop, et cetera, and are doing work in integrating Memorable AI, a company we bought that has expertise in identifying what are the best sort of creative variants. And so we are doing work there in our platform, which I'm really excited about, that again just make creative easier, more portable, and also more optimized. But video per se is just not a focus for us.

Speaker Change: We are working on.

Speaker Change: Making it easier to port existing video assets in AD stack, where we might automatically re crop et cetera, and arguing working integrating memorable AI a company we bought that has.

Speaker Change: <unk> expertise in identifying what are the best sort of accretive variance.

Speaker Change: And so we are doing work there in our platform, which I'm really excited about that again, just make creative easier more portable and also more optimized.

Speaker Change: But video per se, it's just not a focus for us it is something that works really well on our platform. It's what you want to use but you can use many different media types on our platform and have success.

Jen Wong: It is something that works really well on our platform if it's what you want to use, but you can use many different media types on our platform and have...

Richard Greenfield: This question comes from the line of Richard Greenfield of LightShed. Please go ahead. Thanks for taking the question. Steve, I read your comments in the letter about making the best version of Reddit by being faster, easier, and better to use. I'd love sort of your view, like on a scale of 1 to 10, with 10 being the best. Where are you on that journey today? And how should we think about the improvements coming over the coming year? And how does this tie into making Reddit your starting point for where you begin online versus the destination that you get to via a Google open AI, et cetera?

Speaker Change: Your next question comes from the line of Richard Greenfield reflection. Please go ahead.

Richard Greenfield: Thanks for taking the question, Steve I read your comments in the letter about making.

Richard Greenfield: Best version of ready by being faster easier and better to us.

Richard Greenfield: Sort of your view like on a scale of one to 10 with 10 being the best.

Richard Greenfield: Where are you on that journey today, and how should we think about the improvements coming over the coming year and how does it tie into making read at your starting point for where you begin online versus a destination that you get to buy a Google open AI et cetera.

Steve Huffman: It's hard to quantify my answer on that scale. Look, we're in the middle, and we're always gonna be in the middle. we're better than we've been. And when I use Reddit, all I see are ways for Reddit to be better. And I think that's the fun part of the job is continuing to iterate on this product. I don't think of it as an either or between us and other products. We have we have different products that fulfill different needs, right? There's search and AI, which I think it's like an extension of search for, you know, the direct answers or kind of summarized answers.

Richard Greenfield: It's hard to quantify my answer on that scale look we're in the middle or in we're always going to be in the middle.

Richard Greenfield: We're better than we've been and when I use red at all I see are ways for read it to be better.

Richard Greenfield: And I think that's the fun part of the job is continuing to iterate on this product.

Richard Greenfield: I don't think of it as an either or between us and other products.

Richard Greenfield: We have different products that fulfill different needs right their search and AI just things like an extension of search for.

Richard Greenfield: The direct answers or kind of summarized answers and those read it just for community belonging conversation.

Jason Helstein: And there's Reddit. for Community, Belonging, Conversation. And, you know, even within our answers product, it's for getting the broad perspectives of Reddit intentionally. So I think maybe there's some overlap in the middle, but we're really different products that serve different needs. And I expect us to continue all of the companies you've named to continue to evolve and coexist. I expect Google to continue to be a great channel for us and I expect us to continue to grow doing our own thing as well. Your next question comes from the line of Jason Helstein of Oppenheimer. Please go ahead.

Richard Greenfield: And even within our answers product is forgetting the broad perspective of red it intentionally so I think maybe there's some overlap in the middle but we're really different products that serve different needs and I expect us to continue all of the companies you've named to continue to evolve and coexist.

Richard Greenfield: And.

Richard Greenfield: I would expect Google has continued to be a great channel for us and I expect us to continue to grow doing our own thing as well.

Speaker Change: Your next question comes from the line of Jason Jason <unk> of Oppenheimer. Please go ahead.

Speaker Change: Hi, This is Steve Hoffman on for Jason. So just two questions from US one if you could give any commentary on the continued strength within U S logged in users.

Steve Huffman: Driving Better Conversion or Retention, either within desktop on the. a driving Yeah, look, I think the The story of logged in user conversion and retention in our apps over the last couple of years is a success story. We've done a lot of work there to... Just make it easier to register, to sign up, to get onboarded, to find your community. And so I think that's never-ending work. It's probably the single most important number for us is new user retention. So we've been able to move it and we'll continue to do so. And this work broadly, or not broadly, it's kind of the in-the-trenches product work.

Speaker Change: Are you driving better conversion and retention either within the desktop or App and then second any update on the meta campaign important tool that was announced and launched maybe a month ago is that helping to reduce advertisers time to launch a campaign <unk> driving solid AD performance. Thank you.

Speaker Change: Yeah look I think the.

Speaker Change: The story.

Speaker Change: Story of logs and.

Speaker Change: User conversion and retention and our apps over the last couple of years is a success story.

Speaker Change: We've done a lot of work there too.

Speaker Change: Just make it easier to register to sign up to get Onboarding to find your community.

Speaker Change: And so I think that's never ending work.

Speaker Change: Probably the single most important number for us is new user retention.

Speaker Change: So we've been able to move it and we'll continue to do so and this work broadly are not broadly is.

Speaker Change: It's the kind of are in the trenches product work, so when I say make red it easier and better I think every detail here matters, but we've been moving that for a couple of years and look retention compounds into growth and so that's how we think about it.

Jen Wong: So when I say make Reddit easier and better, I think every detail here matters. But we've been moving that for a couple of years. And look, retention compounds into growth. And so that's how we- Jan on the meta thing. Yeah, so, you know, some platforms have a marketing API for advertisers to advertise their campaigns, obviously, the advertisers assets and campaign data are run by the advertiser. And so we did, we did an integration, it was part of our strategy of making it easier for advertisers to get started on Reddit. And there's a lot of features that we work on to take the friction out of onboarding and making it easy to activate.

Speaker Change: Churn on the medicine.

Speaker Change: Yeah, so yeah.

Speaker Change: Some platforms have a marketing API for advertisers to advertise their campaigns, obviously, the appetizers assets and campaigned data are run by the advertiser.

Speaker Change: And so we did get an integration in as part of our strategy of.

Speaker Change: But we're making it easier for advertisers to get started on Reddit and Theres a lot of features that we work on to take the friction out of Onboarding.

Alan Gould: And so this is one of them that, you know, we worked on, you know, we've seen some adoption of this feature. But it's one of many in an effort to just make it easier for advertisers to onboard. And obviously, we've been very pleased with the overall growth in our number of advertisers. Your next question comes from the line of Alan Gould of Sloop Capital. Please go ahead. Yeah, thanks for taking the question. I've got two. One is, can you comment on what's happening with per user engagement? And then second, Steve, you know, the one of the things special about Reddit is that you have the moderators, given the growth in users that you've had, assuming strong user engagement, I know you're using technology, but how do you manage that growth for all the, how do you manage that growth?

Speaker Change: To activate and so this is one of them that.

Speaker Change: We worked on.

Speaker Change: We've seen some adoption of this feature.

Speaker Change: But it's one of many in an effort to just make it easier for advertisers to onboard and obviously, we've been very pleased with the overall growth in our number of advertisers.

Speaker Change: And your next question comes from the line of Alan Gould with Loop capital. Please go ahead.

Speaker Change: Yes, thanks for taking the question I've got two one is can you comment on what's happening with per user engagement and then second Steve.

Speaker Change: The one other thing special about <unk> is that you have the moderators given the growth in users that you have and assuming strong user engagement.

Speaker Change: No you're using technology, but how do you manage that growth for all of them.

Steve Huffman: Are you adding that many more moderators? How do you keep the moderation going so well? Okay, great questions per user per user engagement. Look, of course, this depends on the channel. But this I'll reference all of the answers I've given today about making the product. easier to use, more relevant. I'd say one of the big improvements we've made over the last year, and we'll continue to iterate on that I haven't mentioned today, is the quality of our home feeds. Your home feed in Reddit is made up of the subreddits you subscribe to. But serving you the right subreddit at the right time of day with the right type of content is, you know, getting that right is really important.

Speaker Change: Do you manage that growth are you, adding that many more moderators, how do you keep the the moderation going so well thank you.

Speaker Change: Okay, great questions.

Speaker Change: Per user per user engagement.

Speaker Change: Of course this depends on the channel, but this I'll reference all of the answers I've given today about making the product.

Speaker Change: Easier to use more relevant.

Speaker Change: I'd say one of the big improvements we've made over the last year and we'll continue to iterate on that I Havent mentioned today is the quality of our home feats.

Speaker Change: Home feed and read it is made up of the suburbs, who subscribe to them, but serving you the right sub write it at the right time of day with the right type of content.

Speaker Change: Yes.

Speaker Change: Is getting that right is really important and so that's been one of the biggest drivers of retention over the last couple of years and that's an area, we'll continue to iterate on.

Steve Huffman: And so that's been one of the biggest drivers of retention over the last couple of years. And that's an area we'll continue to iterate on. And there's some stuff we're doing later this year. that I'm very excited about that I think will make Reddit just kind of more accessible and easier to figure out in that in that first session. And of course, that's a little bit upstream from engagement. But that's how we think about it is just get people in the Reddit, get them into their home, and the rest follows. Moderators, what great question. It's kind of two things we're doing at once right now.

Speaker Change: And there is some stuff we're doing later this year.

Speaker Change: I am very excited about that I think will make a credit I'm, just kind of more accessible and easier to figure out in that in that first session and of course, thats a little bit upstream from engagement, but that's how we think about it. It's just get people in the red it get them into their home and the rest follows our moderators look great question, there's kind of two things we're doing at once right now one.

Speaker Change: As reducing moderator burden.

Steve Huffman: One is reducing moderator burden. So AI tools help with this a lot. So whether it's post guidance, or our improved safety work, we can just try to require the mods to do less clicking and less repetitive work so that they can focus on doing the things they love, which is being stewards of communities. And at the same time. we have an initiative to grow the number of mods. I would just wanna see more mods. More mods means more communities, more diversity of communities. It's a big part of our strategy for international growth is starting with that foundation of new moderators.

Speaker Change: So.

Speaker Change: AI tools help with this a lot.

Speaker Change: So whether it's post guidance or our improved safety work, we can just.

Speaker Change: Try to require the mods to do less clicking unless repetitive work so that they can focus on doing the things. They love, which is you know being stewards of communities and at the same time.

Speaker Change: We have an initiative to grow the number of months I would just want to see more much more modest means more communities more diversity of communities. It's a big part of our strategy for international growth is starting with that foundation of of new moderators. So it's a big part of our work literally in countries finding engaged users.

Jen Wong: So it's a big part of our work, literally in countries, finding engaged users and saying, hey, do you wanna actually run a community and teaching them how to do that? So it's kind of a whole program around that. So there's actually, I think it's a unique aspect of work is all of this infrastructure we have around finding, recruiting, training, building products for mods. So thanks for the question. Your next question comes from the line of Dan Salmon of Newstreet Research. Please go ahead. Great afternoon, everyone. Thanks for taking the question. Jen, I believe you mentioned during your prepared remarks that the conversation that place and it's now up to Could you just tell us a little bit more about the performance of the format, how it's helping Inform your search strategy and potentially broader monetization strategy later.

Speaker Change: And saying, Hey, do you want to actually run a community and teaching them how to do that.

Speaker Change: So it's kind of a whole program around that so it was actually I think it's a unique aspect of work is all of this infrastructure, we have around finding recruiting training building products for March so thanks for the question.

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

Speaker Change: Yeah.

Speaker Change: Accurate afternoon, everyone. Thanks for taking the question Jim.

Speaker Change: I believe you mentioned.

Speaker Change: During your prepared remarks that the conversations AD placements now two accounting for 6% of impressions.

Speaker Change: Just tell us a little bit more about the performance of the format, how it's helping.

Speaker Change: Inform your search strategy and potentially broader monetization strategy later.

Speaker Change: Yes.

Jen Wong: Sure. Yeah, the... So I think you're referring to ads in comments. So on the conversation page, we, you know, have had an ad below the post and above the comments, but we tested and launched an ad inside the comments, which, of course, is a high engagement space for people coming to Reddit, because when you're trying to get answers to your questions, you're reading through the conversation there. So highly contextual. And, you know, as a reminder, about 40% of the conversations on Reddit are actually commercial in nature. They're about products and services. So there's a lot of engagement, you know, where people are in a purchase decision journey.

Speaker Change: Sure Yes.

Speaker Change: So I think youre, referring to ads and comments so on the conversation page.

Speaker Change: We have had an AD below the post and above the comments that we.

Speaker Change: Tested and launched them in.

Speaker Change: And at inside the comments of which of course is a high engagement space for people coming to read it because when you're trying to get answers to your questions you're reading through the conversation there so highly contextual and.

Speaker Change: As a reminder, about 40% of the conversations on <unk> are actually commercial in nature, they're about products and services. So there's a lot of engagement where people are in it a purchase decision journey and we've been really pleased with the adoption of that AD.

Jen Wong: We've been really pleased with the adoption of that ad. You know, I think almost no platform has ads in their comments. It's not been typically a high engagement space for other platforms, but it is uniquely high engagement for Reddit. And we've been pleased with the performance that we're seeing. Again, that space is highly contextual. It is high engagement because that's usually where you're finding the answers to your questions. People who come into that space come two ways. They either come one click past search on a very specific query where they're reading the comments for an answer, or they've clicked into that space from a post that interested them in the feed.

Speaker Change: I think almost no platform has ads in their comments, it's not been typically a high engagement space for other platforms, but it is uniquely.

Speaker Change: High engagement for read it and we've been pleased with the performance that we're seeing again that spaces highly contextual.

Speaker Change: It is high engagement, because that's usually where youre finding the answers to your questions.

Speaker Change: Who come into that space come two ways either come one click past search on a very specific query where they're reading the comments for an answer.

Speaker Change: Or they've clicked into that space from a post that interested then in the seed so the intent in that space is incredibly high.

Jen Wong: So the intent in that space is incredibly high. And we see a lot of opportunity to drive outcomes and performance from that ad unit. Great. Thanks, Jen. Kelvin, I think we're out of time here. So we'll wrap up. Thanks, everyone, for joining. We really appreciate it. Looking forward to speaking with you again. This concludes Reddit's Q1725 earnings call. You may now disconnect.

Speaker Change: And we see a lot of opportunity to drive outcomes and performance from that AD unit.

Speaker Change: Great. Thanks Jen.

Speaker Change: Kelvin I think we're at time here. So we'll wrap up thanks, everyone for joining we really appreciate it looking forward to speaking with you again soon.

Speaker Change: Right.

Speaker Change: Yeah.

Speaker Change: This concludes <unk> Q1, 'twenty to 'twenty five earnings call you may now disconnect.

Speaker Change:

Speaker Change: Yeah.