Q3 2025 Reddit Inc Earnings Call
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I would now like to turn the call over to Jessie Rose head of Investor Relations you May begin your conference.
Hi, everyone welcome to <unk> third quarter 2025 earnings call. Joining me are Steve Hoffman <unk> co founder and CEO Jen Wong rated CLO, Andrew Valero <unk> CFO.
Speaker #1: Good afternoon . My name is Julianne , and I will be your conference operator today . At this time , I would like to welcome everyone to Reddit, Inc. Q3 2025 Earnings Call .
Operator: Good afternoon. My name is Julianne, and I will be your conference operator today. At this time, I would like to welcome everyone to Reddit's Q3 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. 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, press star one again. Thank you. I would now like to turn the call over to Jesse Rose, Head of Investor Relations. You may begin your conference.
Speaker #1: All lines have been placed on mute to prevent any background noise . After the speakers remarks , there will be a question and answer session .
I'd like to remind you that our remarks today will include forward looking statements and actual results may vary information concerning risks and other factors that could cause. These results to vary is included in our SEC filings. These.
Speaker #1: If you would like to ask a question during this time , simply press star followed by the number one on your telephone keypad .
Speaker #1: If you would like to withdraw your question , press star one again . Thank you . I would now like to turn the call over to Jesse Rose Head of Investor Relations .
These forward looking statements represent our outlook only as of the date of this call and we undertake no obligation to update any forward looking statements.
Speaker #1: You may begin your conference . .
During this call we will discuss both GAAP and non-GAAP financials reconciliation of GAAP to non-GAAP financials can be found in our letter to shareholders.
Speaker #2: Hi everyone . Welcome to Reddit's third quarter 2020 earnings call . Joining me are Steve Hoffman , right as co-founder and CEO . Wong , Reddit COO .
Jesse Rose: Hi, everyone. Welcome to Reddit's third quarter 2025 earnings call. Joining me are Steve Huffman, Reddit's Co-Founder and CEO, Jen Wong, Reddit's COO, and Drew Vollero, Reddit's CFO. I'd like to remind you that our remarks today will include forward-looking statements, and actual results may vary. Information concerning risks and other factors that could cause these results to vary is included in our SEC filings. These forward-looking statements represent our outlook only as of the date of this call, and we undertake no obligation to update any forward-looking statements. During this call, we will discuss both GAAP and non-GAAP financials. Reconciliation of GAAP to non-GAAP financials can be found in our letter to shareholders. Our third quarter letter to shareholders and earnings press release are available on our Investor Relations website and Investor Relations subreddit. I'll turn the call over to Steve.
Our third quarter letter to shareholders and earnings press release are available on our Investor Relations website, and investor relation Subreddit and now I will turn the call over to Steve. Thanks.
Speaker #2: And Drew Reddit CFO . I'd like to remind you that our remarks today will include forward looking statements and actual results may vary .
Speaker #2: Information concerning risks and other factors that could cause these results to vary is included in our SEC filings . These forward looking statements represent our outlook only as of the date of this call , and we undertake no obligation to update any forward looking statements during this call , we will discuss both GAAP and non-GAAP financials .
Thanks, Jessie everyone. Thank you for joining our earnings call Q3 was a strong quarter for <unk> with differentiated results and solid execution across product growth and revenue.
We ended the quarter with 116 million T. A your Q and $444 million $444 million <unk>, both growing around 20% year over year, we're especially encouraged by the mix of growth with organic product, let improvements and successful marketing both playing a role this balance is working and we're focused.
Speaker #2: Reconciliation of GAAP to non-GAAP financials can be found in our letter to shareholders . Our third quarter letter to Jen earnings press release are available on our Investor Relations website and Investor Relations subreddit .
On replicating across markets.
Speaker #2: And now I'll turn the call over to Steve . Thanks .
Revenue came in at $585 million up 68% year over year, and our financial model is scaling very well, we continue to be GAAP profitable with a net income of $163 million and a net margin of 28% an improvement of $133 million from last year.
Speaker #3: Jesse . Hi , everyone . Thank you for joining our earnings call . Q3 was a strong quarter for Reddit with differentiated results and solid execution across product growth and revenue .
Steve Huffman: Thanks, Jesse. Hi, everyone. Thank you for joining our earnings call. Q3 was a strong quarter for Reddit, with differentiated results and solid execution across product, growth, and revenue. We ended the quarter with 116 million DAUQ and 444 million WAUQ, both growing around 20% year over year. We're especially encouraged by the mix of growth, with organic product-led improvements and successful marketing both playing a role. This balance is working, and we're focused on replicating it across markets. Revenue came in at $585 million, up 68% year over year, and our financial model is scaling very well. We continue to be GAAP profitable, with a net income of $163 million and a net margin of 28%, an improvement of $133 million from last year. This quarter, we achieved a targeted adjusted EBITDA margin of 40%, which was a profitability goal we set at our IPO just last year.
Speaker #3: We ended the quarter with 116 million dork and 444,000,444 million Woohoohoo , both growing around 20% year over year . We're especially encouraged by the mix of growth with organic product led and successful marketing , both playing a role .
This quarter, we achieved a targeted adjusted EBITDA margin of 40%, which was our profitability goal, we set at our IPO just last year.
Today read it if the number three most visited site in the U S. For some rush October 2025 that puts us in a rare company.
Speaker #3: This balance is working and we're focused on replicating it across markets . Revenue came in at 585 million , up 68% year over year .
Youtube is number two and Amazon is number four and reflects how red it is where people start not just where they end up.
Speaker #3: And our financial model is scaling very well . We continue to be GAAP profitable with a net income of 163 million and a net margin of 28% .
People come here to find trusted perspective to participate in communities that share their interests, no matter, how niche or mainstream and increasingly to engage directly with brands institutions and publishers.
Speaker #3: An improvement of 133 million from last year . This quarter , we achieved a targeted adjusted EBITDA margin of 40% , which was a profitability goal we set at our IPO just last year .
In September we launched new Red at pro tools tailored for publishers early adopters like the associated press and know Sinclair feeds automatically import articles track how their stories are shared and use AI powered tools to find the right communities.
Speaker #3: Today , Reddit is the number three most visited site in the US for SEMrush . October 2025 . That puts us in rare company .
Steve Huffman: Today, Reddit is the number three most visited site in the U.S. per Semrush, October 2023. That puts us in rare company. YouTube is number two, and Amazon is number four, and reflects how Reddit is where people start, not just where they end up. People come here to find trusted perspectives, to participate in communities that share their interests, no matter how niche or mainstream, and increasingly to engage directly with brands, institutions, and publishers. In September, we launched new Reddit Pro Tools tailored for publishers. Early adopters, like the Associated Press, can now sync their feeds, automatically import articles, track how their stories are shared, and use AI-powered tools to find the right communities. Our consumer product strategy continues to focus on making Reddit easier to use and more rewarding from day one, so casual users become daily users. They're already coming to Reddit.
Speaker #3: YouTube is number two and Amazon is number four . And reflects how Reddit is where people start , not just where they end up .
Our consumer product strategy continues to focus on making it easier to use and more rewarding from day, one so casual users become daily users there.
Speaker #3: People come here to find trusted perspectives to participate in communities that share their interests . No matter how niche or mainstream , and increasingly to engage directly with brands , institutions and publishers .
They are already coming to right now it's on us to make the experience forthcoming back for by being more relevant and intuitive.
To that end, we're making real progress across the three main focus areas, we shared last quarter core product search and internationalization.
Speaker #3: In September , we new Reddit Pro Tools tailored for publishers , early adopters like the Associated Press can now sync their feeds automatically , import articles , track how their stories are shared , and use AI powered tools to find the right communities .
Let's start with our core product.
We're redesigning the red it experience with a more modern search forward interface and streamlining onboarding. So it's easier for new users to find what they're looking for with a dynamic personalized home feed.
Speaker #3: Our consumer product strategy continues to focus on making Reddit easier to use and more rewarding . From day one , so casual users become daily users .
We're also helping more people contribute to their favorite communities by using AI to interpret subreddit rules and surface post insights.
Speaker #3: They're already coming to Reddit . Now it's on us to make the experience worth coming back for by being more relevant and intuitive .
Steve Huffman: Now it's on us to make the experience worth coming back for by being more relevant and intuitive. To that end, we're making real progress across the three main focus areas we shared last quarter: core product, search, and internationalization. Let's start with the core product. We're redesigning the Reddit experience with a more modern search-forward interface and streamlining onboarding so it's easier for new users to find what they're looking for with a dynamic, personalized home feed. We're also helping more people contribute to their favorite communities by using AI to interpret subreddit rules and surface post insights. On the moderation side, we're investing in tools that help mods grow and strengthen their communities. These tools are now live in over 3,000 communities, which are seeing 30% more active moderators on average. Moderators aren't just enforcing rules. They're shaping culture, building communities, and helping Reddit thrive.
On the moderation side, we're investing in tools that help <unk> grow and strengthen their communities. These tools are now live in over 3000 communities, which are seeing 30% more active moderators on average.
Speaker #3: To that end , we're making real progress across the three main focus areas we shared last quarter core product search and internationalization . Let's start with the core product we're redesigning , the Reddit experience with a more modern search forward interface and streamlining onboarding so it's easier for new users to find what they're looking for .
Moderator is arent just enforcing rules they're.
Theyre shaping culture building communities and helping <unk> thrive our job is to give them the tools to do it more efficiently.
Speaker #3: With a dynamic , personalized home feed . We're also helping more people contribute to their favorite communities by using AI to interpret subreddit rules and surface post insights on the moderation side , we're investing in tools that help mods grow and strengthen their communities .
Next search.
Search is one of our biggest opportunities because <unk> conversations are uniquely authentic contextual and helpful.
This is why we're investing in making it a true search destination in Q3 over 70 of about 75 million people searched unread It weekly and that number continues to rise.
Speaker #3: These tools are now live in over 3000 communities , which are seeing 30% more active moderators on average . Moderators aren't just enforcing rules .
Read it answers provides users with curated community powered insights that are often more helpful than traditional web results.
Speaker #3: They're shaping culture , building communities and helping Reddit thrive . Our job is to give them the tools to do it more efficiently .
We started integrating <unk> answers into core search increasing its visibility across conversations and rolling out to non English languages.
Steve Huffman: Our job is to give them the tools to do it more efficiently. Next, search. Search is one of our biggest opportunities because Reddit conversations are uniquely authentic, contextual, and helpful. This is why we're investing in making Reddit a true search destination. In Q3, over 75 million people searched on Reddit weekly, and that number continues to rise. Reddit Answers provides users with curated, community-powered insights that are often more helpful than traditional web results. We started integrating Reddit Answers into Core Search, increasing its visibility across conversations, and rolling out to non-English languages. Our aim is to have a single, great search experience on Reddit. Third, internationalization. Our international growth continues to accelerate. Machine translation is available in 30 languages, and it's a major driver of top-of-funnel growth outside the U.S.
Speaker #3: Next , search . Search is one of our biggest opportunities because Reddit conversations are uniquely authentic , contextual , and helpful . This is why we're investing in making Reddit a true search destination in Q3 , over 7075 million people searched on Reddit weekly , and that number continues to rise .
Our aim is to have a single great search experience on Reddit.
And third internationalization are.
Our international growth continues to accelerate.
Machine translation is available in 30 languages, and it's a major driver of top of funnel growth outside the U S.
Speaker #3: Reddit Answers provides users with curated , community powered insights that are often more helpful than traditional web results . We started integrating Reddit answers into core search , increasing its visibility across conversations and rolling out to non-English languages .
We spilt, a local content framework to identify top interests in each country, which we use to guide partnerships content and marketing.
This approach worked well in India and now we're applying it in Australia, Brazil, Germany and France.
We're focused on finishing the year strong and putting our strategy for 2026 and motion looking ahead, our biggest priorities are growing app users by improving the experience and therefore retention.
Speaker #3: Our aim is to have a single great search experience on Reddit . And third , internationalization . Our international growth continues to accelerate machine translation is available in 30 languages , and it's a major driver of top of funnel growth outside the US .
<unk> the types of users and communities that call right at home both in the U S and globally.
Increasing top of funnel growth by diversifying our sources of traffic, including organic paid and publisher driven and of course scaling monetization and ads formats for our users and partners.
Speaker #3: We've built a local content framework to identify top interests in each country , which we use to guide partnerships , content and marketing .
Steve Huffman: We've built a local content framework to identify top interests in each country, which we use to guide partnerships, content, and marketing. This approach worked well in India, and now we're applying it in Australia, Brazil, Germany, and France. We're focused on finishing the year strong and putting our strategy for 2026 in motion. Looking ahead, our biggest priorities are growing app users by improving the experience and therefore retention, broadening the types of users and communities that call Reddit home, both in the U.S. and globally, increasing top-of-funnel growth by diversifying the sources of traffic, including organic, paid, and publisher-driven, and of course, scaling monetization and ads formats for our users and partners. Reddit is in a unique position. We're not trying to be the next anything. We're focused on being the best version of ourselves and what the internet needs most.
Speaker #3: This approach worked well in India , and now we're applying it in Australia , Brazil , Germany and France . We're focused on finishing the year strong and putting our strategy for 2026 .
Brett It is in a unique position, we're not trying to be the next anything we're focused on being the best version of ourselves and what the internet needs most of <unk>.
Speaker #3: In motion . Looking ahead , our biggest priorities are growing app users by improving the experience and therefore retention , broadening the types of users and communities that call Reddit home both in the US and globally , increasing top of funnel growth by diversifying the sources of traffic , including organic , paid and publisher driven .
<unk>, where people can connect on almost any topic and fine genuinely useful information.
Because no matter, what youre going through somewhat on right. It has already been there done that and shared the story. Thank you for being a part of this journey I'll now hand, it over to Jan to walk through the business in more detail.
Speaker #3: And of course , scaling , monetization and ads formats for our users and partners . Reddit is in a unique position . We're not trying to be the next anything .
Thanks, Steve Good afternoon, everyone I'd like to start by building on what Steve mentioned about our consumer product strategy.
We're excited about the opportunity to meaningful meaningfully grow our user base both in the U S and internationally.
Speaker #3: We're focused on being the best version of ourselves and what the internet needs most . A place where people can connect on almost any topic and find genuinely useful information .
And as we refine our strategies, our consumer product roadmap is focusing more intently underwriting Pat.
Steve Huffman: A place where people can connect on almost any topic and find genuinely useful information. Because no matter what you're going through, someone on Reddit has already been there, done that, and shared the story. Thank you for being a part of this journey. I'll now hand it over to Jen to walk through the business in more detail.
This is where we can build direct high engagement relationships, which are most valuable to both our users and our business.
Speaker #3: Because no matter what you're going through , someone on Reddit has already been there , done that , and shared the story . Thank you for being a part of this journey , and I'll hand it over to Jen to walk through the business in more detail .
The app can be more personalized had easier onboarding and incorporate search more consistently.
Speaker #2: Thanks , Steve . Good .
Jen Wong: Thanks, Steve. Good afternoon, everyone. I'd like to start by building on what Steve mentioned about our consumer product strategy. We're excited about the opportunity to meaningfully grow our user base, both in the U.S. and internationally. As we refine our strategies, our consumer product roadmap is focusing more intently on the Reddit app. This is where we can build direct, high-engagement relationships, which are most valuable to both our users and our business. The app can be more personalized, have easier onboarding, and incorporate search more consistently. These kinds of changes can impact user retention, increase returns on marketing, and help us better convert web users into the app. We're also working on expanding our users, communities, and contribution across Reddit. We recently introduced tools focused specifically on publishers to help them share content and engage organically on Reddit through Reddit Pro Tools. Now moving to monetization.
These kinds of changes can impact user retention increased returns on marketing and help us better convert web users into the app.
Speaker #4: Afternoon everyone . I'd like to start by building on what Steve mentioned about our consumer product strategy . We're excited about the opportunity to meaningfully , meaningfully grow our user base , both in the US and internationally .
We're also working on expanding our users communities in contribution across credit.
Speaker #4: And as we refine our strategies , our consumer product roadmap is focusing more intently on the Reddit app . This is where we can build direct , high engagement relationships , which are most valuable to both our users and our business .
We recently introduced tools focus specifically on publishers to help them share content and engage organically on reddit through very proud.
Now moving to monetization.
The third quarter, we demonstrated continued growth and strong execution with total revenue, reaching $585 million up 68% year over year.
Speaker #4: The app can be more personalized , have easier onboarding , and incorporate search more consistently . These kinds of changes can impact user retention , increased returns on marketing , and help us better convert web users into the app .
Our unique proposition in AD platform improvements delivering differentiated growth and positive outcomes for advertisers.
Speaker #4: We're also working on expanding our users communities and contribution across Reddit . We recently introduced tools focused specifically on publishers to help them share content and engage organically on Reddit , through Reddit Pro , now moving to monetization in the third quarter , we demonstrated continued growth and strong execution , with total revenue reaching $585 million , up 68% year over year .
The advertising business grew 74% year over year in Q3, reaching $549 million and the growth was driven by broad based strength across the business as we continue to expand existing relationships acquire new customers and diversify our advertiser base.
Jen Wong: In the third quarter, we demonstrated continued growth and strong execution, with total revenue reaching $585 million, up 68% year over year. Our unique proposition and ad platform improvements delivered differentiated growth and positive outcomes for advertisers. The advertising business grew 74% year over year in Q3, reaching $549 million. The growth was driven by broad-based strength across the business as we continue to expand existing relationships, acquire new customers, and diversify our advertiser base. The total active advertiser count expanded by over 75% year over year in Q3 as we added new accounts across all channels, including large, mid-market, and SMB businesses. Now moving to our ad stack, our strategy is focused on making all businesses successful on Reddit by driving performance of our ad solutions, improving usability for users and productivity for our sales force, and offering our advertisers and partners Reddit-unique solutions and ad formats.
Total active advertiser count expanded by over 75% year over year in Q3, as we added new accounts across all channels, including large mid market and F&B businesses.
Speaker #4: Our unique proposition and ad platform improvements delivered differentiated growth and positive outcomes for advertisers . The advertising business grew 74% year over year in Q3 , reaching $549 million , and the growth was driven by broad based strength across the business .
Now moving to our AD stack, our strategy is focused on making all businesses successful and ready I driving performance of our AD solutions, improving usability for users and productivity for our sales force and offering our advertisers and partners ready unique solutions at AD formats, we made meaningful progress against each of these areas in Q3.
Speaker #4: As we continue to expand existing relationships , acquire new customers and diversify our advertiser base , the total active advertiser count expanded by over 75% year over year in Q3 .
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First.
Ongoing investments in our AD models and formats are driving greater performance and efficiency, which means better returns for advertisers in Q3, we continued to optimize our models for lower funnel objectives, including App installs and conversion.
Speaker #4: As we added new accounts across all channels , including large , mid-market and SMB businesses . Now moving to our ad stack , our strategy is focused on making all businesses successful on Reddit by driving performance of our ad solutions , improving usability for users and productivity for our sales force , and offering our advertisers and partners Reddit unique solutions and ad formats .
Model improvements to our lower funnel App ads objective generated double digit percentage improvements to performance outcomes and ml driven optimizations in the lower funnel conversion objective improved performance by over 20%.
Speaker #4: We made meaningful progress against each of these areas in Q3 . First , ongoing investments in our ad models and formats are driving greater performance and efficiency , which means better returns for advertisers in Q3 , we continued to optimize our models for lower funnel objectives , including app installs and conversions , model improvements to our lower funnel app ads , objective generated double digit percentage improvements to performance , outcomes , and ML driven optimizations in the lower funnel conversion objective .
Jen Wong: We made meaningful progress against each of these areas in Q3. First, ongoing investments in our ad models and formats are driving greater performance and efficiency, which means better returns for advertisers. In Q3, we continue to optimize our models for lower-funnel objectives, including app installs and conversions. Model improvements to our lower-funnel app ads objective generated double-digit percentage improvements to performance outcomes. ML-driven optimizations in the lower funnel conversion objective improved performance by over 20%. We continue to enhance our shopping solution, Dynamic Product Ads, or DPA, which launched to general availability earlier this year. We're excited by the capability and seeing ongoing improvements to performance beyond the core conversion objective. DPAs currently account for a small portion of our total lower funnel revenue. Broader advertiser adoption remains an opportunity, as it takes a little more time and resources for clients to implement this more complex ad product.
We continue to enhance our shopping solution dynamic product ads or DPA, which launched to general availability earlier this year.
Excited by the capability and seen ongoing improvements performance beyond the core conversion objectives.
EPA is currently account for a small portion of our total lower funnel revenue.
Broader advertiser adoption remains an opportunity and is it takes as it takes a little more time and resources for clients to implement this more complex ad product.
To strengthen our lower funnel strategy, we continue to make it easier for businesses of all sizes to adopt our measurement tools, including pixel and converging API or Kathy.
Speaker #4: Improved performance by over 20% . We continue to enhance our shopping solution . Dynamic product Ads , or DPA , which launched to general availability earlier this year .
In Q3, Kathy covered conversion revenue tripled year over year.
Speaker #4: We're excited by the capability and seeing ongoing improvements to performance beyond the core conversion objective . DPA is currently account for a small portion of our total lower funnel revenue , broader advertiser adoption remains an opportunity , and as it takes .
Second improving usability for advertisers and productivity for our sales force, we're investing in automation across our full AD stack to help drive adoption of our AD tools and improved performance for advertisers for the upper funnel, we launched the beta of auto bidding, which simplifies budget management and improves efficiency leading to over 15%.
Speaker #4: As it takes a little more time and resources for clients to implement this more complex ad product to strengthen our lower funnel strategy , we continue to make it easier for businesses of all sizes to adopt our measurement tools , including pixel and conversion API or Kathy .
Sent more impressions and lower pricing for advertisers and.
Jen Wong: To strengthen our lower funnel strategy, we continue to make it easier for businesses of all sizes to adopt our measurement tools, including Pixel and Conversion API, or CAPI. In Q3, CAPI-covered conversion revenue tripled year over year. Second, improving usability for advertisers and productivity for our sales force. We're investing in automation across our full ad stack to help drive adoption of our ad tools and improve performance for advertisers. For the upper funnel, we launched a beta of auto-bidding, which simplifies budget management and improves efficiency, leading to over 15% more impressions and lower pricing for advertisers. In the middle and lower funnel, auto-targeting is delivering strong results, and adoption is growing over 50% year over year. We're also in early testing of our end-to-end automated campaign platform that uses AI to streamline campaign setup.
In the middle and lower funnel auto targeting is delivering strong results and adoption is growing over 50% year over year.
Speaker #4: In Q3 , Capi covered conversion revenue tripled year over year . Second , improving usability for advertisers and productivity for our sales force .
We're also in early testing of our end to end automated campaign platform that uses AI to streamline campaign set up.
Speaker #4: We're investing in automation across our full ad stack to help drive adoption of our ad tools and improve performance for advertisers . For the upper funnel , we launched a beta of auto bidding , which simplifies budget management and improves efficiency , leading to over 15% more impressions and lower pricing for advertisers in the middle and lower funnel .
It is focused on activating mid and lower funnel objectives and provides customers with insights on what made their campaign successful.
Early results are promising with advertisers unlocking higher return on AD spend or spending less time managing campaigns, we're continuing to test the solution with a number of global advertisers across business sizes and verticals and adding new features.
Speaker #4: Auto targeting is delivering strong results , and adoption is growing over 50% year over year . We're also in early testing of our end to end automated campaign platform that uses AI to streamline campaign setup .
Third building ready unique solutions in AD formats for advertisers in the third quarter, we expanded access to conversation summary add ons.
Stinker AD format that lets brands integrate positive ready conversations into ads. We're now testing this format with a broader set of advertisers across the funnel and seeing encouraging results with brands like Bethesda, the mid market video game publisher seeing 15% higher click through rates.
Speaker #4: It is focused on activating mid- and lower-funnel objectives and provides customers with insights on what made their campaign successful. Early results are promising, with advertisers unlocking higher return on ad spend while spending less time managing campaigns.
Jen Wong: It is focused on activating mid and lower funnel objectives and provides customers with insights on what made their campaign successful. Early results are promising, with advertisers unlocking higher return on ad spend while spending less time managing campaigns. We're continuing to test the solution with a number of global advertisers across business sizes and verticals and adding new features. Third, building Reddit-unique solutions and ad formats for our advertisers. In the third quarter, we expanded access to Conversation Summary add-ons, a distinctive ad format that lets brands integrate positive Reddit conversations into ads. We're now testing this format with a broader set of advertisers across the funnel and seeing encouraging results with brands like Bethesda, the mid-market video game publisher, seeing 15% higher click-through rates. We're developing interactive ads built on our developer platform, allowing advertisers to create custom experiences like mini games or quizzes directly within an ad.
Speaker #4: We're continuing to test the solution with a number of global advertisers across business sizes and verticals, and adding new features. Third, we're building Reddit's unique solutions and ad formats for our advertisers.
We're developing interactive ads built on our developer platform, allowing advertisers to create custom experiences like many gains or quizzes directly within an AD. This format is testing them and the plan with plans to scale more broadly next year.
Speaker #4: In the third quarter , we expanded access to conversations , summary add ons , a distinctive ad format that lets brands integrate positive Reddit conversations into ads .
Finally, we are seeing momentum with our free format format launched last year, which lets brands tell richer story through multiple media types in a post that youll need to read it for example foot joy used free form ads to promote their new Hyperflex line of golf shoes, delivering click through rates are 100% above benchmark and time spent.
Speaker #4: We're now testing this format with a broader set of advertisers across the funnel , and seeing encouraging results with brands like Bethesda , the mid-market video game publisher , seeing 15% higher click through rates .
Speaker #4: We're developing interactive ads built on our developer platform , allowing advertisers to create custom experiences like mini games or quizzes directly within an ad .
More than 50% above benchmark.
Overall Q3 was another strong quarter for read it I'm proud of the progress and the importance and the improvements we're delivering for our communities and partners and excited about the opportunities ahead.
Speaker #4: This format is testing now , and the plan with plans to scale more broadly next year . Finally , we're seeing momentum with our freeform ad format launched last year , which lets brands tell richer stories through multiple media types .
Jen Wong: This format is testing now, with plans to scale more broadly next year. Finally, we're seeing momentum with our Freeform ad format, launched last year, which lets brands tell richer stories through multiple media types in a post that feels native to Reddit. For example, FootJoy used Freeform ads to promote their new HyperFlex line of golf shoes, delivering click-through rates 100% above benchmark and time spent more than 50% above benchmark. Overall, Q3 was another strong quarter for Reddit. I'm proud of the progress and the improvements we're delivering for our communities and partners, and excited about the opportunities ahead. Now I'll turn the call over to Drew.
Now I'll turn the call over to Jim. Thank you Jen and good afternoon, everyone.
Our solid Q3 results again demonstrated the financial model continues to scale, well and specifically read it can be a leader in both growth and profitability.
Speaker #4: In a post that feels native to Reddit , for example , Footjoy used freeform ads to promote their new Hyperflex line of golf shoes , delivering click through rates 100% above benchmark and time spent more than 50% above benchmark .
Revenues grew 68% year over year, and our adjusted EBITDA margin reached 40% passing that important profitability benchmark for the first time.
Speaker #4: Overall , Q3 was another strong quarter for Reddit . I'm proud of the progress and the importance and the improvements we're delivering for our communities and partners , and excited about the opportunities ahead .
The key to our financial success is continued traction across our five financial strategies. These strategies include first achieving differentiated revenue growth revenues grew more than 60% for the fifth consecutive quarter.
Speaker #4: Now I'll turn the call over to drew .
Speaker #5: Thank you , Jen , and good afternoon , everyone . Our solid Q3 results again demonstrated the financial model continues to scale . Well and specifically Reddit can be a leader in both growth and profitability .
Drew Vollero: Thank you, Jen, and good afternoon, everyone. Our solid Q3 results again demonstrated the financial model continues to scale well. Specifically, Reddit could be a leader in both growth and profitability. Total revenues grew 68% year over year, and our adjusted EBITDA margin reached 40%, passing that important profitability benchmark for the first time. The key to our financial success is continued traction across our five financial strategies. These strategies include, first, achieving differentiated revenue growth. Revenues grew more than 60% for the fifth consecutive quarter. Second, expanding margins. Gross margins expanded 90 basis points year over year to 91%, our fifth consecutive quarter of over 90%. Our adjusted EBITDA and net income margins expanded by 1,300 and 1,900 basis points year over year, respectively. Third, scaling profitably. GAAP net income reached $163 million, and adjusted EBITDA hit $236 million, both new highs for Reddit.
Expanding margins gross margins expanded 90 basis points year over year to 91%, our fifth consecutive quarter of over 9% our.
Our adjusted EBITDA and net income margins expanded by 300 9800 basis points year over year, respectively.
Speaker #5: Total revenues grew 68% year over year , and our adjusted EBITDA margin reached 40% , passing that important profitability benchmark for the first time .
Third scaling profitably GAAP net income reached $163 million and adjusted EBITDA at $236 million, both new highest for red.
Speaker #5: The key to our financial success is continued traction across our five financial strategies . These strategies include . First achieving differentiated revenue growth , revenues grew more than 60% for the fifth consecutive quarter .
Net income margin was 28% our incremental adjusted EBITDA margin hit 60%.
Speaker #5: Second , expanding margins , gross margins expanded 90 basis points year over year to 91% . Our fifth consecutive quarter of over 90% .
Fourth generating positive cash flow Q3 cash flow ended at $183 million and our free cash flow margin for the quarter was 31% in the last 12 months, we've generated over half a billion dollars of free cash flow.
Speaker #5: Our adjusted EBITDA and net income margins expanded by 1319 hundred basis points year over year , respectively . Third , scaling profitably GAAP net income reached 163 million and adjusted EBITDA hit 236 million .
Cash and cash equivalents on the balance sheet continue to build at $2 2 billion.
And fifth minimizing dilution, we continue to view stock based compensation and dilution as business costs and manage them closely the progress continues to be evident total fully diluted shares outstanding were $206 1 million down from both $206 six last quarter and 200.
Speaker #5: Both new highs for Reddit . Our net income margin was 28% . Our incremental adjusted EBITDA margin hit 60% . Fourth , generating positive cash flow Q3 cash flow ended at 183 million , and our free cash flow margin for the quarter was 31% .
Drew Vollero: Our net income margin was 28%. Our incremental adjusted EBITDA margin hit 60%. Fourth, generating positive cash flow. Q3 cash flow ended at $183 million, and our free cash flow margin for the quarter was 31%. In the last 12 months, we've generated over half a billion dollars of free cash flow. Cash and cash equivalents in the balance sheet continue to build at $2.2 billion. Fifth, minimizing dilution. We continue to view stock-based compensation and dilution as business costs and manage them closely. The progress continues to be evident. Total fully diluted shares outstanding were 206.1 million, down from both 206.6 million last quarter and 206.2 million last year. Similarly, stock-based compensation costs fell sequentially, both in dollars and a percent of revenue basis, from 19% to 16%. I'll provide a bit more color on these headlines.
Third $6 2 million last year.
Speaker #5: In the last 12 months , we've generated over a half $1 billion of free cash flow , cash and cash equivalents in the balance sheet continue to build at 2.2 billion .
Similarly stock based compensation cost fell sequentially, both in dollars and a percent of revenue basis from 19% to 60%.
I'll provide a bit more color on these headlines first Q3 total revenue of 585 million was driven by our advertising revenue, which grew 74% year over year to $549 million as we saw strength across objectives verticals geographies and channels.
Speaker #5: And fifth , minimizing dilution . We continue to view stock based compensation and dilution as business costs and manage them closely . The progress continues to be evident .
Speaker #5: Total fully diluted shares outstanding were 206.1 million , down from both 206.6 last quarter and 206.2 million last year . Similarly , stock based compensation costs fell sequentially , both in dollars and a percent of revenue basis from 19% to 16% .
Other revenue, which includes revenue from our data licensing business reached $36 million up 7% year over year.
Average revenue per user or <unk> grew 41% year over year to $5 <unk>, which is still low on an absolute basis and remains an opportunity.
Speaker #5: I'll provide a bit more color on these headlines . First , Q3 total revenue of 585 million was driven by our advertising revenue , which grew 74% year over year to 549 million .
Regionally revenue grew 67% and 74% year over year in the U S and internationally respectively.
Drew Vollero: First, Q3 total revenue of $585 million was driven by our advertising revenue, which grew 74% year over year to $549 million, as we saw strength across objectives, verticals, geographies, and channels. Other revenue, which includes revenue from our data licensing business, reached $36 million, up 7% year over year. Average revenue per user, our PUU, grew 41% year over year to $5.04, which is still low on an absolute basis and remains an opportunity. Regionally, revenue grew 67% and 74% year over year in the U.S. and internationally, respectively. In the quarter, four revenue drivers fueled growth. First, performance ads and brand ads had strong quarters, both growing more than 70% year over year. Second, impression growth remains our key driver, but we saw a tailwind from pricing in the quarter, a consistent trend so far this year as we continue to deliver value and favorable outcomes for advertisers.
In the quarter four revenue drivers fueled growth first performance ads and brand ads had strong quarters, both growing more than 70% year over year.
Speaker #5: As we saw strength across objectives , verticals , geographies and channels . Other revenue , which includes revenue from our data licensing business , reached 36 million , up 7% year over year .
Second impression growth remains our key driver, but we saw a tailwind from pricing in the quarter, our consistent trends. So far this year as we continue to deliver value and favorable outcomes for advertisers.
Speaker #5: Average revenue per user Rpu grew 41% year over year to $5.04 , which is still low on an absolute basis and remains an opportunity .
We saw strength across the funnel with growth ranging from mid to high double digits in the upper middle and lower funnel segments and fourth we continue to see diversified strength by verticals. We had nine of our top 15 verticals grow revenues by 50% or more.
Speaker #5: Regionally , revenue grew 67 and 74% year over year in the US and internationally , respectively . In the quarter , four revenue drivers fueled growth .
Speaker #5: First , performance ads and brand ads had strong quarters , both growing more than 70% year over year . Second impression growth remains our key driver , but we saw tailwind from pricing in the quarter , a consistent trend so far this year as we continue to deliver value and favorable outcomes for advertisers .
Now moving to expenses the growth rate in Q3 total adjusted costs was very similar to Q2 total adjusted costs, which include both cost of revenue and Opex were $349 million in Q3 up 30, 37% year over year, consistent with a 38% growth last quarter.
Speaker #5: Third , we saw strength across the funnel , with growth ranging from mid to high double digits in the upper middle and lower funnel segments , and fourth , we continue to see diversified strength by verticals .
Drew Vollero: Third, we saw strength across the funnel, with growth ranging from mid to high double digits in the upper, middle, and lower funnel segments. Fourth, we continue to see diversified strengths by verticals. We had nine of our top 15 verticals grow revenues by 50% or more. Now moving to expenses, the growth rate in Q3 total adjusted costs was very similar to Q2. Total adjusted costs, which include both cost of revenue and OpEx, were $349 million in Q3, up 37% year over year, consistent with a 38% growth last quarter. Our main cost driver continues to be operating expenses, which on an adjusted basis were $297 million in Q3, about 85% of total adjusted expenses. Adjusted OpEx costs grew 35% in Q3, the same growth rate as Q2, close to half the growth rate of our revenue, which was 68%.
Our main cost driver continues to be operating expenses, which on an adjusted basis were $297 million in Q3 about 85% of total adjusted expenses.
Speaker #5: We had nine of our top 15 verticals grow revenues by 50% or more . Now moving to expenses . The growth rate in Q3 , total adjusted cost was very similar to Q2 .
Adjusted Opex cost grew 35% in Q3, the same growth rate as Q2 close to half the growth rate of our revenue which was 68%.
Most of the increase in Opex costs were driven by our growth investments in sales and marketing.
Speaker #5: Total adjusted costs , which include both cost of revenue and opex , were 349 million in Q3 , up 3,037% year over year .
Adjusted sales and marketing expenses were $115 million in Q3 about 20% of revenue in line with peers.
Speaker #5: Consistent with a 38% growth last quarter . Our main cost driver continues to be operating expenses , which on an adjusted basis were 297 million in Q3 , about 85% of total adjusted expenses , adjusted opex costs grew 35% in Q3 , the same growth rate is Q2 , close to half the growth rate of our revenue , which was 68% .
Sales and marketing investments were made in two key areas first building out our sales team and second branded user marketing, let me expand on each.
First our sales team investments were primarily adding people resources and customer facing areas like sales marketing and AD tech in.
In the quarter. The company grew total head count of about 3% sequentially slightly more than 80 net adds with about 70% of the net hires focused in these three growth functions. Our investment track record continues to be very strong here with fast paybacks and industrial returns multiples higher than the cost.
Speaker #5: Most of the increase in opex costs were driven by our growth investments in sales and marketing , adjusted sales and marketing expenses were 115 million in Q3 .
Drew Vollero: Most of the increase in OpEx costs were driven by our growth investments in sales and marketing. Adjusted sales and marketing expenses were $115 million in Q3, about 20% of revenue, in line with peers. Sales and marketing investments were made in two key areas. First, building out our sales team, and second, brand and user marketing. Let me expand on each. First, our sales team investments were primarily adding people, resources, and customer-facing areas like sales, marketing, and ad tech. In the quarter, the company grew total headcount about 3% sequentially, slightly more than 80 net ads, with about 70% of the net hires focused in these three growth functions. Our investment track record continues to be very strong here, with fast paybacks and investment returns multiple times higher than the cost.
Speaker #5: About 20% of revenue , in line with peers , sales and marketing investments were made in two key areas . First , building out our sales team and second , brand and user marketing .
Second during the quarter, we continued to invest strategically in brand campaigns and user marketing to drive awareness acquisition and engagement our.
Speaker #5: Let me expand on each . First , our sales team investments were primarily adding people , resources and customer facing areas like sales , marketing and adtech .
Our marketing spend was aligned with creative campaigns and targeted specific growth segments. We maintained a balanced approach to investing in brand awareness and performance marketing in both the U S and international markets.
Speaker #5: In the quarter , the company grew total headcount about 3% sequentially , slightly more than 80 net adds with about 70% of the net hires focused in these three growth functions .
We remained thoughtful with our Q3 spending targeting marketing expenses in the low to mid single digits as a percentage of revenue.
Speaker #5: Our investment track record continues to be very strong here , with fast paybacks and investment returns multiples higher than the cost . Second , during the quarter , we continued to invest strategically in brand campaigns and user marketing to drive awareness acquisition and engagement .
We're poised to scale marketing spend where we see the traction is promising we continue to invest in those areas. If we see the returns are sustainable.
Drew Vollero: Second, during the quarter, we continued to invest strategically in brand campaigns and user marketing to drive awareness, acquisition, and engagement. Our marketing spend was aligned with creative campaigns and targeted specific growth segments. We maintained a balanced approach to investing in brand awareness and performance marketing in both the U.S. and international markets. We remained thoughtful with our Q3 spending, targeting marketing expenses in the low to mid-single digits as a percentage of revenue. We're poised to scale marketing spend where we see the traction is promising. We'll continue to invest in those areas if we see the returns are sustainable. Let me finish up the results discussion by adding a couple of other callouts for the quarter. In Q3, our CapEx remained modest, $2 million, less than 0.5% of revenue, which means both operating and free cash flow continued to move in lockstep.
Let me finish up the results discussion by adding a couple of other callouts for the quarter in Q3, our Capex remained modest $2 million less than a half a percent of revenue, which means both operating and free cash flow continue to move in lockstep.
Speaker #5: Our marketing spend was aligned with creative campaigns and targeted specific growth segments . We maintained a balanced approach to investing in brand awareness and performance marketing in both the US and international markets .
Net income was $163 million or 87 per basic share <unk> 80 per diluted share up 4% to five times from 18, and 16 last year respectively.
Speaker #5: We remain thoughtful with our Q3 spending , targeting marketing expenses in the low to mid single digits . As a percentage of revenue .
Speaker #5: We're poised to scale marketing spends where we see the traction as promising . We'll continue to invest in those areas if we see the returns of sustainable .
So as we look ahead, we'll share our internal thoughts on revenue adjusted EBITDA for the fourth quarter, which is where we have the greatest visibility.
Speaker #5: Let me finish up the results discussion by adding a couple of other call outs for the quarter in Q3 , our CapEx remained modest 2 million , less than a half a percent of revenue , which means both operating and free cash flow continue to move in lockstep .
In the fourth quarter 2025, we estimate revenue in the range of 655 million to $665 million, representing 53% to 55% year over year revenue growth with a midpoint of about 54.
Speaker #5: Net income was 163 million , or $0.87 per basic share , $0.80 per diluted share , up 4 to 5 times from $0.18 , and $0.16 last year , respectively .
Drew Vollero: Net income was $163 million or $0.87 per basic share, $0.80 per diluted share, up four to five times from $0.18 and $0.16 last year, respectively. As we look ahead, we'll share our internal thoughts on revenue and adjusted EBITDA for the fourth quarter, which is where we have the greatest visibility. In the fourth quarter 2025, we estimate revenue in the range of $655 million to $665 million, representing 53% to 55% year-over-year revenue growth, with a midpoint of about 54%. Adjusted EBITDA in the range of $275 million to $285 million, representing approximately 78% to 85% year-over-year growth, and an adjusted EBITDA margin of 42% at the midpoint. Overall, we accomplished a lot in Q3, and the output metrics of users, revenues, and margins reflect that progress.
Adjusted EBITDA in the range of $275 million to $285 million, representing approximately 78% to 85% year over year growth and an adjusted EBITDA margin of 42% at the midpoint.
Speaker #5: So as we look ahead , we'll share our internal thoughts on revenue and adjusted EBITDA for the fourth quarter , which is where we have the greatest visibility in the fourth quarter 2025 .
So overall, we accomplished a lot in Q3 and the output metrics of users revenues and margins reflect that progress.
The business model remains quite powerful as we saw impressive revenue growth be converted at 90% gross margins, 60% incremental margins and now 40% adjusted EBITDA margins for the first time.
Speaker #5: We estimate revenue in the range of 655 million to 665 million , representing 53 to 55% year over year revenue growth , with a midpoint of about 54 adjusted EBITDA in the range of 275 million to 285 million , representing approximately 78 to 85% year over year growth and an adjusted EBITDA margin of 42% at the midpoint .
That was a pre IPO go read it and important milepost to pass.
That concludes my comments for Q3, and now we turn our attention to the seasonally important fourth quarter, Let me turn the call back over to Steve.
Thanks drew.
We will start.
As usual with a few questions from the RTD tea community and then we'll turn it over to the rest of the call question one.
Speaker #5: revenues and margins reflect that progress . The business model remains quite powerful , as we saw impressive revenue growth reconverted into 90% gross margins , 60% incremental margins , and now 40% adjusted EBITDA margins for the first time .
Drew Vollero: The business model remains quite powerful, as we saw impressive revenue growth be converted into 90% gross margins, 60% incremental margins, and now 40% adjusted EBITDA margins for the first time. That was a pre-IPO goal for Reddit and an important milepost to pass. That concludes my comments for Q3, and now we turn our attention to the seasonally important fourth quarter. Let me turn the call back over to Steve.
Impressed by the growth in international <unk>, 31% year over year can you give any detail on which countries in particular stood out for growth, but thanks for the question, we're seeing strength across a number of regions and our focus countries in particular, France, Brazil and India.
Speaker #5: That was a pre-IPO goal for Reddit , an important milepost to pass . That concludes my comments for Q3 . And now we turn our attention to the seasonally important fourth quarter .
And these are some of the first countries, where relaunched our international playbook, which includes machine translation, which is a good driver of top of funnel growth local contact framework base of local concept framework, which is based on interests and passions.
Speaker #5: Let me turn the call back over to Steve .
Speaker #3: Thanks , drew . We'll start as usual with a few questions from the R&D community , and then we'll turn it over to the rest of the call .
Steve Huffman: Thanks, Drew. We'll start, as usual, with a few questions from the Reddit community, and then we'll turn it over to the rest of the call. Question one. I am impressed by the growth in international DAUQ, 31% year over year. Can you give any detail on which countries in particular stood out for growth? Thanks for the question. We're seeing strength across a number of regions and our focus countries, in particular France, Brazil, and India. These are some of the first countries where we launched our international playbook, which includes machine translation, which is a good driver of top-of-funnel growth, local content framework, which is based on interests and passions, marketing efforts to drive awareness, and finally, local partnerships with brands and notable people. Question two.
Marketing efforts to drive awareness and then finally local partnerships with brands and notable people.
Speaker #3: Question one I am impressed by the growth in international dork 31% year over year . Can you give any detail on which countries in particular stood out for growth ?
Question two.
A question about what we are doing to improve the user experience, making it easier to contribute and helping new users understand subreddit rules.
Speaker #3: Thanks for the question . We're seeing strength across a number of regions and our focused countries in particular France , Brazil and India .
So improving the onboarding experience and delivering value early in the user's journey is a top priority for us we want them to see in their first session that read it is amazing and has content for them.
Speaker #3: And these are some of the first countries where we launched our international playbook , which includes machine translation , which is a good driver of top of funnel growth , local content framework based , a local content framework which is based on interests and passions , marketing efforts to drive awareness , and then finally local partnerships with brands and notable people .
So our goal is to connect users with relevant relevant content very quickly.
Community rules are unique credit feature. So every subreddit has rules that is written by its own community and enforced by their own community.
Speaker #3: Question two . A question about what we are doing to improve the user experience , making it easier to contribute and helping new users understand subreddit rules .
But what we're doing is we're using AI to make it easier for those user written rules or moderate a written rules to be enforced.
Steve Huffman: A question about what we are doing to improve the user experience, making it easier to contribute, and helping new users understand subreddit rules. Improving the onboarding experience and delivering value early in a user's journey is a top priority for us. We want them to see in their first session that Reddit is amazing and has content for them. Our goal is to connect users with relevant content very quickly. Community rules are a unique Reddit feature. Every subreddit has rules that are written by its own community and enforced by their own community. What we're doing is we're using AI to make it easier for those user-written rules or moderator-written rules to be enforced automatically to make moderation more fun and efficient. That's coming along. That's out there and working nicely in many cases.
<unk> to make moderation more.
Speaker #3: So improving the onboarding experience and delivering value early in a user's journey is a top priority for us . We want them to see in their first session that Reddit is amazing and has content for them .
<unk> and efficient and.
And so that's that's coming along that's out there and working nicely in many cases.
And we're supporting the contribution journey, so users posting successfully using AI powered tools like post guidance and community recommendations to for example, tell a user before they submit a post whether or not it violates the community rules, which has historically been a friction point for new users.
Speaker #3: So our goal is to connect users with relevant content very quickly . Community rules are unique . Reddit feature , so every subreddit has rules .
Speaker #3: That are written by its own community and enforced by their own community . But what we're doing is we're using AI to make it easier for those user written rules or moderator written rules to be enforced automatically to make moderation more fun and efficient , and so that's that's coming along .
Now I will turn it over to the rest of the call for questions.
I would like to remind everyone that in order to ask a question Press Star then the number one on your telephone keypad.
Our first question comes from Ron Josey from Citi. Please go ahead. Your line is open.
Speaker #3: That's out there and working nicely in many cases . And we're supporting the contribution journey . So users posting successfully using AI powered tools like post guidance and community recommendations to for example , tell a user before they submit a post whether or not it violates the community rules , which is historically been a friction point for new users .
Steve Huffman: We're supporting the contribution journey, so users posting successfully using AI-powered tools like post guidance and community recommendations to, for example, tell a user before they submit a post whether or not it violates the community rules, which has historically been a friction point for new users. Now we'll turn it over to the rest of the call for questions.
Great. Thanks for taking the question Steve I wanted to ask about users and then also on product and so can you talk to us a little bit more of a talk to us a little bit more just about user growth trends here.
Particularly as we go into <unk> and going forward in the context I think you said on the call, we're increasing top of funnel growth by diversifying traffic. So any insights on on call. It immediate term or near term trends on traffic and more details on diversifying traffic progress and then on answers now that were embedded in searches Aldrich and $75 million Wows would love to hear.
Speaker #3: Okay , now we'll turn it over to the rest of the call for questions .
Speaker #1: I would like to remind everyone , in order to ask a question , press star . One on your telephone keypad . Our first question comes from Ron Josey from Citi .
Operator: I would like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. Our first question comes from Ron Josey from Citi. Please go ahead. Your line is open.
Sure.
<unk> trends from those users are they more are those users who are using answers more engaged asking more questions things along those lines. Thank you.
Speaker #1: Please go ahead . Your line is open .
Speaker #6: Great . Thanks for taking the question , Steve . I wanted to ask about users and then also on product . And so can you talk just a little bit more or talk to us a little bit more just about user growth trends here , particularly as we go into four Q and going forward in the context , I think you said on the call , we're increasing top of funnel growth by diversifying traffic .
[Analyst 1]: Great. Thanks for taking the question. Steve, I wanted to ask about users and then also on product. Can you talk just a little bit more about user growth trends here, particularly as we go into Q4 and going forward? In the context, I think you said on the call, we're increasing top-of-funnel growth by diversifying traffic. Any insights on, call it immediate term or near-term trends on traffic and more details on diversifying traffic progress? On Answers, now that we're embedded in search results, reaching 75 million Wows, would love to hear engagement trends from those users. Are those users who are using Answers more engaged, asking more questions, things along those lines? Thank you.
Ron Okay question, one user growth trends so.
As we mentioned in Q3.
As a nice balance between organic and paid.
External search was basically flat of course that can ebb and flow.
Speaker #6: So any insights on on call it a medium term or near term trends on traffic and and more details on diversifying traffic progress and then on answers .
The product initiatives, including machine translation were the largest contributors.
And our product roadmap, we're still working very hard through that.
Speaker #6: Now that we're embedded in search results , reaching 75 million Wows , we'd love to hear engagement trends from those users . Are they more ?
Marketing today is very broad, but we want to focus on growing our most valuable users in the app and improving ROI there.
Speaker #6: Are those users who are using answers more engaged , asking more questions . Things along those lines . Thank you .
Looking into Q4, we exited Q3 higher than our average so we have a head start.
Speaker #3: Thanks , Ron . Okay . Question one user growth trends . So as we mentioned in Q3 , it was a a nice balance between organic and paid external search was basically flat .
Steve Huffman: Thanks, Ron. Okay, question one, user growth trends. As we mentioned in Q3, it was a nice balance between organic and paid. External search was basically flat. Of course, that can ebb and flow. The product initiatives, including machine translation, were the largest contributors. Our product roadmap, we're still working very hard through that. Marketing today is very broad, but we want to focus on growing our most valuable users in the app and improving ROI there. Looking into Q4, we exited Q3 higher than our average, so we have a head start. Beyond that, we're going to see how the quarter plays out. Thinking bigger and longer term, we're really focused on the product to drive sustainable growth. We have 190 million Americans visit Reddit every week, so the reach is there. Our aim is to increase the frequency of those visits.
Beyond that we're going to see how the quarter plays out.
And thinking bigger and longer term, we're really focused on the product to drive sustainable growth.
Speaker #3: Of course that can ebb and flow . The product initiatives , including machine translation , were the largest contributors . And our product roadmap , we're still working very hard through that .
We have 109 190 million Americans visit read it every week. So the reach is there. Our aim is to increase the frequency of those visits and that really means focusing on that first session user experience to improve retention, which compounds into growth.
Speaker #3: Marketing today is very broad , but we want to focus on growing our most valuable users in the app and improving ROI . There .
As for.
Answers that integration is coming along nicely.
<unk>.
Our goal there is to build a globe.
Speaker #3: We're really focused on the product to drive sustainable growth . We have 109 , 190 million Americans . Visit Reddit every week , so the reach is there .
Global unified modern search experience.
<unk>.
The community vote signals that we see on rat at the authenticity and trust are all differentiators in Red at search.
Speaker #3: Our aim is to increase the frequency of those visits , and that really means focusing on that first session user experience to improve retention , which compounds into growth .
We're currently handling about 20% of our search volume enhancers or in that kind of core search box and that full integration is coming in the coming quarters. We've also expanded read it answers to non English languages, very recently last week, Spanish German Italian and French and Portuguese So I think.
Steve Huffman: That really means focusing on that first session user experience to improve retention, which compounds into growth. As for Reddit Answers, that integration is coming along nicely. Our goal there is to build a global, unified, and modern search experience. The community vote signals that we see on Reddit, the authenticity and trust are all differentiators in Reddit search. We're currently handling about 20% of our search volume in Answers or in that kind of core search box, and that full integration is coming in the coming quarters. We've also expanded Reddit Answers to non-English languages. Very recently, last week, Spanish, German, Italian, French, and Portuguese. I think lots of opportunity there. At a very high level, search is something that many users do in their first session.
Speaker #3: As for answers , that integration is coming along nicely . Our goal there is to build a global , unified and modern search experience .
Lots of opportunity there and then very high level.
Search is something that many users do in their first session and so this is a part of and if the general Onboarding and retention strategy, which is make sure that when users run a search on read it it's great result, and it's differentiated.
Speaker #3: The community vote signals that we see on Reddit . The authenticity and trust are all differentiators in Reddit search . We're currently handling about 20% of our search volume in answers , or in that kind of core search box , and that full integration is coming in the coming quarters .
That should turn into improved retention for us, which is why it's such a priority. Thank you.
Our next question comes from Tom Champion from Piper Sandler. Please go ahead. Your line is open.
Speaker #3: We've also expanded Reddit answers to non-English languages very recently . Last week , Spanish , German , Italian , French and Portuguese . So I think lots of opportunity there and then very high level search is something that many users do in their first session .
Thank you and good afternoon, everyone.
John I was wondering if you could talk about publisher pro is there a revenue opportunity here or is this about.
Bringing new content into the corpus and maybe driving.
Speaker #3: And so this is a part of kind of the general onboarding and retention strategy , which is make sure that when users run a search on Reddit , it's great results .
Steve Huffman: This is a part of the general onboarding and retention strategy, which is to make sure that when new users run a search on Reddit, it's great results and it's differentiated. That should turn into improved retention for us, which is why it's such a priority. Thank you.
Sure.
User engagement on Reddit.
And drew maybe for you curious if you could talk about user marketing, how youre approaching it domestically and in rest of world and just curious if you intend to ramp user marketing spend going forward. Thank you.
Speaker #3: And it's differentiated . That should turn into improved retention for us , which is why it's such a priority . Thank you .
Speaker #1: Our next question comes from Tom champion from Piper Sandler . Please go ahead . Your line is open .
Operator: Our next question comes from Tom Champion from Piper Sandler. Please go ahead. Your line is open.
Speaker #7: Thank you . Good afternoon everyone . Jenna , I was wondering if you could talk about publisher Pro . Is there a revenue opportunity here , or is this about bringing new content into the corpus ?
[Analyst 2]: Thank you. Good afternoon, everyone. Jen, I was wondering if you could talk about Publisher Pro. Is there a revenue opportunity here, or is this about bringing new content into the corpus and maybe driving user engagement on Reddit? Drew, maybe for you, curious if you could talk about user marketing, how you're approaching it domestically and in the rest of the world, and just curious if you intend to ramp user marketing spend going forward. Thank you.
Thanks, Tom I'll take the first one so I think we think about <unk> first and foremost is bringing I think value to the platform.
Speaker #7: And maybe driving user engagement on Reddit and drew , maybe for you ? Curious if you could talk about user marketing , how you're approaching it domestically and in rest of world ?
So read it is better when we have a diverse set of users and entities and leagues and businesses and publishers ad.
Add a lot of vibrancy to our community because they bring content and a lot of our communities are talking about these organizations and so having them engage on our platform.
Speaker #7: And just curious if you intend to ramp user marketing spend going forward ? Thank you .
We think is a really a part and very pro is really positive and <unk> as a way of getting finding giving them a home on rent it from which to do that and and of course, obviously, if we have more engagement on the platform that converts into into revenue.
Speaker #4: Thanks , Tom . I'll take the first one . So I think , you know , we think about Reddit Pro first and foremost as bringing , I think , value to the platform .
Jen Wong: Thanks, Tom. I'll take the first one. I think we think about Reddit Pro first and foremost as bringing value to the platform. Reddit is better when we have a diverse set of users and entities and leagues and businesses and publishers. They add a lot of vibrancy to our community because they bring content, and a lot of our communities are talking about these organizations. Having them engage on our platform is really positive, and Reddit Pro is a way of giving them a home on Reddit from which to do that. Of course, if we have more engagement on the platform, that converts into revenue. Having Reddit Pro also allows businesses to find a home on Reddit. They can have their own profile. They have tools that allow them to find insights, who's talking about their brands, etc., or their products.
Having read a pro also allows businesses to find a home on ready they can have their own profile. They have tools that allow them to find.
Speaker #4: So Reddit is better when we have a diverse set of users and entities and leagues and businesses and publishers , you know , add a lot of vibrancy to our community because they bring content and a lot of our communities are talking about these organizations .
<unk> insight to is talking about their brands et cetera, their products and so that is really helpful. Because those are potentially leads into our advertising platform.
Speaker #4: And so having them engage on our platform , we think is a really a and pro is really positive . And Reddit Pro is a way of giving , finding , giving them a home .
Publisher tools, specifically I think our vision there is to help those publishers be able to bring their content onto read it that can be in multiple formats in tax and video et cetera, and I think we'll just increase the contribution content on <unk> and the vibrancy of the platform. So I think it's accretive and a lot of ways.
Speaker #4: On Reddit , from which to do that . And and of course , obviously if we have more engagement on the platform that converts into into revenue , having read a pro also allows businesses to find a home on Reddit , they can have their own profile .
So on your second question on how we're thinking about the financials of it and where we're focused but right now we're in test mode. I would say that we are looking across a couple of dimensions I would say, we're top of funnel lower funnel in terms of our spend we're doing brand spend at the top we're also looking for conversion down at the bottom and say we're spending in the U S.
Speaker #4: They have tools that allow them to find insights . Who's talking about their brands , etc. or their products . And so that is really helpful because those are potentially leads into our advertising platform .
Jen Wong: That is really helpful because those are potentially leads into our advertising platform. Publisher tools specifically, I think our vision there is to help those publishers be able to bring their content onto Reddit. That can be in multiple formats and text and video, etc., and I think will just increase the contribution, the content on Reddit, and the vibrancy of the platform. I think it's creative in a lot of ways.
Speaker #4: Publisher tools specifically . I think our vision there is to help those publishers be able to bring their content onto Reddit . That could be in multiple formats and text and video , etc.
In international markets right now.
Giving you a couple of bread crumbs over the last couple of quarters on how much. We spent we spent about the low.
Speaker #4: And I think we'll just increase the contribution content on Reddit and the vibrancy of the platform. So I think it's accretive in a lot of ways.
Low single digit percent revenue last quarter. This quarter, we're kind of low mid single digits percent of revenue to be honest with you. We don't have sort of a pinpoint number that we're going after we're really at this point looking at that quality user. We're looking at the ROI and we're looking at the retention curves of people that we're bringing onto the platform. That's really what we're focused on if we.
Speaker #5: So on your second question on how we're thinking about the financials of it and where we're focused , look , right now we're in test mode .
Drew Vollero: On your second question on how we're thinking about the financials of it and where we're focused, right now we're in test mode. I would say that we're looking across a couple of dimensions. We're top-of-funnel, lower-funnel in terms of our spend. We're doing brand spend at the top. We're also looking for conversion down at the bottom. We're spending in the U.S. and international markets. I've given you a couple of breadcrumbs over the last couple of quarters on how much we've spent. We spent about low single-digit % of revenue last quarter. This quarter, we're kind of low to mid-single digits % of revenue. To be honest with you, Tom, we don't have sort of a pinpoint number that we're going after. We're really, at this point, looking at that quality user.
Speaker #5: I would say that we're looking across a couple of dimensions . I would say we're top of funnel , lower funnel in terms of our spend .
Speaker #5: We're doing brand spend at the top . We're also looking for conversion down at the bottom . I'd say we're spending in the US and international markets right now .
Find an area that makes sense, we're not afraid to spend obviously, we have a P&L that we're continuing to show that we can both grow our business and grow it profitably and so we do have that ability to invest I think really right now we're trying to understand how we can really drive that usage on our platform and if we find an area that makes sense.
Speaker #5: You know , I've given you a couple of breadcrumbs over the last couple of quarters on how much we've spent . We spent about low single digit percent of revenue last quarter .
Speaker #5: This quarter , we're kind of low mid digits percent of revenue , to be honest with you , Tom , we don't have sort of a pinpoint number that we're going after .
We're not afraid to invest behind it but if we don't see that we won't be putting a ton of money behind it. So that's that's where we are we're really idea driven at this point and really looking for engagement users over the last couple of quarters, we've been kind of consistent and that's been it could be more than that if we move forward. If we're starting to see the traction in certain markets or with certain initial.
Speaker #5: We're really at this point looking at that quality user . We're looking at the ROI and we're looking at the retention curves of of people that we're bringing on to the platform .
Drew Vollero: We're looking at the ROI, and we're looking at the retention curves of people that we're bringing onto the platform. That's really what we're focused on. If we find an area that makes sense, we're not afraid to spend. Obviously, we have a P&L that we're continuing to show that we can both grow our business and grow it profitably. We do have that ability to invest. I think really right now we're trying to understand how we can really drive that usage on our platform. If we find an area that makes sense, we're not afraid to invest behind it. If we don't see that, we won't be putting a ton of money behind it. That's where we are. We're really idea-driven at this point and really looking for engagement users. Over the last couple of quarters, we've been kind of consistent in that spend.
Speaker #5: That's really what we're focused on . If we find an area that makes sense , we're not afraid to spend . Obviously we have a PNL that we're continuing to show that we can both grow our business and grow it profitably .
It is running.
Speaker #5: And so we do have that ability to invest . I think really right now we're trying to understand how we can really drive that usage on our platform .
Our next question comes from John Cantone from Jefferies. Please go ahead. Your line is open.
Great. Thanks, so much for taking the questions.
Speaker #5: And if we find an area that makes sense , we're not afraid to invest behind it . But if we don't see that , we won't be putting a ton of money behind it .
In your new marketing campaign talk about returns and learnings so far and maybe you could just sort of help compare how engagement for the users who come to you through performance ads compared to your existing users and second as you track engagement of these users acquire.
Speaker #5: So that's that's where we are . We're really idea driven at this point and really looking for engagement . Users over the last couple of quarters , we've been kind of consistent in that spend .
Speaker #5: It could be more than that . If we move forward , if we're starting to see the traction in certain markets or with certain initiatives that we're running .
Drew Vollero: It could be more than that if we move forward, if we're starting to see the traction in certain markets or with certain initiatives that we're running.
Through performance channels, how those conversion to log in compare to overall company averages.
Speaker #1: Our next question comes from John Colantoni from Jefferies . Please go ahead . Your line is open .
Operator: Our next question comes from John Colantuoni from Jefferies. Please go ahead. Your line is open.
Yeah.
Yes, I can take that good questions.
Speaker #6: Great .
Speaker #8: Thanks so much for taking my questions in your new marketing campaign . Talk about returns and learnings so far , and maybe you could just sort of help compare how engagement for the users who come to you through performance ads , compare to your existing users , and second , as you track engagement of these users acquired through performance channels , how does conversion to log in compare to overall company averages ?
[Analyst 1]: Great. Thanks so much for taking my questions. In your new marketing campaign, talk about returns and learning so far. Maybe you could just sort of help compare how engagement for the users who come to you through performance ads compares to your existing users. Second, as you track engagement of these users acquired through performance channels, how does conversion to log in compare to overall company averages? Thanks.
Was hoping to start with some examples so we.
We do we've done a little bit of brand work for example, we did a campaign in France.
<unk> outside of the U S, where our awareness and consideration is lower than in the U S. Because we're newer.
I think we need to make some investment at the top of the funnel.
The very beginning of that journey, but things like from that where the.
The fact that we saw an increase in embedded app installs as well of a brand campaign.
Speaker #8: Thanks .
Speaker #4: I can take that . Good questions . So let me start with some examples . So we , you know , we do .
Which I think is good.
Jen Wong: I can take that. Good questions. Let me start with some examples. We've done a little bit of brand work. For example, we did a campaign in France, in countries outside of the U.S. where our awareness and consideration is lower than in the U.S. because we're newer. We think we need to make some investment at the top of the funnel, very beginning of that journey. Things we liked from that were the fact that we saw an increase in Reddit app installs as a result of a brand campaign, which I think is good. We saw movement in brand awareness and consideration, which I think was also positive and provides a foundation for performance later. Obviously, with things like that, you want to keep on being top of mind, etc., and that's work that you have to continue to do. I think there are some good learnings there.
And we saw them move things in brand awareness and consideration, which I think was also positive and provides a foundation for performance later.
Speaker #4: We've done a little bit of brand work . For example we did a campaign in France . You know countries outside of the US where our awareness and consideration is lower than in the US because we're newer , we think we need to make some investment at the top of the funnel , you know , very beginning of that journey .
With things like that you're going to keep on being top of mind et cetera, and that's work that you have to continue to do but I think there are some good learnings there.
Over time, we can probably talk all how do we think about brand performance as the awareness sticks in some of those new markets outside of the U S. So just to give you. An example of the kinds of things that we're testing on the performance side I'd say.
Speaker #4: But things we like from that were the fact that , you know , we were we saw an increase in in Reddit app installs as a result of a brand campaign , which I think is good .
It takes we've never marketed so until recently, we really haven't spent a lot of money on marketing and so there is some apparatus that you have to build in terms of the infrastructure for marketing and targeting et cetera.
Speaker #4: And we saw movement in brand awareness and consideration , which I think was also positive and provides a foundation for performance . Later .
Speaker #4: Obviously , with things like that , you want to keep on being top of mind , etc. and that's work that you have to continue to do .
The spend that we've done.
Speaker #4: But I think , you know , there are some good learnings there . You know , I think over time we can probably toggle how we think about brand and performance as the awareness sticks in some of those new markets outside of the US .
Ill turn it on has allowed us to learn there there's still more to learn.
Jen Wong: Over time, we can probably toggle how we think about brand and performance as the awareness sticks in some of those new markets outside of the U.S. Just to give you an example of the kinds of things that we're testing. On the performance side, I'd say we've never marketed until recently. We really haven't spent a lot of money on marketing, so there is some apparatus that you have to build in terms of the infrastructure for marketing and targeting, etc. The spend that we've done since we turned it on has allowed us to learn there. There's still more to learn. I think what we're excited about is the opportunity to grow specific audiences. If you look at Reddit in the U.S., for example, we have very robust content in parenting, in sports, in gaming.
I think.
We're excited about is the opportunity to grow specific audiences.
Speaker #4: So just to give you an example of the kinds of things that we're testing on the performance side , I'd say , you know , it takes we've never marketed .
If you look at read it in the U S. For example, we had very robust content inherent gain in sports in gaming, but yet when you look at the audiences that are available in those areas like how many parents there on the U S that could come to read it and have a great experience about half of them.
Speaker #4: So until , you know , recently , we really haven't spent a lot of money on marketing . And so there is some apparatus that you have to build in terms of the infrastructure for marketing and targeting , etc.
Speaker #4: . And so , you know , spend that we've done , you know , since we turned it on is allowed us to learn there .
I don't even think about read it for parenting only a quarter of them are on <unk> today, It's a really big opportunity that's both a little bit of awareness at a little bit of performance that needs to go into that and there's a little bit of work that we're doing and thinking about the landing page experience for that like when we bring them in and show off that we have great parenting content, we bring them in like what.
Speaker #4: There's still more to learn . You know , I think we what we're excited about is the opportunity to grow specific audiences . So if you look at Reddit in the US , for example , we have very robust content in parenting in sports , in gaming , but yet when you look at the audiences that are available in those areas , like how many parents are on the US that could come to Reddit and have a great experience ?
Do we show them first and maybe it.
A variety of different content from different communities from dad, and mom and parenting et cetera. So that's what we're really testing to see where we have the best residence for that audience and as we go through the testing with one audience group, we want to expand to others. We see a lot of verticals, where we have this opportunity. So that's kind of how we're approaching it.
Jen Wong: Yet, when you look at the audiences that are available in those areas, like how many parents there are in the U.S. that could come to Reddit and have a great experience, about half of them don't even think about Reddit for parenting. Only a quarter of them are on Reddit today. It's a really big opportunity. That's both a little bit of awareness and a little bit of performance that needs to go into that. There's a little bit of work that we're doing in thinking about the landing page experience for that. When we bring them in and show off that we have great parenting content, we bring them in, what do we show them first? Maybe it's a variety of different content from different communities, from dadit and momit and parenting, etc.
Speaker #4: About half of them don't even think about Reddit for parenting . Only a quarter of them are on Reddit today . It's a really big opportunity that's both a little bit of awareness and a little bit of performance that needs to go into that .
Okay.
Speaker #4: And there's a little bit of work that we're doing in thinking about the landing page experience for that , like when we bring them in and show off that we have great parenting content , we bring them in like , what do we show them first ?
Our next question comes from now that Khan from B Riley Securities. Please go ahead. Your line is open.
Great. Thank you very much.
Two questions for me one maybe just on the simplified onboarding flow are there any earlier those who can share in terms of how that effort is going and then.
Speaker #4: And maybe it's a variety of different content from different communities , you know , from Dated and mom and parenting , etc. . So that's where we're really testing to see where we have the best resonance for that audience .
Jen Wong: That's where we're really testing to see where we have the best residents for that audience. As we go through the testing with one audience group, we want to expand to others. We see a lot of verticals where we have this opportunity. That's kind of how we're approaching it.
Maybe just another one on.
Traffic from chat box.
Speaker #4: And as we go through the testing , sort of with one audience group , we want to expand to others . We see a lot of verticals where we have this opportunity .
Just trying to understand how meaningful is that.
In terms of your overall traffic in.
Speaker #4: So that's kind of how we're approaching it .
What kind of trends Youre seeing there anything anything you can do specifically to improve that.
Speaker #1: Our next question comes from Naved Khan from B Riley Securities . Please go ahead . Your line is open .
Operator: Our next question comes from Navid Khan from B. Riley Securities. Please go ahead. Your line is open.
Maybe it's not necessarily very important to you.
Great. Thanks for the questions so on simplified Onboarding.
Speaker #6: Great .
Speaker #9: Thank you very much . Two questions from me . One , maybe just on the simplified onboarding flow . Are there any early results you can share in terms of how that effort is going ?
[Analyst 1]: Great. Thank you very much. Two questions for me. One, maybe just on the simplified onboarding flow. Are there any early results you can share in terms of how that effort is going? Maybe just another one on referral traffic from AI chatbots. Just trying to understand how meaningful is that in terms of your overall traffic and what kind of trends you're seeing there. Anything you can do specifically to improve that? Or maybe it's not necessarily very important to you.
We're launching it.
Kind of a revamp of that relatively soon to get early results I think intuitively it makes a lot of sense.
Speaker #9: And then maybe just another one on referral traffic from AI chatbots trying to understand how meaningful is that in terms of your overall traffic and what kind of trends you're seeing there ?
Read it we believe has some of the best content on the Internet, but today, it's behind us.
<unk>.
A couple of screens of interrogation before you actually get to see it and so really streamlining that or even removing it are the things that we're putting into test shortly.
Speaker #9: Anything, anything you can do specifically to improve that? Or maybe it's not necessarily very, very important to you.
And making sure users are landing on feeds that are relevant to them.
Speaker #3: Great . Thanks for the questions . So on simplified onboarding , we're launching a , a kind of a revamp of that relatively soon to get early results .
Steve Huffman: Great. Thanks for the questions. On simplified onboarding, we're launching a kind of a revamp of that relatively soon to get early results. I think intuitively, it makes a lot of sense. Reddit, we believe, has some of the best content on the internet, but today it's behind a couple of screens of interrogation before you actually get to see it. Really streamlining that or even removing it are the things that we're putting in the test shortly and making sure users are landing on feeds that are relevant to them. Jen was alluding to some of that, where users are coming from specific channels with specific interests, making sure the content matches their expectations and what's going to work for them. It's still very early there, but we're excited about where that can go. Second question on traffic from chatbots. They're not a traffic driver today.
John was alluding to some of that where users are coming from specific channels with specific interests, making sure the content matches their expectations and what's going to work for them. So it's still very early there, but we're excited about.
Speaker #3: I think intuitively it makes a lot of sense . Reddit . We believe , has some of the best content on the internet , but today it's behind a couple of screens of of interrogation before you actually get to see it .
Where that can go.
Second question on traffic from chat bots.
Not a traffic driver today.
Speaker #3: And so really streamlining that or even removing it are the things that we're putting in the test shortly . And making sure users are landing on feeds that are relevant to them .
I think our relationships.
With the companies that we work for our work with directly are healthy and we both learned a lot over the last couple of years really the <unk>.
Speaker #3: Jen was alluding to some of that where users are coming from specific channels with specific interests , making sure the content matches their expectations and what's going to work for them .
The value of right its data.
Where.
Where our respective products can go and how we can help each other so I'm looking forward to.
Speaker #3: So it's still very early . There , but we're excited about , you know , where that can go . Second question on traffic from chatbots .
Continuing to work on these things with these partners, but they're not a major traffic driver today.
But I think there's plenty of opportunity there as we continue to work together.
Speaker #3: They're not a traffic driver today . I think our relationships , you know , with with the companies that we work for or work with directly , are healthy .
Steve Huffman: I think our relationships with the companies that we work with directly are healthy, and we've both learned a lot over the last couple of years. Really, the value of Reddit's data and where our respective products can go and how we can help each other. I'm looking forward to continuing to work on these things with these partners, but they're not a major traffic driver today. I think there's plenty of opportunity there as we continue to work together.
Our next question comes from Jason <unk> from Oppenheimer. Please go ahead. Your line is open.
Speaker #3: And we both learned a lot over the last couple of years , really , the the of Reddit's data and where , you know , where our respective products can go and how we can help each other .
Hey, Thanks for taking my questions.
I'll start with that.
However on licensing.
Is there any kind of color or thoughts around progress.
Speaker #3: So I'm looking forward to , you know , continuing to work on these things with these partners . But they're not a major traffic driver today .
Licensing deals with both easier existing partners or non partners and then for those companies that you are kind of involved and lawsuits with.
Speaker #3: But I think there's plenty of opportunity there as we continue to work together .
Perhaps just yet.
Logic. They think they can just take your IP without without paying for it and then just a quick follow up is there any kind of deals you could do to capture identity for logged out users that would help with AD targeting whether it's like a JV or partner. Thanks.
Speaker #1: Our next question comes from Jason Helfstein from Oppenheimer . Please go ahead . Your line is open .
Operator: Our next question comes from Jason Helstein from Oppenheimer. Please go ahead. Your line is open.
Speaker #10: Hi . Thanks for taking the questions . I'll just start with the LM licensing . Is there any kind of color or just thoughts around progress with licensing deals with both , either your existing partners or non partners .
Drew Vollero: Hey, thanks for taking the question. I'll just start with the LLM licensing. Is there any kind of color or just thoughts around progress with LLM licensing deals with both either your existing partners or non-partners? For those companies that you're kind of involved in lawsuits with, perhaps just share what is their logic. They think they can just take your IP without paying for it. Just a quick follow-up. Is there any kind of deals you could do to capture identity for logged-out users that would help with ad targeting, whether it's like a JV or partners? Thanks.
Okay. Thanks for the questions.
On LLM licensing.
No news to share here, our relationships are very healthy and collaborative as I mentioned I think we both learned a lot.
Speaker #10: And then for those companies that you're kind of involved in lawsuits with perhaps just share what what is their logic . They think they can just take , you know your IP without without paying for it .
And I think with.
Better identify the areas, where we can mutually help each other's products and create better consumer experiences.
Speaker #10: And then just a quick follow up , is there any kind of deals you could do to capture identity for logged out users that would help with ad targeting , whether it's like a JV or partners ?
So I'm looking forward to.
Continuing to work through that with our partners there.
Speaker #10: Thanks .
But I think we're in great shape.
Speaker #3: Okay , thanks for the questions on LLM licensing . No news to share here . Our relationships are very healthy and collaborative . As I mentioned , I think we've learned a lot and I think we've , you know , better identified the areas where we can mutually help each other's products and better consumer experiences .
Steve Huffman: Okay. Thanks for the questions. On LLM licensing, no news to share here. Our relationships are very healthy and collaborative. As I mentioned, I think we've both learned a lot, and I think we've better identified the areas where we can mutually help each other's products and create better consumer experiences. I'm looking forward to continuing to work through that with our partners there. I think we're in great shape. Second, on the lawsuits, can't add anything on that. Our complaints are worth a read. There's, I think, lots of information in there. I think you captured their logic, but I don't want to suppose it. At the end of the day, our job is to protect our data for our business, for our users, and for our paying partners. Finally, I think your third question was capturing identity of logged-out users.
Second on the lawsuits.
I can't add anything on that our complaints.
Worth a read.
There's I think lots of information in there.
I think you captured their logic.
But I don't want to suppose it but at the end of the day like our job is to protect our data for our business for our users and for our paying partners.
Speaker #3: So I'm looking forward to , you know , continuing to work through that with our partners . There . But I think we're we're in great shape .
And finally I think your third question was capturing identity of logged out users.
Look all of Red It is really built around this idea of connecting users with their interests.
Speaker #3: Second , on the lawsuits can't add anything on that . Our complaints are worth a read . There's I think , lots of information in there .
So not necessarily what or who they are but what they are into on Reddit and so that's how we're different than some other platforms. We don't need to know who you are or necessarily even how old you are our other demographics, because we look at your explicit interests on read it right are you part of the scheme community probably into <unk>.
Speaker #3: I think you captured their logic , but I don't want to suppose it . But at the end of the day , like our job is to protect our data for our business , for our users and for our paying partners .
Outdoor stuff are you coming from.
Speaker #3: And finally , I think your third question was capturing identity of logged out users . Look , all of Reddit is really built around this idea of connecting users with their interests .
Parenting blog, you'll probably apparent and so that's generally how we think about it and I think it's a little bit of a different model, but I think it's better for user privacy and we can target on a I think a unique but really powerful dimension.
Steve Huffman: Look, all of Reddit is really built around this idea of connecting users with their interests, so not necessarily what or who they are, but what they're into on Reddit. That's how we're different than some other platforms. We don't need to know who you are or necessarily even how old you are or other demographics because we look at your explicit interests on Reddit, right? Are you part of the skiing community? You're probably into outdoor stuff. Are you coming from a parenting blog? You're probably a parent. That's generally how we think about it. I think it's a little bit of a different model, but I think it's better for user privacy, and we can target on, I think, a unique but really powerful dimension.
Speaker #3: So not necessarily what or who they are , but what they're into on Reddit . And so that's how we're different than some other platforms .
Our next question comes from Andrew Boone from Citizens Bank. Please go ahead. Your line is open.
Speaker #3: We don't need to know who you are or necessarily even how old you are or other demographics , because we look at your explicit interests on Reddit .
Thanks, So much for taking my question I wanted to go back to a logged out users and talk about users that are coming in from search can you guys talk about the product roadmap of improving that experience and then one for Jim Jim can you just talk about lower funnel products that youre excited about for 26, what gets you most excited and kind of what's the biggest near.
Speaker #3: Right ? Are you a part of the skiing community ? You're probably into outdoor stuff . Are you coming from a , you know , parenting blog ?
Speaker #3: You're probably a parent . And so that's generally how we think about it . And I think it's a little bit of a different model , but I think it's better for user privacy .
Term impact do you think investors should be thinking about thanks, so much.
Speaker #3: And we can target on a , I think , a unique but really powerful dimension .
Okay. Thanks, Andrew first question on logged out users coming in from search.
Speaker #1: question comes from Andrew Boone , from citizens Bank . Please go ahead . Your line is open .
Operator: Our next question comes from Andrew Boone from Citi. Please go ahead. Your line is open.
Our focus is.
On growing.
[Analyst 3]: Thanks so much for taking the question. I wanted to go back to logged-out users and talk about users that are coming in from search. Can you guys talk about the product roadmap of improving that experience? One for Jen. Jen, can you just talk about lower-funnel products that you're excited about for '26? What gets you most excited, and what's the biggest near-term impact that you think investors should be thinking about? Thanks so much.
Logged in App users and so we do that in two ways.
One of of course, we want to convert some of those search users into logged in and I think there's more we can do there.
I don't think that's going to be our best channel long term just because of what they use their store if they're running a search they might be on the internet to get off the internet, but I do think we can do more there for example, something we've been doing.
This year is showing those users.
Steve Huffman: Okay. Thanks, Andrew. First question on logged-out users coming in from search. Look, our focus is on growing logged-in app users, and we do that in two ways. One, of course, we want to convert some of those search users into logged-in, and I think there's more we can do there. I don't think that's going to be our best channel long-term just because of what the user's doing, right? They're running a search. They might be on the internet to get off the internet. I do think we can do more there. For example, something we've been doing this year is showing those users not just the direct post they're arriving on, but also a Reddit Answers summary of the topic that that's about, and that has helped to increase engagement from those users. There's plenty we can do there.
Not just the direct posts are arriving on but also read it answer a summary of the topics that that's about and that has helped to increase engagement from those uses so there's plenty we can do there, but I actually think the biggest opportunity are the users who are opening the red app for the first time.
These are the users who are coming for the community and conversation product and I think we have the biggest opportunity here to give them a better experience improve their retention which will.
Obviously compound into more outgrowth. So that's the cohort that we care most about.
Second question, John was lower funnel products.
I love talking about the lower funnel and I am excited about a lot of things.
Three.
One is the engine automation, which we've been testing really excited about that to make our platform easier more accessible I think that allows for the thousands of advertisers who arent on red it today some of them small to make it easier for them to activate an onboard onto read it and then allows us to deliver even more performance.
Steve Huffman: I actually think the biggest opportunity are the users who are opening the Reddit app for the first time. These are the users who are coming for the community and conversation product, and I think we have the biggest opportunity here to give them a better experience, improve their retention, which will obviously compound into more app growth. That's the cohort that we care the most about. Second question, Jen, was lower-funnel products.
We love, making the impressions work harder for our customers and delivering more outcomes for them. The second is shopping shopping and something that.
Jen Wong: Oh, I love talking about the lower-funnel, and I am excited about a lot of things. I'll just pick three. One is the engine automation, which we've been testing. Really excited about that to make our platform easier, more accessible. I think that allows for the thousands of advertisers who aren't on Reddit today, some of them small, to make it easier for them to activate and onboard onto Reddit, and then allows us to deliver even more performance. We love making the impressions work harder for our customers and delivering more outcomes for them. The second is shopping. Shopping is something that we're really pleased with the results that shopping or DPA delivers. In a way, the partnership with Smartly that we announced, and a piece of that is also just doing work together on shopping, which we're excited about. Feeling really optimistic of the opportunity around shopping.
We're really pleased with the results that shopping or DPA.
<unk> and then we had.
Our partnership with smartly that we announced in a piece of that is also just doing work together on shopping which we're excited about and so.
<unk> really optimistic of the opportunity around shopping so that's another piece and also how shopping come alive on our platform.
In General and then the third is the ongoing work we're doing in App install you know we've been working on.
Measurement, there and you know the attribution and this journey, becoming a sand and.
I think the very powerful in terms of measurement.
Making sure the advertising to see all the value we're delivering and then two for signals that go into the end now for even stronger optimization for App install.
Jen Wong: That's another piece. Also how shopping can come alive on our platform in general. The third is the ongoing work we're doing in app install. We've been working on our measurement there and the attribution. This journey of becoming a SAN can be very powerful in terms of measurement, making sure that advertisers see all the value we're delivering, and then two, for signals that go into the ML for even stronger optimization for app install.
Our next question comes from Josh Beck from Raymond James. Please go ahead. Your line is open.
Thank you so much for taking the question I wanted to discuss the Onboarding flows a little bit should obviously has historically had quite a few steps in quite a few.
Kind of tiles to choose interest I think the goal is to simplify that I'm just kind of curious as you've done the experimentation with the new flows is it getting to a place where it's maybe closer to <unk> or how should we think about maybe what you've learned so far and how.
Operator: Our next question comes from Josh Beck from Raymond James. Please go ahead. Your line is open.
Should we think about the rollout there.
Thanks, Josh Great question.
Steve Huffman: Thank you so much for taking the question. I wanted to discuss the onboarding flows a little bit. It obviously has historically had quite a few steps and quite a few tiles to choose interests. I think the goal is to simplify that. I'm just kind of curious, as you've done the experimentation with the new flows, is it getting to a place where it's maybe closer to going GA? How should we think about maybe what you've learned so far, and how should we think about maybe the rollout there?
Yes.
Lots of steps, we want to get rid of those steps I think the best.
The best pitch for read it as red its content.
And making sure.
That first fit is amazing.
And one of the big developments that we've had over the last couple of years are.
Since we released the kind of Onboarding as we know what the topic this election.
As our machine learning feed is much more capable and it's actually the top driver of new subreddits subscriptions today, and so getting users into that feed sooner.
Steve Huffman: Thanks, Josh. Great question. Yes, lots of steps. We want to get rid of those steps. I think the best pitch for Reddit is Reddit's content and making sure that first feed is amazing. One of the big developments that we've had over the last couple of years since we released the kind of onboarding as we know it, the topic-based selection, is our machine learning feed is much more capable. It's actually the top driver of new subreddit subscriptions today. Getting users into that feed sooner and letting the feed and the ML do the work of making good community recommendations is important. We're pushing very hard here, getting some things on the task, and then hopefully beyond as soon as possible, because I think this is one of our biggest levers.
And letting.
The feed and the ml through the work of making good community recommendations. So we're pushing very hard here.
Getting some things in the past and then hopefully beyond as soon as possible because I think this is one of our biggest levers.
the best pitch for Reddit is reddit's content, um, and making sure, um,
Yeah.
Our next question comes from Doug Anmuth from Jpmorgan. Please go ahead. Your line is open.
Thanks, so much for taking my question.
And I apologize if this has been.
Asked but theres just been a lot of discussion around how ready shows up on search and on large language model.
Can you just help us understand how that ties to the value of your data licensing deals or do you view these as kind of two more.
you know, that first feed is amazing and 1 of the big developments that we've had over the last couple of years. Um, since we released the kind of onboarding, as we know it, the topic based selection is our, uh, machine learning feed is much more capable. It's actually the top driver of new subreddit subscriptions today and so getting users into that feeder. Um, and letting the the the feed and the ml through the work of making good Community recommendations. So we're pushing very hard here. Um,
Linked are separate items.
Thanks for the question Doug.
Uh, getting some things on the task and then hopefully beyond as soon as possible because I think this is one of our biggest levers.
Look I think our relationships with the kind of search and MLM companies are multifaceted right there.
Operator: Our next question comes from Doug Anmuth from JPMorgan. Please go ahead. Your line is open.
Our next question.
Steve Huffman: Thanks so much for taking the question. I apologize if this has been asked, but there's just been a lot of discussion around how Reddit shows up on search and on large language model results. Can you just help us understand how that ties to the value of your data licensing deals, or do you view these as kind of two more distinct or separate items? Thanks.
Doug andm from JP Morgan. Please go ahead, your line is open.
Products are different.
For sure and so we look at I think all of the different ways that there can be a value exchange.
Thanks so much for taking the question. Um,
Our top priority is growing the <unk> community and conversation product.
So really helping our flywheel go faster and I think look in the other direction. We can help these companies deliver better search results and those moments and.
And I apologize if this has been uh, asked but there's just been a lot of discussion around how ready it shows up on search and on large language models results? Can you just help us understand how that ties to the value of your data licensing, deals or or do you do these kind of 2 more uh distinct or separate items? Thanks.
Steve Huffman: Thanks for the question, Doug. Look, I think our relationships with the kind of search and LLM companies are multifaceted, right? Their products are different, for sure. We look at, I think, all of the different ways that there can be a value exchange. Our top priority is growing the Reddit community and conversation product, really helping our flywheel go faster. I think looking the other direction, we can help these companies deliver kind of better search results in those moments. That's our attitude, or that's our position in this space, is how can we make, how can we use these relationships to grow the core Reddit product? I'd say, I guess the color commentary there is I think our relationships are as healthy and collaborative as ever. I think having interesting conversations on how we can help each other do this.
Uh, thanks for the question Doug. Um,
And so that that's our attitude.
That's our position.
Kind of in this space is how can we make like how can we use these relationships to grow the core wrapped product.
I would say.
Look, I think our our relationships with the kind of search and llm companies are, you know, multifaceted, right. They're they're um, products are different uh, for sure. And so we, we look at I think all of the different ways that there can be a value Exchange.
I guess the color commentary there is I think our relationships are as healthy and collaborative as ever.
So I think having interesting conversations on how we can help each other do this.
Because we've learned so much over the last couple of years. So I think we got into this place before and maybe perhaps.
A simpler place, but now I think we mutually have much more confidence in where our products are growing and then of course I'll just.
those moments and
Everybody is that our core business is ads and <unk>.
That's really the driver.
The <unk> revenue.
Our next question comes from Rich Greenfield from like Chad Partners. Please go ahead. Your line is open.
Hi, Thanks for taking the question.
Steve Huffman: We've learned so much over the last couple of years, where I think we got into this relationship in maybe perhaps a simpler place, but now I think we mutually have much more confidence in where our products are going. Of course, I'll just remind everybody that our core business is ads, and that's really the driver of Reddit's revenue.
I guess, Steve more than anything else, you've talked about 50% of your traffic comes direct and 50% from Google.
And and so that, that's our attitude. Um, or that's our position, um, in this space is how can we make? Like how can we use these relationships to grow? The core Reddit product? Um, say, uh, I guess the color commentary, there is, I think our relationships are as healthy and collaborative is ever. Um, and so we're, I think having interesting conversations on how we can help each other do this. Um, because you know, we've learned so much over the last couple of years. So I think we got into this relationship and, and maybe perhaps a
I guess, if you just think from a very high level what are the top three or five whatever the best number to think about is what are the best drivers of someone becoming.
Ready to App user like what determines that activity because that's obviously, where you make your money and what is the biggest determinant of your success.
A, a simpler place. But now, I think we usually have much more confidence in where our products are going. And then, of course, um, I'll just remind everybody that our our Core Business is ads and you know, that's really the driver of of the of reddit's Revenue.
Operator: Our next question comes from Richard Greenfield from LightShed. Please go ahead. Your line is open.
Thanks for the question Rich I'd say those numbers are approximate.
But.
Steve Huffman: Hi. Thanks for taking the question. I guess, Steve, more than anything else, you talked about 50% of your traffic comes direct and 50% from Google. If you just think from a very high level, what are the top three or top five, whatever the best number to think about is, what are the best drivers of someone becoming a Reddit app user? What determines that activity? That's obviously where you make your money and what is the biggest determinant of your success.
Pretty close.
Look the way somebody comes to read it user and App user as they install the app and they find amazing content.
We see a lot of new app users everyday and plenty of what we call like a reinstall our opportunity for a reengagement everyday and so this is why I keep.
Hi, thanks for taking the question. Um, you know, I guess Steve more than anything else, you know, you talked about, 50% of your traffic comes Direct in 50% from Google.
Bringing your and our team's attention back to that first open experience and making sure there are no barriers between.
I guess if you just think from a very high level, what are the top 3 or top 5? Whatever the best number to think about is what are the best drivers of someone becoming a Reddit app user? Like, what determines that activity because that's obviously where you make your money and what is the biggest determinant of your success?
Steve Huffman: Thanks for the question, Rich. I'd say those numbers are approximate, but pretty close. Look, the way somebody becomes a Reddit user and app user is they install the app and they find amazing content. We see a lot of new app users every day, and plenty of what we call a reinstall or an opportunity for a re-engagement every day. This is why I keep bringing your and our team's attention back to that first open experience and making sure there are no barriers between the user and seeing content on Reddit. The biggest driver of retention is following subreddits that are relevant to your interests. It's not rocket science. Reddit is very, very broad, and we don't always have a lot of information coming in, so we do have to do that work. Our machine learning there has gotten much better.
The user and seeing content on right. It is the biggest driver of retention is following sub write ups that are relevant to your interests and so it's not rocket science not read it is very very broad and we don't always have a lot of information coming in.
Thanks for the question Rich. I'd say those numbers are approximate. Um
uh, but
And so we do have to do that work our machine learning there has gotten much better and then generally earlier describing opportunities, where we know where a user is coming from from a particular content source, whether it's category source, so counting our gaming our TV shows or whatever.
To give them a tailor feed as well and so that's really the way that we think about it I think we have enough shots on goal here everyday that improving this process will make the whole Reddit machine run much more efficiently.
pretty close. Um, look the way somebody comes to Reddit user and app user is, they install the app and they find amazing content. Um, we see a lot of new app users every day. Um, and plenty of what we call like a a, a reinstall, or an opportunity for a re-engagement every day. And so, this is why I keep, you know, bringing your and our team's attention back to that first open experience and making sure there are no barriers between um, the user and seeing content on Reddit because the biggest driver of retention is following subreddits that are relevant to your interests.
Okay.
Our next question comes from Benjamin Black from Deutsche Bank. Please go ahead. Your line is open.
Steve Huffman: Jen was earlier describing opportunities where we know where a user is coming from, from a particular content source, whether it's a category source, so call it parenting or gaming or TV shows or whatever, to give them a tailored feed as well. That's really the way that we think about it. I think we have enough shots on goal here every day that improving this process will make the whole Reddit machine run much more efficiently.
Great. Thank you for taking my questions John.
John I guess could you talk on top of the operating environment Youre seeing as we head into the <unk> holiday shopping season, and what assumptions have you baked into the guide from a macro perspective, and then secondly drew one on margins I guess no. Good deed goes unpunished, you've already hit your margin targets.
And so it's not rocket science now. Reddit is very, very broad, and we don't always have a lot of information coming in. Um, and so we do have to do that work. Our machine learning there has gotten much better, and then Jen was earlier describing opportunities where we know where our user is coming from, um, from a particular content source, you know, whether it's the category source. So we call it parenting, or gaming, or TV shows, or whatever.
You laid out the <unk>.
So when we look ahead your incremental margins are sort of hovering around the 60% range. How should we think about potentially it could have an updated margin targets. Thank you.
Um, to give them a tailor feed as well. And so that's really the the way that we think about it. I think we have enough shots on goal here every day that you know, improving this process will make the whole Reddit machine. Run much more efficiently.
Operator: Our next question comes from Benjamin Black from Deutsche Bank. Please go ahead. Your line is open.
Okay, Great I can take the first one.
Jesse Rose: Great. Thank you for taking my questions. Jen, I guess, can you talk to us a little about the operating environment you're seeing as we head into the Q4 holiday shopping season? What assumptions have you baked into the guide from a macro perspective? Secondly, Drew, one on margins, I guess, no good deed goes unpunished. You already hit your margin targets that you laid out, the IPO. When we look ahead, your incremental margins are sort of hovering around the 60% range. How should we think about potentially sort of an updated margin target? Thank you.
Our next question comes from Benjamin black from Deutsche Bank. Please go ahead. Your line is open
Look I'd say the macros for us the market feels largely stable broadly stable, but I'd say theres low visibility.
I'd say tariffs are on the minds of some of our customers' efficiency is important we're certainly delivering that.
And we're definitely counseling, our customers as they're navigating.
Through a very dynamic environment and as they're thinking about investment across the funnel I mean, the great news is we have a full funnel offering. So we can meet their needs I think.
Jen Wong: I agree. I can take the first one. Look, I'd say the macros, for us, the market feels largely stable, broadly stable. I'd say there's low visibility. Tariffs are on the minds of some of our customers. Efficiency is important. We're certainly delivering that. We're definitely counseling our customers as they're navigating through a very dynamic environment. As they're thinking about investment across the funnel, the great news is we have a full funnel offering, so we can meet their needs, I think, broadly. I think it's broadly been stable in Q3.
Great. Um thank you for taking my questions. Um Jen I guess could you could you talk and talk a little about the operating environment you're seeing as we head into the 4q holiday shopping season and you know what assumptions that we baked into the guide from a macro perspective and then secondly Drew 1 on margins? I guess you know no good deed goes on punished. You know you already hit your margin targets that you laid out the IPO. So when we look ahead, your incremental margins are sort of hovering around the 60% range. You know, how should we think about potentially sort of an updated margin targets? Thank you.
Probably.
So I think it's it's probably been stable.
Great.
Then on the on the margin side of things Youre right.
Our our targets at 40% margin that we talked about that was our north star during the IPO, It's nice to hit it six quarters in so that is something the guys you probably picked up on in the fourth quarter is even higher than 40.
I agree. I think the first 1 um look I say the macros for us the the market feels largely, stable, broadly stable. But I'd say there's low visibility, um, I'd say tariffs on the minds of some of our customers.
How we think about it is in the North star is going to be something more than 40, we're thinking that it's probably in the $50 range. That's our north Star I think it's a couple of things are important on the day to day and kind of a near and mid term, obviously, we want margins to be higher and they will go higher it wont be every quarter I think that's the piece that I want to make sure that.
Efficiency is important. We're certainly delivering that and we're definitely counseling our customers as they're navigating, um, you know, through a very Dynamic environment and as they're thinking about investment, you know, across the funnel, I mean, the great news is we have a full funnel offering so we can meet their needs, I think, um, you know, broadly. Um, so that's I think it's, it's broadly been stable in Q3
Steve Huffman: Ben, on the margin side of things, you're right. That was our target, that 40% margin that we talked about. That was our North Star during the IPO. It's nice to hit it six quarters in. That is something the guide is you probably picked up on in the fourth quarter is even higher than 40%. I think how we think about it is, and the North Star is going to be something more than 40%. We're thinking that it's probably in the 50% range. That's our North Star. I think a couple of things are important on the day-to-day and kind of the near and midterm. Obviously, we want margins to be higher, and they will go higher. It won't be every quarter. I think that's the piece that I want to make sure that people understand here.
People understand here, we're really building a business and we will invest in things where it makes sense right and do you have a 90 gross margin you just have the ability here to really do special things. If you can get growth and so there may be times that we will have to invest in our business periodically I.
I think right now, we're doing fine and things continue to scale well, but.
For our North Star I think 50 makes sense I think in the medium term will be focused on better than 40%, that's how we'll be thinking about it.
And then remember that our business will always be that way quarter to quarter, We reserve the right to be strategic to grow our business.
Okay.
Okay.
Steve Huffman: We're really building a business, and we'll invest in things where it makes sense, right? When you have a 90% gross margin, you just have the ability here to really do special things if you can get growth. There may be times that we'll have to invest in our business periodically. I think right now we're doing fine, and things continue to scale well. For a North Star, I think 50% makes sense. I think in the medium term, we'll be focused on better than 40%. That's how we'll be thinking about it. Remember that our business won't always be that way quarter to quarter. We reserve the right to be strategic to grow our business.
Our next question comes from Ken <unk> from Wells Fargo. Please go ahead. Your line is open.
Thank you two if I may please.
Two probably directed to Jen first could you talk about it first impressive expansion of the advertiser.
Again this quarter can you speak to the whether it's self serve has become a meaningful part of.
That advertising advertiser count expansion, yet or when it may become meaningful and then maybe a second one. Please probably also for you John is you talked about.
I think it's a couple things are important on the day-to-day and kind of a near and Midterm, you know, obviously we want margins to be higher and they will go higher, it won't be every quarter. I think that's the piece that I want to make. Sure that people understand here. We're we're really building a business and we'll invest in things where it makes sense, right? You have a 90 gross margin. You just have the ability here to really do special things if you can get growth and and so there may be times that we'll have to invest in our business, periodically. Um, I think right now we're doing fine and and things continue to scale well, but, you know, for for a Northstar, I think 50 makes sense. I think in the medium term will be focused on better than 40, like that's how we'll be thinking about it. Um, and then remember that our business won't always be that way quarter to quarter. We reserve the right to be strategic, to grow our business.
Operator: Our next question comes from Ken Gawrelski from Wells Fargo. Please go ahead. Your line is open.
Our next question.
About how marketers may use you for Geo regenerative.
Steve Huffman: Thank you. Two, if I may, please. Two, probably directed to Jen. First, could you talk about, I mean, first, impressive expansion of the advertiser count again this quarter. Jen, can you speak to whether self-serve has become a meaningful part of that advertiser count expansion yet, or when it may become meaningful? Maybe a second one, please, probably also for you, Jen, is could you talk about how marketers may use you for GEO, like generative AI optimization? Is this a major use case for your advertisers? Could you walk us through your pitch? Thank you.
Areski from Wells Fargo, please go ahead. Your line is open.
Optimism optimization.
Our position is this a major use case for your advertisers and.
Could you walk us through your pitch. Thank you.
Sure.
On self serve.
You know that we do a self serve today, but it's not a big part of our business.
We want to have a self serve offering and I think the end to end automation work that we're doing will be.
Right step in that direction for more advertisers, who want to operate on a self serve basis, but it has been the focus I mean, our focus is on.
Thank you, uh, 2. If I may please, um, uh, 2 probably, uh, directed to, to Jen. Um, first, could you talk about? I mean, first impressive expansion of The Advertiser account, again, this quarter, Jen. Can you speak to the, whether whether it's self-served, is become a meaningful part of the of that advertise Advertiser account expansion yet, or when it may become meaningful. And then maybe a second 1, please. I'll probably also for you. Jen is, could you talk about uh, about how marketers may use?
The advertisers, who really have a lot of significant budget, who do want somebody to talk to you.
Jen Wong: Sure. On self-serve, we do have self-serve today, but it's not a big part of our business. We want to have a self-serve offering, and I think the end-to-end automation work that we're doing will be a great step in that direction for more advertisers who want to operate on a self-serve basis. It has been the focus. Our focus is on the advertisers who really have a lot of significant budget, who do want somebody to talk to in a lot of cases. They're in our managed segment, either our large customer segment, mid-market, or even our managed SMB segment, where they provide some light counsel to them. We're in what I would call a hybrid configuration, where we're kind of both hands on keyboard working together in a light way.
You for geo like generative. Uh, a Optum optimization aif optimization. Is this? A major use case for your advertisers and and if you walk us through your pitch, thank you.
In a lot of cases, so they're in our manage segment either our large customer segment mid market or even our managed F&B segment, where they provide some light council to them and we're in like what I would call a hybrid configuration, where we're kind of both hands on keyboard working together in a in a in a light way.
Our strategy is to maximize the opportunity across the biggest part of the market and that fits right now in in the manage segment and to optimize like.
Put the customer in the right service channel that maximizes their experience and their ability to spend on R&D. So we're not religious about self serve I think we're really focused on the right service model for their right advertiser can be successful on the platform and get what they need.
Uh sure, um, so on self-serve, uh, you know that we, we do have self-serve today but it's not a big part of our business. Um, it it, it, we want to have a self-serve offering and I think the end-to-end automation work that we're doing, will be a great step in that direction, for more advertisers, who want to operate on a self-serve basis, but it has been the focus. I mean, our focus is on, you know, the advertisers who really have a lot of of significant budget who do want
But I think <unk> is something that we're interested in as we build more automation.
Second one was about optimizing for harp, I guess L and and.
Jen Wong: Our strategy is to maximize the opportunity across the biggest part of the market, and that sits right now in the managed segment, and to optimize, put the customer in the right service channel that maximizes their experience and their ability to spend on Reddit. We're not religious about self-serve. I think we're really focused on the right service model for the right advertiser to be successful on the platform and get what they need. I think self-serve is something that we're interested in as we build more automation. The second one was about optimizing for, I guess, LLMs. Reddit's corpus of information is clearly incredibly valuable and helpful to LLMs because it's human conversation. That's fresh. It's authentic. It's just distinctive. There's nothing like it. We know that LLMs appreciate Reddit's conversation.
Look I think on.
Brent at Corpus of information is clearly incredibly valuable and helpful to ellen's because it's human conversation that's fresh it's authentic it's just distinct there's nothing like it and.
Somebody to talk to and you know, in some in a lot of cases. So they're in our managed segment either, our large customer segments, mid-market, or even our managed SMB segment you know, where they or provide some light Council to them. And we're in like what I would call a hybrid configuration where we're kind of both hands on keyboard working together in a, in a, in a light way, our strategy is to maximize the opportunity across the biggest part of the market and that sits right now in in, in the manage segment and to optimize like, put the customer in the right service channel that maximizes their experience and their ability to spend on Reddit. So we're not, we're
And we know that <unk> appreciate it.
<unk>.
Marketers come to us they are coming to us because that conversation is on Reddit and for the opportunity to find customers and engage those customers in an environment, where that conversation is happening because when they're in that environment on bread. It they are getting the engagement converting to outcomes that.
Religious about self-serve. I think we're really focused on the right service model for the right Advertiser to be successful on the platform and get what they need. Um, but I think self is something that we're interested in, you know, as we build more automation, the second 1 was about optimizing for for, I guess, L LMS and you know, look, I I think, um,
Help them grow their business. So I don't think it's about <unk>.
Influencing <unk>, that's a secondary product of our core amazing platform. The conversation entity with the marketers are getting us real value from the red It platform itself in terms of converting that engagement to real business outcomes for them.
Jen Wong: When marketers come to us, they're coming to us because that conversation is on Reddit and for the opportunity to find customers and engage those customers in an environment where that conversation is happening, because when they're in that environment on Reddit, they're getting the engagement converting to outcomes that help them grow their business. I don't think it's about the influence in LLMs. That's a secondary product of our core amazing platform, the conversations and communities. What the marketers are getting is real value from the Reddit platform itself in terms of converting that engagement to real business outcomes for them. It just so happens that that environment of that conversation is also appreciated by LLMs. That environment is on Reddit.
Reddit's Corpus of information is clearly incredibly valuable and helpful to LMS because it's human conversation, that's fresh, it's authentic, it's just distinctive, there's nothing like it and um and we know that LMS appreciate right? It's, you know, conversation.
It just so happens that that environment of that conversation is also appreciated by all lands, but that environment is on rent it.
Yeah.
Our next question comes from Rohit Kulkarni from Roth Capital Partners. Please go ahead. Your line is open.
Hey, Thank you a couple of questions one of them using a mix.
Engagement has also been a number of users surfacing.
Can you talk about how the mix has evolved over time.
A couple of years, maybe in terms of people who actively contribute horses, we just become the medical humor.
But when marketers come to us, they're coming to us because that conversation is on Reddit. And for the opportunity to find customers and engage those customers in an environment where that conversation is happening. Because when they're in that environment on Reddit, they're getting the engagement converting to outcomes that help them grow their business. So I don't think it's about, you know, the influence and LMS—that's a secondary product of our core. Amazing platform, the conversations and communities with the marketers are getting is real value from the Reddit platform itself in terms of converting that engagement to real business outcomes for them.
And between people, who amplified through working on shifting content.
Second is on all of these drivers on the underlying ARPA growth.
It just so happens that that environment of that conversation is also appreciated by LMS, but that environment is on Reddit.
Operator: Our next question comes from Rohit Kulkarni from Roth Capital Partners. Please go ahead. Your line is open.
Oh, how much is AD load contributing to our growth.
Jesse Rose: Hey, thank you. Couple of questions. One on user mix, as in engagement has risen in number of users ever since. Can you talk about how the mix has evolved over time over the last couple of years, maybe in terms of people who actively contribute versus who just come in there to consume, or then there are those in-between people who amplify through voting and sharing content? Second is on RFU, any drivers on underlying RFU growth? How much is ad load contributing to RFU growth versus other factors? Thank you.
Our next question comes from Rohit, coccari from Roth Capital Partners, please go ahead, your line is open.
Other factors.
Thanks for the questions and user mix yeah.
There's been some movement there, let's say.
And a fairly consistent range.
It's something we think a lot about we haven't talked about it much on this call, while we did a little bit to.
Our strategy around contribution is when we say that we're really referring to helping new users post successfully on rabbit.
And eliminating like roadblocks, there one of which were working very hard on which is.
When a user shows up to read it and they want to contribute but they may not be aware that there's a bunch of rules in the community, they're writing too and so we try to catch that early in the journey to give them feedback or find them other places to submit.
Steve Huffman: Thanks for the questions. On user mix, yeah, there's been some movement there. I'd say it's in a fairly consistent range. It's something we think a lot about. We haven't talked about it much on this call. Our strategy around contribution is, when we say that, we're really referring to helping new users post successfully on Reddit and eliminating roadblocks there. One of which we're working very hard on, which is when a user shows up to Reddit and they want to contribute, but they may not be aware that there's a bunch of rules in the community they're writing to. We try to catch that early in the journey to give them feedback or find them other places to submit. That's been testing very well and improving kind of the contributor mix there. Reddit does have multiple ways of contributing.
Forces we just come in there to consume or when there are those in between people who, um, you know, amplify through voting and sharing, uh, content. And and then second is on our to any drivers on the, underlying, our food growth. Um, how much is AD load? Uh, contributing to our food growth versus uh, other factors? Thank you.
Thanks for the questions.
Movement there. Um, I'd say it's.
So thats been testing very well.
In a fairly consistent range. Um,
And improving kind of the contributor mix there.
And then read it does have multiple ways of contributing.
You described a cohort of users that we.
We colloquially call. The lurkers on these are people, who don't read comments, but they vote.
The voting is very important for ranking.
And you know today underwrite it you can't leave.
We have a comment or a vote unless you are locked in and so getting more people logged in and so this brings us back of course to Onboarding and those flows getting people through log them more successfully relevant communities more successfully removing barriers to contribute and finding content. They like to increase the voting engagement are all things that kind of.
It's something we think a lot about uh we haven't talked about it, much on this call. Well, we did a little bit to um our strategy around contribution is when we say that we're really referring to helping new users post successfully on Reddit, um, and eliminating like roadblocks there. Um, 1 of, which we're working very hard on, which is, uh, when a user shows up to Reddit and they want to contribute, but they might may not be aware that there's a bunch of rules in the community, they're writing to. And so we try to catch that early in the journey to give them feedback or find them other places uh to submit. Um so that's been testing very well um and improving kind of the the contributor mix there.
Steve Huffman: You described a cohort of users that we colloquially call the lurkers. These are people who don't write comments, but they vote. The voting is very important for ranking. Today on Reddit, you can't leave a comment or vote unless you're logged in. Getting more people logged in brings us back, of course, to onboarding and those flows, getting people through logged in more successfully, relevant communities more successfully, removing barriers to contribute, and finding content they like to increase the voting engagement are all things that kind of push us in, I think, in the healthy direction. I think there's a lot of opportunity here because there's friction at each of those steps. The second question, Jen, was RFU and ad load.
Push us in the I think in a healthy direction I think theres a lot of opportunity here because there's no.
Friction at each of those steps.
And then the second question churn was <unk> and Abbott, Yes, sure I can take that one on arcos. So.
Just a reminder, our strategy is to make every impression more valuable.
By delivering hard outcomes more class more conversions in Q3, we saw E. C. P M grow, but the quarter had impressions grow.
Was the bigger contributor.
Three components that drove the impressions.
One is our user engagement.
And then also <unk>.
Ads and comments and then also.
Jen Wong: Yeah, sure. I can take that one on RFU. Just a reminder, our strategy is to make every impression more valuable by delivering hard outcomes, more clicks, more conversions. In Q3, we saw ECPM grow, but the quarter had impressions grow, which was a bigger contributor. There are three components that drove the impressions. One is user engagement, and then also ads in comments, and then also a temporary operating point that we had when we had a balance between balancing supply and demand in ad load. To address ad load directly, our ad load overall, if you look at the feed compared to peers, is much lower than our peers. It is not a core part of our strategy to increase ad load. Our strategy is to make every impression more valuable and to design ad units for spaces where we don't have ads, like ads in comments.
At temporary operating point that we had when we had a balance between balancing supply and demand in ad load.
And then Reddit does have multiple ways of contributing. Um, you describe a cohort of users that, uh, we colloquially call the lurkers. Um, these are people who don't write comments, but they vote. Um, and the voting is very important for ranking. Um, and you know, today on Reddit, you can't, you know, leave a comment or vote unless you're logged in. So, getting more people, um, logged in. So, this brings us back, of course, to onboarding. And those flows getting people through logged in more successfully, relevant communities more successfully, removing barriers to contribute, and finding content that they like to increase the voting and engagement are all things that kind of push us in the, I think, in the healthy direction. I think there's a lot of opportunity, uh, here because there's, um, you know, frightening at each of those steps. Um, and then the second question Jen was, uh, had about... Yeah, sure. I can take that one on.
Just to be just to address AD load directly so our AD load overall, if you look at the sea compared to peers.
Is much lower than our peers and it is not a core part of our strategy to increase AD load. Our strategy is to make every impression more valuable and to design AD units for spaces, where we don't have that like ads and comments.
Question more valuable, uh, by delivering heart outcomes, more clicks more conversions. Um, in Q3 we saw ecpm grow but the quarter um, had Impressions grow, uh, was a bigger contributor.
It is an operating point that we do use when we have supply demand tightness to make sure that the marketplace is consistent for our advertisers.
And so we didn't use that lever temporarily in Q3, but we turned it back. So that's a so that's kind of the contributors of impressions.
There's 3 components that drove the, you know, Impressions, um, 1 is uh, user engagement. Um, and then also, uh, adds in comments. And then also, uh, at temporary operating point that we have, when we had a balance between balancing supply and demand in in ad load,
Our next question comes from Youssef Squali from <unk> Securities. Please go ahead. Your line is open.
Hi, This is Robert on for you Cisco there. Thanks for taking our question just one from me it seems like.
New types of AI content arising and users are also are consuming more video. So just curious what <unk> strategy is in this environment.
Jen Wong: It is an operating point that we do use when we have supply-demand tightness to make sure that the marketplace is consistent for our advertisers. We did use that lever temporarily in Q3, but we turned it back. That's kind of the contributors of impressions in the quarter.
Just to be just to address abloh directly so our ad load overall. If you look at the fee compared to peers is much lower than our peers and it is not a core part of our strategy to to increase ad load our strategies to make every impression more valuable and to design ad units for spaces where we don't have that like ads and comments.
If you focus on building out answers.
Integrating publishers does that imply that the focus of content is still going to be predominantly tax based thanks.
It is an operating point that we do use, when we have Supply demand tightness to make sure that the marketplace is consistent for our advertisers. Uh, and so we did use that lever temporarily in Q3, but we turned it back. So that's uh, so that's kind of the contributors of impressions in the course.
Uh huh.
Operator: Our next question comes from Yousef Scully from JMP Securities. Please go ahead. Your line is open.
Great question.
Our next question.
Comes from Yousef.
So there's.
There's a couple of dimensions to this.
From truist Securities, please.
Go ahead. Your line is open.
Jesse Rose: Hi, this is Robert on for Yousef Scully. Thanks for taking our question. Just one for me. It seems like new types of AI content are rising, and users are also consuming more video. Just curious what Reddit's strategy is in this environment. If you're focused on building out Answers and integrating publishers, does that imply that the focus of content is still going to be predominantly text-based? Thanks.
Our very high level positioning for Red hat and the AI era is that readiness for humans by him.
And so yes, there's plenty of AI content on the Internet.
And but we won't read it to be a place where humans talked to other humans or people talk to people about the stuff that they're interested now.
Now every post on rate at which they can be a link tax image video mean gifts.
Hi. This is Robert on for you. Say, thanks for taking our question. Um, just 1 for me. It, it seems like, you know, new types of AI content, arising, and users are also consuming more video. So, just curious what Reddit strategy is in this environment. Um, and, you know, if you're focused on building out answers and and integrating Publishers, does that imply that the focus of content is still going to be predominantly text-based. Thanks.
Steve Huffman: Great question. There's a couple of dimensions to this. Our very high-level positioning for Reddit in the AI era is that Reddit is for humans by humans. Yes, there's plenty of AI content on the internet. We want Reddit to be a place where humans talk to other humans or people talk to people about the stuff that they're interested in. Every post on Reddit, which can be a link, text, image, video, meme, GIF, is really a prompt for conversation. In terms of what the post is, we don't have a strong feeling there. We just want more posts, and we want to continue to expand the post types that Reddit supports, kind of evolving with the time. The developer platform, which we haven't talked much about today, is one of our big ways of doing that. We're seeing all sorts of new posts on Reddit.
It's really a prompt for conversation so in terms of what the post is.
uh,
great question. Um,
We don't have a strong feeling there.
so um, there's a couple Dimensions to this.
We just want more posts and we want to continue to expand.
The post types that read it support.
So kind of evolving with the time and developer platform, which we haven't talked much about today.
So our our our very high level positioning for Reddit and the AI era is that Reddit is 4 humans by humans. And so yes there's plenty of AI content on the internet. Um,
It's one of our big ways of doing that so we're seeing all sorts of new posts on rabbit users have retail Paul. So we've got lots of gains there is stock charts, all sorts of things, but really all of these things surface pumps for conversation.
And we want Reddit to be a place where humans talk to other humans, or people talk to people about the stuff that they're interested in.
Video on read it as is and has been for a while our fastest growing content type.
Even though we don't think I've read it as a video platform I think there's a lot of headroom for video on Red both as post which is what we see today, but also using video and then potentially down the road audio just as a means of communication.
There is a kind.
Kind of very uniquely Reddit way of doing video one of the things that I'm very excited about as we did our first video.
Steve Huffman: Users have rebuilt polls. We've got lots of games. There's stock charts, all sorts of things. All of these things serve as prompts for conversation. Video on Reddit is and has been for a while our fastest-growing content type. Even though we don't think of Reddit as a video platform, I think there's a lot of headroom for video on Reddit, both as posts, which is what we see today, but also using video and then potentially down the road audio just as a means of communication. I think there is a kind of very uniquely Reddit way of doing video. One of the things that I'm very excited about is we did our first video AMA just a couple of weeks ago. This was done by NASA, so you can find it.
Just a couple of weeks ago. So this was done by NASA. So you can find it.
And so in this case NASA hosted the MAA.
You know, we don't have a strong feeling there. Um, we just want more posts and we want to continue to expand, um, you know, the post types that Reddit supports. Um, so kind of evolving with the times and the developer platform, which we haven't talked much about today, is one of our big ways of doing that. So, we're seeing all sorts of new posts on Reddit. Um, users have rebuilt polls, we've got lots of games, there's stock charts, all sorts of things. But really, all of these things, um, serve as prompts for conversation.
But all of our astronauts answered in video within the Red of comments I think this is a really nice way of letting people kind of like really bring their charisma to these moments and video comment applies as kind of an interesting marriage of video the modern content format, but in the context of a conversation as opposed to.
Kind of a long form short form influence or stuff you might see on other platforms. So we just try to think like what's the read it version of this content format and I think there might be.
Some some opportunity there and then in terms of publishers yellow text isn't going anywhere.
Steve Huffman: In this case, NASA hosted the AMA, but all of their astronauts answered in video within the Reddit comments. I think this is a really nice way of letting people really bring their charisma to these moments. Video comment replies is kind of this interesting marriage of video, the modern content format, but in the context of a conversation, as opposed to the long-form, short-form influencer stuff you might see on other platforms. We always try to think, what's the Reddit version of this content format? I think there might be some opportunity there. In terms of publishers, text isn't going anywhere. Text, you can read quietly. Again, it serves as good as anything as a prompt for conversation. Now with AI, you can turn text into audio for background listening. I don't think video or AI video replaces text any more than movies replaced books.
Tax do you can you can read quietly again it serves as good as anything that's a proper conversation now with AI you can turn text in the audio for background listening.
And so I don't think you know.
Video or AI video replaces taxed anymore than movies replaced books I'm really what happens is the content Pi just keeps getting bigger and bigger and we want to make sure everything works on our radar.
Uh video on Reddit is is and has been for a while our fastest growing content type. Um even though we don't think of Reddit as a video platform, I think there's a lot of Headroom for video on Reddit both as posts which is what we see today, but also using video and then potentially down the road audio, just as a means of communication. Um, I think there is a um kind of very uniquely Reddit way of doing video. Uh 1 of the things that I'm very excited about is we did our first video AMA, uh just a couple of weeks ago. So this was uh done by NASA. So you can find it and you know, in this case uh, NASA hosted the AMA, um but all of their astronauts answered in video within the Reddit comments. I think this is a a really nice way of letting people kind of like really bring their Charisma to these moments in video. Comment replies is kind of this interesting marriage of video. The modern content format but in the context of a conversation, you know, as opposed to
Okay.
Hey, Julien this is Jesse I think we're kind of bumping up in time here. So I just want to thank everyone for joining we appreciate it refer to speaking again soon thanks al Thanks, everyone.
You know, kind of a long form, short, form, influencer stuff, you might see on other platforms. So we always try to think like what's the Reddit version of this content format and I think there might be, um, you know, some some opportunity there. And then in terms of Publishers, yeah, look text isn't going anywhere. Um,
This concludes that at Q3 2025 earnings call you may now disconnect.
Steve Huffman: What happens is the content pie just keeps getting bigger and bigger, and we want to make sure everything works on Reddit.
Uh, text you can read quietly again. It serves as good as anything as a prompt for conversation. You know, now with AI, you can turn text into audio for background listening. Um, and so I don’t think, you know, video or AI video replaces text any more than movies replaced books.
Really, what happens is the the content pie just keeps getting bigger and bigger and we want to make sure everything works on Reddit.
Jesse Rose: Hey, Julian, this is Jesse. I think we're kind of bumping up in time here. I just want to thank everyone for joining. We appreciate it. Look forward to speaking again soon.
Steve Huffman: Thanks, all.
Jen Wong: Thanks, everyone.
Operator: This concludes Reddit's Q3 2025 earnings call. You may now disconnect.
Hey, Julian, this is Jesse. I I think we're kind of bumping up in time here, so I just want to thank everyone for joining. We appreciate it. Look forward to speaking again soon. Thanks all. Thanks, everyone.
This concludes the Reddit Q3 2025 earnings call. You may now disconnect.