Reddit forecasts quarterly revenue above estimates on growing ad spend

(Reuters) – Reddit forecast third-quarter revenue above Wall Street estimates on Tuesday, a sign that a recovering digital ad market would draw new advertisers to the social media platform.

The company said it expects third-quarter revenue to be between $290 million and $310 million, compared with analysts’ average estimate of $278.7 million, according to LSEG data.

The results, the company’s second after Reddit went public in March, follows bigger rival Meta (NASDAQ:)’s upbeat second-quarter revenue and rosy sales forecast, driven by robust digital-ad spending.

The earnings also fan optimism that Reddit’s content licensing deals with Alphabet (NASDAQ:)’s Google and Microsoft-backed OpenAI are paying off despite a fiercely competitive social media market, as it looks to diversify its revenue streams.

Reddit also signed deals with sports leagues, including the National Basketball Association and the National Football League in July, to attract a loyal sports audience and in turn create opportunities for advertisers.

The company’s daily active unique visitors increased 51%, to 91.2 million, in the second quarter ended June 30.