Reddit predicts surprise core profit in second quarter, shares surge
2024.05.07 17:28
(Reuters) -Reddit predicted that it could post an adjusted core profit in the second quarter on the back of strong user growth and an uptick in the advertising market, sending its shares up more than 16% in extended trading on Tuesday.
The forecast contrasted with Wall Street expectations of a loss. Reporting its first results since going public in March, the company also forecast revenue for the second quarter that was widely above market estimates.
Reddit is also trying to diversify revenue by licensing its user-generated content for the training of data-hungry AI models. It signed a deal with Google (NASDAQ:) earlier this year that is worth about $60 million per year.
The results follow strong earnings from rivals including Snap and fan optimism that marketers are ramping up spending this year, after an ad market slump in 2023 caused by sticky inflation and an uncertain economic outlook.
Reddit said it expects adjusted earnings before interest, taxes, depreciation, and amortization to be between break-even and $15 million in the second quarter, compared with analysts’ estimate for a loss of $18.2 million, according to LSEG data.
The company also forecast second-quarter revenue to be between $240 million and $255 million, compared with analysts’ average estimate of $223.8 million.
