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01/10 17:55
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presented strong financial performance with revenue and EBITDA growth, improved gross margins, and positive cash flow. The Q&A section highlighted confidence in profitability and ad innovations, though some uncertainty remains regarding Google's algorithm changes. The guidance is optimistic, with a focus on growth and profitability, which should positively impact stock price. Despite some non-specific responses, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
Total Revenue Q4 2024 $428,000,000, up 71% year over year, driven by a ramp in ad revenue.
Total Revenue Full Year 2024 $1,300,000,000, up 62% year over year.
Advertising Revenue Q4 2024 $395,000,000, up 60% year over year, driven by broad-based strength across objectives, channels, verticals, and geographies.
Adjusted EBITDA Q4 2024 $154,000,000, with an adjusted EBITDA margin of 36%.
GAAP Net Income Q4 2024 $71,000,000, with a net income margin of 17%.
Gross Margin Q4 2024 92.6%, improved due to revised agreements with hosting providers.
Operating Cash Flow Q4 2024 $90,000,000, contributing to a free cash flow margin of 21%.
Free Cash Flow Q4 2024 $89,000,000.
Total Diluted Shares Q4 2024 206,200,000, down 1% sequentially.
Earnings Per Share Q4 2024 $0.36 diluted, more than doubled from Q3.
Total Adjusted Cost Growth Q4 2024 21%, with notable differences in cloud hosting costs and hiring pace.
Total Headcount Q4 2024 2,233, up 5% sequentially and 11% for the year.
Operating Cash Flow Full Year 2024 $222,000,000.
CapEx Q4 2024 Less than $1,000,000, less than 0.5% of revenue.
Cash Balance Q4 2024 $1,840,000,000, up $96,000,000 sequentially.
Reddit Answers: Launched a beta for Reddit Answers, an AI-powered search tool providing curated summaries of community discussions, currently only available in English.
Machine Translation: Rolling out machine translation in eight languages to enable international users to participate in communities.
Reddit Pro Trends: Testing Reddit Pro Trends, a tool that helps businesses uncover real-time insights and build an organic presence on Reddit.
International Growth: International user growth reached 46%, contributing to a total of 101.7 million daily active users.
Ad Revenue Growth: International ad revenue grew 77% year over year, with significant contributions from the UK and EMEA regions.
Operational Efficiency: GAAP profitability achieved for the second consecutive quarter with total revenue growing 71% year over year.
Cost Management: Total adjusted cost growth was 21%, with significant improvements in cloud hosting agreements positively impacting gross margins.
Updated Mission Statement: Updated mission to empower communities and make their knowledge accessible to all, focusing on enhancing user experience.
Ad Platform Strategy: Focusing on multi-objective ad platform, improving usability, and driving performance across various advertising objectives.
Competitive Pressures: Reddit experienced volatility from Google Search due to a periodic algorithm change, which affected traffic primarily from logged out users. Although traffic has recovered, the company acknowledges that fluctuations from search engines are common and can impact user engagement.
Regulatory Issues: Reddit is monitoring events that could impact the broader advertising industry, particularly in relation to the evolving EU privacy landscape, which may pose challenges for advertising revenue.
Supply Chain Challenges: The company signed revised agreements with key hosting providers, which positively impacted gross margins. However, there are ongoing concerns about potential future cost increases related to user growth and machine learning investments.
Economic Factors: The advertising market is described as healthy, but Reddit is cautious about external economic factors that could impact advertising revenue and overall business performance.
International Growth: Reddit aims to enhance its global presence, achieving 39% growth in daily active users (DAUs) year over year, with international growth at 46%.
AI Integration: Reddit is rolling out machine translation in eight languages to improve accessibility for international users.
Advertising Strategy: The company is focusing on diversifying its advertising customer base across various industries and geographies.
Reddit Answers: A new AI-powered search tool, Reddit Answers, is being tested to provide curated summaries of community discussions.
Community Engagement: Reddit is enhancing its community model to ensure it remains a platform for everyone, everywhere.
Content Licensing: Partnerships are being developed to create new data and analytics products for the financial industry.
Q1 2025 Revenue Guidance: Estimated revenue in the range of $360 million to $370 million, representing 48% to 52% year-over-year growth.
Q1 2025 Adjusted EBITDA Guidance: Expected in the range of $80 million to $90 million, indicating approximately 700% to 800% growth.
Long-term Financial Goals: Focus on scaling profitably, maintaining high margins, and generating meaningful cash flow.
CapEx: CapEx remained light, less than $1 million in Q4, indicating a focus on low capital expenditures.
User Growth Strategy: Continued efforts to convert logged-out users to logged-in users through improved onboarding and search functionalities.
Total diluted shares outstanding: The total number of diluted shares outstanding in Q4 was 206,200,000, down 1% sequentially and only up 1.1% for the year, excluding the IPO.
Stock-based compensation: Stock-based compensation in Q4 was $97,000,000, about 23% of revenue.
Earnings per share: Net income was $71,000,000 or $0.4 per basic share and $0.36 per diluted share.
Free cash flow: Free cash flow for Q4 was $89,000,000 and $216,000,000 for the year.
Cash balance: The balance sheet ended at $1,840,000,000, up $96,000,000 sequentially.
Share dilution: Total diluted shares actually fell sequentially to 206,200,000 in Q4, helping to minimize dilution.
Reddit's earnings call reveals strong financial performance, with record high Adjusted EBITDA and positive cash flow. The Q&A section highlights promising international growth, particularly in France, Brazil, and India, and successful marketing campaigns. However, some uncertainties remain, such as unclear management responses on LLM licensing and AI chatbot referrals. Despite this, the overall sentiment is positive due to strong financial metrics, optimistic guidance, and strategic growth initiatives in international markets and product enhancements.
The earnings call summary indicates strong financial performance with significant revenue growth and positive guidance for Q2 2025. The Q&A session reveals strategic advancements in advertising and data licensing, along with positive international expansion efforts. Despite some uncertainties in data licensing, the overall sentiment from analysts appears positive, especially with the focus on automation and AI integration. The stock is expected to react positively in the short term, with a potential increase of 2% to 8%.
The earnings call reveals robust financial performance with 61% revenue growth and record high operating cash flow. Despite some macroeconomic uncertainties, management remains optimistic about sustained user growth and advertising revenue. The Q&A section highlights positive sentiment from analysts, with concerns about data quality addressed and new AI integrations enhancing user experience. The strong financial metrics, optimistic guidance, and innovative product developments like Reddit Answers suggest a positive market reaction, likely leading to a stock price increase.
The earnings call presented strong financial performance with revenue and EBITDA growth, improved gross margins, and positive cash flow. The Q&A section highlighted confidence in profitability and ad innovations, though some uncertainty remains regarding Google's algorithm changes. The guidance is optimistic, with a focus on growth and profitability, which should positively impact stock price. Despite some non-specific responses, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8%.
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