Reddit made history on Tuesday by announcing its first-ever quarterly profit after 20 years in operation. The company, known for its user-driven communities called subreddits, experienced a remarkable 35% increase in its shares on the following day’s market open.
With nearly 100 million monthly users, marking a 47% year-over-year growth, Reddit reported a profit of $29.9 million. Its sales also surged by 68% compared to the previous year, totaling $348.4 million, exceeding analyst projections by a significant margin.
CEO Steve Huffman attributed the spike in users to a new feature on the platform that uses artificial intelligence to translate posts into multiple languages like French, Spanish, Portuguese, Italian, and German. Huffman outlined in a letter to shareholders that Reddit plans to expand this feature to include more languages in the near future.
The company anticipates surpassing Wall Street’s revenue expectations this quarter, aided by AI content licensing agreements and robust digital advertising spending.
After newsletter promotion
Analysts pointed out that content licensing agreements with Alphabet Inc.’s Google and Microsoft-backed OpenAI for AI model training are driving up revenue. Additionally, Reddit’s partnerships with sports leagues like the NBA are helping the platform offer more sports content, attracting more advertising revenue.
Jeremy Goldman, the senior director of briefings at eMarketer, likened Reddit’s AI collaborations to training wheels on a bicycle – providing stability and significant revenue contribution this quarter.
Source: www.theguardian.com
