Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Reddit Inc (RDDT, Financial) reported a strong Q2 with over 50% year-over-year growth in both users and revenue.
- The company achieved positive cash flow and profitability on an adjusted EBITDA basis for the second consecutive quarter.
- International expansion is a key driver, with international daily active users growing 44% year-over-year.
- Reddit Inc (RDDT) is enhancing user experience with faster, safer, and more intuitive navigation, leading to a 10% increase in comments viewed from Q1 to Q2.
- The company is making significant progress in its ad business, with ad revenue growing 41% year-over-year and international revenue accelerating by 49%.
Negative Points
- Despite strong growth, Reddit Inc (RDDT) faces challenges with CPM pricing, which has declined due to new ad placements on conversation pages.
- There is macroeconomic uncertainty, particularly around elections, which could impact future revenue growth.
- The company is still in the early stages of its ad platform and marketplace, indicating potential challenges in scaling and optimizing ad performance.
- Reddit Inc (RDDT) is facing issues with third-party search engines using its content without transparency, leading to blocking access in some cases.
- The integration and impact of recent acquisitions, such as Memorable AI, are still in progress and may take time to show results.
Q & A Highlights
Q: In past interviews, you mentioned using large language models to translate Reddit's content into other languages. Is this actively being built or just a vision for the future?
A: Steven Huffman, CEO: It's actively being built. We've already launched French, and it's in general availability. We're now working on German, Spanish, and Portuguese, aiming for release later this year. This is a promising initiative with short-term impacts.
Q: Advertising is Reddit's primary revenue source. Do you plan to focus on increasing the quantity or quality of ads?
A: Jennifer Wong, COO: Our focus is on driving more demand and performance to increase value per ad. Our ad load is lighter compared to peers, and we're designing ads for spaces where users spend more time rather than increasing ad load in existing spaces.
Q: Can you provide more color on the 3Q revenue guide and the health of the ad market?
A: Andrew Vollero, CFO: We guided $290 million to $310 million, with year-over-year growth in the mid-40s. The sports deals will have a modest impact in Q3, with more expected in Q4. The guide reflects the current business environment, despite some macro uncertainties.
Q: How do you plan to protect Reddit's unique culture while allowing users to earn money on the platform?
A: Steven Huffman, CEO: We believe the existing altruistic version of Reddit will continue to thrive. Introducing monetary incentives will expand Reddit's use cases without cannibalizing the current culture. It's an opportunity for expansion.
Q: What changes have driven the recent growth in logged-in DAUs, and what are the lasting implications?
A: Steven Huffman, CEO: Improved onboarding and a focus on quality have driven growth. We've shifted new users from a global feed to a community-specific experience, improving retention. This strategy has led to consistent user growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
