Reddit Q2 Earnings Beat on Ad Growth and Strong Monetization

RDDT’s Revenue Mix Shows Broad-Based Strength

Advertising revenues increased 64% year over year to $762 million. Other revenues rose 24% to $43 million, providing a smaller but growing contribution to the top line.

U.S. revenues advanced 56% to $638.1 million. International revenues increased 84% to $166.8 million, reflecting faster growth outside the company’s core domestic market.

Reddit’s User Growth Extends Global Reach

Weekly Active Uniques averaged 514.6 million, up 24% year over year and crossing the half-billion mark. U.S. WAUq rose 9% year over year to 197.2 million, while international WAUq grew 35% to 317.4 million.

U.S. DAUq increased 6% year over year to 53.2 million, whereas international DAUq surged 28% to 77.1 million. Global average revenue per unique rose 36% year over year to $6.18, with U.S. ARPU climbing 51% to $11.85 and international ARPU increasing 31% year over year to $2.26.

RDDT’s Ad Tools Support Full-Funnel Gains

Conversion volume more than doubled and click volume grew more than 30% year over year. Revenues from dynamic product ads and app-install campaigns each more than doubled, while the scaled sales channel, which includes mid-market and small businesses, also doubled.

Active advertisers increased more than 70%. Reddit Max advertisers grew more than 60% sequentially and Max revenues rose more than 150% from the first quarter as automation and machine learning improved campaign setup and performance.

Reddit also expanded its Shopify integration to general availability and launched Shopping Listing Ads in alpha. The multi-advertiser format matches product catalogs with high-intent shopping conversations, which grew 40% year over year.

RDDT’s Operating Details

RDDT maintained very high gross profitability. Reddit’s GAAP gross margin expanded 50 basis points on a year-over-year basis to 91.3%. 

Operating expenses increased with continued investment. Sales and marketing expenses surged 62.4% year over year to $195.9 million. Research and development expenses rose 17.6% year over year to $231.3 million, while general and administrative expenses increased 10.1% to $75.7 million.

Adjusted EBITDA increased 106% year over year to $342.8 million, and the adjusted EBITDA margin improved to 42.6% from 33.4%.

RDDT’s Balance Sheet & Cash Flow

As of June 30, 2026, Reddit had cash, cash equivalents, and marketable securities of $2.79 billion compared with $2.77 billion as of March 31, 2026.

For the second quarter of 2026, operating cash flow rose 135% to $262 million and free cash flow reached $261 million.

The company repurchased 1.5 million shares for $235 million at an average price of $157.57 per share. Approximately $760 million remained under the current authorization.

Reddit's Q3 Outlook Signals Continued Momentum

For the third quarter of 2026, management expects revenues between $860 million and $870 million. The midpoint implies about 48% year-over-year growth.

Adjusted EBITDA is projected to be between $385 million and $395 million, representing a midpoint margin of about 45%. Management also lowered its full-year stock-based compensation outlook to the low-to-mid-teens as a percentage of revenues and expects full-year dilution at the lower end of its 1% to 3% target range.

RDDT’s Zacks Rank & Stocks to Consider

Reddit currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector include Arista Networks ANET, ACI Worldwide ACIW and Analog Devices ADI. Each stock carries a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arista Networks shares have gained 30.5% in the year-to-date period. Arista Networks is set to report second-quarter 2026 results on Aug. 4.

Shares of ACI Worldwide have gained 20.6% in the year-to-date period. ACI Worldwide is set to report the second-quarter 2026 results on Aug. 6.

Shares of Analog Devices have rallied 35.2% in the year-to-date period. Analog Devices is slated to report fiscal third-quarter 2026 results on Aug. 19.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research