Reddit’s second quarter was marked by a strong commercial performance but a negative market reaction, with the stock declining sharply following results. Management attributed the positive revenue and profit trends to robust adoption of its advertising platform, especially among mid-market and small business clients, as well as improved pricing and conversion outcomes. CEO Steven Huffman emphasized the value of authentic, human-centric conversations on the platform, noting that, “Our product work is improving engagement in key areas,” and highlighted that new app user retention rose 50% year over year, albeit from a small base. However, leadership also acknowledged ongoing headwinds from volatile search referral traffic, which became more pronounced late in the quarter.
Is now the time to buy RDDT? Find out in our full research report (it’s free for active Edge members).
Reddit (RDDT) Q2 CY2026 Highlights:
- Revenue: $804.9 million vs analyst estimates of $732.4 million (61.1% year-on-year growth, 9.9% beat)
- Adjusted EPS: $1.77 vs analyst estimates of $1.45 (22.5% beat)
- Adjusted EBITDA: $342.8 million vs analyst estimates of $298.2 million (42.6% margin, 15% beat)
- Revenue Guidance for Q3 CY2026 is $865 million at the midpoint, above analyst estimates of $830.3 million
- EBITDA guidance for Q3 CY2026 is $390 million at the midpoint, above analyst estimates of $368.8 million
- Operating Margin: 28.8%, up from 13.6% in the same quarter last year
- Domestic Daily Active Visitors: 53.2 million, up 2.9 million year on year
- Market Capitalization: $29.87 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Reddit’s Q2 Earnings Call
- Tom Champion (Piper Sandler) asked about the key drivers of current ad business growth and user trends. COO Jennifer Wong cited advertiser onboarding improvements and diversified vertical strength, while CEO Steven Huffman discussed new app user retention gains and ongoing headwinds from search referral declines.
- Richard Greenfield (LightShed Partners) pressed on the disconnect between strong financials and perceived user growth issues. CEO Steven Huffman reiterated confidence in long-term user targets, attributing progress to product work but acknowledging search referral volatility and the time required to reach milestones.
- Ron Josey (Citi) inquired about strategies for converting weekly active users to daily active users and updates on data licensing partnerships. Huffman outlined plans for enhanced feed technology and reaffirmed the value and multifaceted nature of Reddit’s data licensing deals.
- Justin Post (Bank of America) questioned the sustainability of ARPU growth and ad load headroom. Jennifer Wong responded that marketplace flexibility and new ad objectives, especially video, provide continued room for growth, while Vollero described marketing ROI as driven by short-term payback on user acquisition.
- Andrew Boone (Citizens) asked about SMB adoption and whether Reddit needs a different creator strategy to scale. Wong emphasized ongoing Shopify partnership efforts and streamlined SMB onboarding, while Huffman noted that Reddit’s creator ecosystem is “for everybody else” rather than just professional creators.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will focus on (1) evidence of improved daily active user retention and successful conversion from weekly users, (2) adoption and performance of the expanded Reddit Max platform and new ad products, and (3) the impact of ongoing feed and onboarding enhancements on user engagement. We will also monitor any developments in data licensing agreements and their implications for revenue diversification.
Reddit currently trades at $153.68, down from $178.04 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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