WASHINGTON, 31 October 2025 — Social media platform Reddit Inc. (NYSE: RDDT) projected fourth-quarter revenue above Wall Street expectations, boosted by strong adoption of its artificial intelligence-powered advertising tools that continue to attract a broader base of advertisers.
Shares of Reddit surged 9% in after-hours trading following the announcement, signaling renewed investor confidence in the company’s AI-driven growth strategy.
AI Tools Drive Advertising Growth
Reddit said it expects fourth-quarter revenue between US$655 million and US$665 million, above analysts’ average estimate of US$637.9 million, according to LSEG data.
It also forecast adjusted EBITDA of US$275 million to US$285 million, topping consensus expectations of US$258.8 million.
The company’s AI-optimized ad platform allows marketers to target relevant discussions within its community-based forums, known as subreddits, based on topic and context rather than traditional demographic filters.
“We’re also in early testing of our end-to-end automated campaign platform that uses AI to streamline campaign setup,” said Jen Wong, Reddit’s Chief Operating Officer.
She added that the enhanced ad system had helped the company expand its active advertiser base by more than 75% in the third quarter, drawing a broader mix of clients beyond its traditional digital-native brands.
AI Data Licensing and IP Protection
Reddit’s vast user-generated content library has also become a key asset for AI companies seeking data to train large language models (LLMs), the foundation of tools such as OpenAI’s ChatGPT.
The platform currently maintains licensing agreements with Alphabet Inc. (NASDAQ: GOOGL) and Microsoft-backed OpenAI, while also taking legal action against Perplexity AI and three other firms over alleged illegal data scraping.
“To continue its upward trajectory, the company must continue to protect its intellectual property,” said Jeremy Goldman, Senior Director of Briefings at Emarketer.
Performance Metrics and Competitive Landscape
For the third quarter, Reddit reported:
- Revenue of US$585 million, up 68% year-on-year, exceeding analyst estimates of US$545.7 million.
- Global daily active unique visitors (DAUq) up 19% to 116 million.
- Average revenue per user (AaRPU) up 41%.
- U.S. logged-in DAUq up 7%, though slower than the 11% growth recorded in the previous quarter.
Despite a slowdown in U.S. user growth, the results suggest that Reddit’s AI-led monetization strategy is gaining traction against dominant social media rivals TikTok and Meta Platforms (NASDAQ: META) — both of which have also reported strong ad performance from AI-powered targeting.
