RDDT Q2 2024 Earnings

Call Details

• Call Title: Reddit, Inc. Q2 2024 Earnings Call
• Date: August 6, 2024 at 9:00 PM UTC
• Management Team:
  • Steve Huffman (Co-founder & CEO)
  • Jen Wong (Chief Operating Officer)
  • Drew Valero (Chief Financial Officer)
  • Jesse Rose (Head of Investor Relations)

Call Summary

Financial Performance

• Total revenue was $281.2M in Q2 2024, representing 54% year-over-year growth.
• Ad revenue was $253.1M in Q2 2024, representing 41% year-over-year growth.
• Other revenue was $28.1M in Q2 2024, representing over 690% year-over-year growth driven primarily by data licensing deals.
• Active users exceeded 342M and daily active users (DAU) were 91.2M in Q2 2024, with DAU up 51% year-over-year.
• GAAP net loss was $10M in Q2 2024, which was $31M better than the prior year period.
• Adjusted EBITDA was nearly $40M in Q2 2024, which increased $30M sequentially and $75M year-over-year, and adjusted EBITDA margin was 14%.
• Gross margins were nearly 90% in Q2 2024, up from 84% in the prior year, driven by operating efficiencies and lower cloud hosting pricing.
• Operating cash flow was $28M in Q2 2024 and $60M for the first half of 2024, while cash on hand was $1.7B at quarter end.
• CapEx remained minimal at approximately $1M in Q2 2024, representing less than 1% of revenue.
• Stock-based compensation including related taxes was $67M in Q2 2024, or about 24% of revenue, and basic shares outstanding were 166M while fully diluted shares were 205M.

Guidance

• For Q3 2024 the company estimates revenue in the range of $290M to $310M and adjusted EBITDA in the range of $40M to $60M.
• Drew characterized the Q3 midpoint as mid-40s year-over-year growth, which he described as differentiated versus recent quarters.
• The Q3 guide includes modest anticipated contribution from recently signed sports content partnerships, with greater expected impact in Q4 and in 2025.
• OpenAI-related incremental contribution was partially recognized in Q2 and the company stated it saw about half the benefit of that deal in Q2.
• Drew noted some macro and election-related uncertainty in the back half of the year as a downside risk to revenue visibility.
• Management noted incremental adjusted EBITDA margins historically near the mid-70s percent on incremental revenue, but said Q3 guide implies a lower incremental margin in the more mid-60s range due to timing and lapping certain benefits.