TLDR
- Reddit stock jumped 5.3% after hours following Q4 earnings that crushed Wall Street expectations with $1.24 per share versus 94 cents expected
- The company reported Q4 revenue of $726 million, beating estimates of $666 million, with ad revenue growing 75% year-over-year to $690 million
- Daily active users reached 121.4 million, up 19% from last year, driven mostly by international growth through language translations
- Reddit announced a $1 billion share buyback program and ended 2025 with $2.48 billion in cash and securities
- CFO Drew Vollero highlighted Reddit’s minimal AI spending of just $3 million in Q4 capex compared to competitors spending billions
Reddit delivered a knockout punch Thursday with fourth-quarter earnings that blew past Wall Street’s expectations. The social media platform reported adjusted earnings of $1.24 per share on revenue of $726 million.
Results:
📊 Adj. EPS: $1.24 🟢
💰 Revenue: $726M 🟢
📈 Net Income: $252M
🔎 Strong profitability and cash generation alongside authorization of a $1.00B share repurchase program. pic.twitter.com/RkUZvkukYV— EarningsTime (@Earnings_Time) February 5, 2026
Analysts had expected just 94 cents per share on revenue of $666 million. The beat sent shares up 5.3% in after-hours trading.
Ad revenue came in at $690 million for the quarter. That crushed estimates of $626 million and marked a 75% jump from the prior year.
“It’s a strong finish to a stand out year,” CFO Drew Vollero told Barron’s. The numbers back up his confidence.
Daily active users hit 121.4 million in Q4. That’s a 19% increase year-over-year and topped Wall Street’s forecast of 120 million.
Most of the user growth came from international markets. Reddit has been rolling out more language translations for popular subreddits.
The company guided first-quarter revenue between $595 million and $605 million. That range sits well above analyst estimates of $577 million.
For the full year 2025, revenue surged 69% to $2.2 billion. Net income swung to $530 million from a loss in 2024.
Share Buyback Signals Confidence
Reddit announced a new $1 billion share repurchase program for Class A common stock. The move signals management’s confidence in the company’s financial health.
The company ended 2025 with $2.48 billion in cash, cash equivalents and marketable securities. Free cash flow and operating margins expanded throughout the year.
Gross margins stayed above 91% in Q4. The company’s profitability metrics improved across the board.
Minimal AI Spending Stands Out
Investors had grown nervous ahead of earnings. Reddit shares dropped 21% over the five trading days leading up to the report.
Wall Street fears that AI could replace traditional information-service providers. Tech stocks took a beating on those concerns.
Vollero addressed the AI question head-on. He told Barron’s that Reddit is benefiting from AI without the massive costs.
“You’re reading a lot about the other companies that are spending hundreds of billions of dollars in capex,” Vollero said. “Our capex in Q4 was $3 million.”
The company has its own AI chatbot called Reddit Answers. But it’s not pouring billions into AI infrastructure like some competitors.
“The way that we think about AI here is that ultimately, human connection here is paramount,” Vollero explained. He believes Reddit’s community-driven content will help it navigate AI headwinds.
Reddit went public on March 21, 2024 with an IPO price of $34. Shares have surged 344% since then despite the recent pullback.
The stock has still dropped 30% over the past 12 months. But Thursday’s results gave investors a reason to reconsider.
The most recent analyst rating on Reddit stock is a Buy with a $197 price target. TipRanks’ AI Analyst Spark rates the stock as Outperform based on strong financial performance and upbeat guidance.
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