Reddit CEO Emphasizes App Engagement Over AI Summaries Amid Strong Q2 Earnings
Reddit reported strong second-quarter earnings and revenue growth, with results exceeding analyst expectations despite a nearly 10% premarket stock decline due to concerns over choppy search referral traffic. CEO Steve Huffman emphasized the company's focus on direct app engagement rather than relying on AI-driven search referrals from Google. He highlighted that Reddit is building for daily active users as opposed to drive-by traffic, noting higher value in its core user base. The platform saw 61% year-over-year revenue growth to $804.9 million and earnings per share of $1.25, surpassing estimates. Advertising demand remained robust with a 64% increase in ad revenue to $762 million. The company also reported strong user metrics, including over 130 million daily active users (DAUq) and improved new app retention rates. Reddit's gross margin expanded slightly despite increased AI computing costs, while operating cash flow more than doubled to $262 million. With a solid balance sheet of nearly $2.8 billion in cash and ongoing share repurchases, the company remains well-positioned for continued growth.
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