Social media site Reddit marks a historical milestone by going profitable for first time in its 20-year history.
The front page of the internet now boasts 97.2 million DAUs, up 47% year-over-year, and sometimes tops 100 million during peak periods. It's a long-standing milestone, and CEO and co-founder Steve Huffman described this as "Reddit's strongest period ever".
Reddit's Financial Performance Since Going Public
Since the company went public in March, Reddit has witnessed great growth and financial performance. As Digital Trends writes in its latest report, the firm recorded a third-quarter profit of $29.9 million, far from the $575 million loss that it incurred in its first quarter after going public. Reddit gradually narrowed this loss to $10 million in the second quarter before turning profitable in the third.
Key Revenue Growth Drivers for Reddit
The main driver behind the platform's solid financial performance is a jump in advertising revenue, which stands at $315.1 million, up 56% year over year.
Other revenue sources, including deals with tech giants Google and AI firms, come in at $33.2 million, a stunning 547% year-over-year jump. These partnerships allow companies to use content on Reddit to train their AI models, further diversifying the platform's revenue streams.
Reddit's Growing Popularity and Influence
CEO Steve Huffman pointed to the growing importance of being a source of information and a community engagement aspect of Reddit.
This year, "Reddit" became the sixth most searched term in the United States - that is, users look for answers, advice, and communities on topics; during the recent hurricanes, the White House even issued critical updates in real-time with affected communities, to drive home its importance as a source of information.
"It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability," Huffman said on Tuesday.
Challenges and Controversies Facing Reddit
Although Reddit has been this successful, it has also encountered its share of challenges. The company faced criticism this year when it announced charging fees for API access that had a major impact on third-party apps, some of which shut down operations.
Reddit is also in the spotlight of the FTC for selling user-generated content for AI model training due to concerns over data use and privacy.
A Shining Future for Reddit
This is a landmark for Reddit on its road to profitability and achieving a daily active user base at an all-time high. Being financially healthy with a growing user base, the company appears well set up for further growth.
Still, it will be seen how Reddit navigates issues that are continually panning out, including regulatory and community concerns on data use.
Earlier this month, Tech Times reported that Meta's Threads was looking to challenge Reddit and X with its new community-focused feature called "Loops." To give you a glimpse of it, just imagine X communities or subreddits. That's quite similar to the two social media communities.
According to Meta, Loops will align the common interests of individuals on the platform. If you regularly browse about "running shoes," you will meet people on the app who are also interested in the same thing.
Related Article: Reddit Calls out Microsoft for Data Scraping, CEO Wants It to Pay
