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- Reddit forecasts strong revenue on AI-driven ad strength, shares surge</p>
<p>Jaspreet SinghJuly 31, 2025 at 10:08 PM</p>
<p>By Jaspreet Singh</p>
<p>(Reuters) -Reddit forecast third-quarter revenue above Wall Street estimates on Thursday, betting on growing digital advertising driven by its artificial intelligence-powered marketing tools.</p>
<p>Shares of the social media company, which went public in March last year, rose more than 16% in extended trading.</p>
<p>The forecast follows bigger rival Meta's upbeat second-quarter results and strong revenue outlook on Wednesday, lifted by the Facebook and Instagram parent's core ad business.</p>
<p>Advertisers are increasingly turning to platforms such as Reddit, Meta, and TikTok, which offer advanced AI-powered tools for ad creation.</p>
<p>"We've been growing our active advertiser base really nicely, but most of our growth still comes from existing advertisers that are well retained," said Chief Operating Officer Jen Wong.</p>
<p>Reddit offers marketers various ad formats, including conversation placement ads, which allow brands to advertise directly within discussion threads in its interest-based communities known as subreddits.</p>
<p>The company recently launched two new AI-powered ad features designed to help brands drive engagement by tapping into user conversations on the platform. It also has AI content licensing deals with Alphabet's Google and ChatGPT-maker OpenAI.</p>
<p>"Reddit just turned in a quarter that would make even its harshest subreddit proud," Emarketer analyst Jeremy Goldman said.</p>
<p>The company expects third-quarter revenue of $535 million to $545 million, well above analysts' average estimate of $473 million, according to data compiled by LSEG.</p>
<p>It projected quarterly adjusted earnings before interest, taxes, depreciation, and amortization of $185 million to $195 million, compared with estimates of $160.4 million.</p>
<p>Second quarter revenue rose 78% to $500 million, beating estimates of $426 million. Its profit per share of 45 cents also exceeded estimates of 19 cents.</p>
<p>The company said its machine translation feature now supported 23 languages, helping fuel user growth across Asia Pacific, Europe and Latin America.</p>
<p>Daily active unique visitors increased 21% to 110.4 million in the quarter ended June 30.</p>
<p>Reddit said it has seen volatile traffic from Google Search due to algorithm changes tied to the search engine's integration of AI Overviews and AI Mode.</p>
<p>"Traffic from Google varies from week to week, but overall it was a headwind in the second quarter," said CEO Steve Huffman.</p>
<p>(Reporting by Jaspreet Singh in Bengaluru; Editing by Tasim Zahid)</p>
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