Reddit Cashes in on AI Craze: 68% Revenue Jump and 443% Profit Surge Stun Wall Street

Reddit, the popular online social media and forum platform, announced remarkable financial results on 30 October 2025. The company reported a 68% increase in sales and a 19% rise in Daily Active Users (DAUq) to 116 million — its highest ever. Artificial intelligence played a significant role in powering this record-breaking quarter, aligning with the tech giants' focus on AI-driven growth.

DAUq, a key metric for Reddit, measures the number of unique users engaging with the platform daily. Alongside the impressive growth in sales and DAUq, Reddit's net income in the third quarter of fiscal 2025 surged 443% to $163 million. Free cash flow also climbed 161%, reaching $183 million compared to the previous year.

The company's share price stands at $194.42 on Wall Street, reflecting an 18.95% return year-to-date. Additionally, advertising revenue hit $549 million — a 74% increase compared to the same quarter in fiscal 2024.

Focus on Brand Awareness and User Acquisition

Despite these strong figures, Reddit CEO Steve Huffman emphasises the importance of expanding its user base. In the US, its largest market, logged-in users have been declining over the past five quarters. Meanwhile, logged-out users — who account for 24% of traffic — grew faster year-over-year (14%) than logged-in users (also 14%).

Chief Operating Officer Jen Wong explained that Reddit traditionally relied less on marketing to acquire users. However, the company is now investing in performance marketing campaigns, especially overseas, to raise awareness among potential users unfamiliar with the platform.

'The promotions will help in countries where our awareness and consideration are lower than in the US, because we're newer,' Wong said.

The Power of Subreddits and User Engagement

Reddit's distinctive feature is its 'subreddits' — dedicated forums for specific topics where like-minded users gather. Huffman highlighted that following relevant subreddits significantly boosts user retention, stating, 'It's not rocket science.'

The platform benefits from users migrating from other platforms like Google, creating new accounts that contribute to advertising revenues. During Thursday's earnings call, Huffman noted that Reddit is not currently experiencing major traffic from AI-powered chat apps, suggesting a primary focus on its core community.

Innovating with Artificial Intelligence

AI remains a crucial part of Reddit's growth strategy. The platform launched Reddit Answers, an AI-powered search feature that summarises relevant discussions and provides quick responses to user queries. Since its launch in December 2024, the AI tool has attracted a weekly user base of six million.

Reddit's relevance has surged since its public listing in March 2024. From an IPO valuation of $6.4 billion, market capitalisation has soared to $37.6 billion. Huffman stated that Reddit is now the third most-visited site in the US (according to Semrush), behind YouTube and ahead of Amazon.

User Experience and Future Outlook

Reddit's approach focuses on making the app user-friendly and rewarding from day one — aimed at turning casual users into daily active participants. The platform's unique position presents a real challenge to dominant rivals like Facebook and TikTok.

Huffman emphasised that Reddit isn't trying to be the next anything but aims to be the best version of itself. The internet should remain a space where people can connect on almost any topic and access genuinely useful information.

Building a Community and Brand Relationships

Users can engage directly with brands, institutions, and publishers, which forms the 'moat' Reddit is developing. By fostering these connections, Reddit aims to differentiate itself as a platform focused on authentic community engagement rather than just advertising.

Reddit's recent results underscore its resilience and growth potential. While competition remains fierce, its focus on community, AI innovation, and strategic marketing push suggest it's positioning itself for sustained expansion in the global digital landscape.

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