Reddit Surpasses Earnings Estimates and Launches $1 Billion Stock Buyback Program
San Francisco, Thursday, 5 February 2026.
Reddit posted 70% revenue growth to $726 million, significantly beating estimates. Management signaled confidence in sustained profitability by authorizing a massive $1 billion share repurchase program.
Exceptional Financial Performance and Margins
Reddit’s financial disclosure for the fourth quarter of 2025 reveals a company rapidly scaling its monetization efforts. The platform reported revenue of $726 million, a 70% increase year-over-year [1][2]. This figure comfortably exceeded Wall Street’s expectations of $665 million, representing a beat of 9.173 percent [1]. The bottom-line performance was equally robust; earnings per share (EPS) came in at $1.24, surpassing the expected $0.94 by 31.915 percent [1]. Net income for the quarter surged approximately 255% year-over-year to $252 million, yielding a net margin of 35% [1][3]. For the full fiscal year 2025, Reddit achieved total revenue of $2.2 billion, a 69% increase from the prior year, with a full-year net income of $530 million [2].
User Engagement and Metric Evolution
Underpinning these financial results is a solid expansion in user activity. Global Daily Active Uniques (DAUq) grew 19% year-over-year to 121.4 million in the fourth quarter [1][2]. In the United States specifically, DAUq increased 9% to 52.5 million [1]. However, a closer look at the data shows a slight deceleration in the growth of logged-in users in the U.S., which grew 5% to 23 million, compared to a 7% growth rate in the third quarter of 2025 [1]. Addressing this, CEO Steve Huffman noted that the distinction between logged-in and logged-out users is becoming less relevant as the company streamlines onboarding through features like instant personalization [1]. Consequently, Reddit plans to phase out the reporting of these separate metrics later in 2026, though they will continue to be provided for the first two quarters of the year [1].
Capital Allocation: The $1 Billion Buyback
In a significant move demonstrating confidence in its balance sheet, Reddit announced a share repurchase program authorizing the buyback of up to $1 billion of its Class A common stock [1][2]. This authorization was approved by the Board of Directors on December 30, 2025 [2]. The decision is supported by a strong liquidity position; as of December 31, 2025, the company held $2.48 billion in cash, cash equivalents, and marketable securities [3]. The company’s cash generation engine remains efficient, reporting Free Cash Flow of $264 million for the quarter, an improvement of $174 million compared to the prior year [3]. Following the release of these results and the buyback announcement, Reddit stock climbed in late trading on Thursday [4].
Forward Guidance and Strategic Partnerships
Looking ahead to the first quarter of 2026, Reddit has issued guidance projecting revenue between $595 million and $605 million [1][2]. The company also anticipates adjusted EBITDA to land between $210 million and $220 million for the same period [1]. Beyond the financials, CEO Steve Huffman addressed the company’s data-licensing landscape, describing relationships with Google and OpenAI as “very healthy” and noting that they are evolving into product partnerships aimed at bringing users into Reddit’s community ecosystems [1]. This strategic focus on data licensing complements the core advertising business as the industry continues to integrate AI-driven search and discovery [1].