Key Takeaways
- Q2 earnings release scheduled for July 30 following market close
- Wall Street projects 46.3% revenue increase to $731 million with GAAP EPS reaching $0.97
- First quarter advertising revenue surged 74% to $625 million while daily active users reached 126.8 million
- Ongoing negotiations with Google over $60 million annual data licensing agreement represent primary concern
- Analyst consensus shows Moderate Buy rating with $226.29 average target price, suggesting 26% potential gain
Trading at $179.23, Reddit (RDDT) enters its July 30 earnings announcement down 20% for the year following a steep January decline, despite maintaining over 400% gains since its 2024 public debut.
Thursday’s after-hours Q2 results carry high expectations. Wall Street forecasts $731 million in revenue—a 46.3% annual increase—alongside GAAP earnings of $0.97 per share, more than doubling the $0.45 reported during Q2 2025.
Reddit exceeded similar projections during the first quarter, delivering 69% revenue expansion to $663.4 million. The company recorded $204 million in net income alongside $311.2 million in free cash flow.
Advertising revenue powered most of that growth, jumping 74% to $625 million. Ad impressions increased approximately 32%, while average pricing expanded at a comparable rate.
Company leadership provided Q2 guidance ranging from $715 million to $725 million in revenue with adjusted EBITDA between $285 million and $295 million. Surpassing these targets could trigger positive stock movement.
The platform attracted 126.8 million daily active users during Q1, marking a 17% year-over-year climb. International weekly active users expanded 33%, outpacing domestic growth of 10%.
Monetization disparity between regions remains substantial. International users generated $2.02 in average revenue compared to $9.63 domestically, presenting growth opportunities as the platform enhances translation capabilities and localized content.
Google Licensing Dispute Looms Large
The most significant uncertainty surrounding Thursday’s report involves Reddit’s contentious licensing negotiations with Google. Both parties have been reworking an agreement valued at approximately $60 million annually.
Reports indicate Reddit seeks usage-based compensation, expressing frustration that Google’s AI Overviews feature redirects users to proprietary summaries instead of driving traffic back to Reddit’s platform.
Shares plummeted 9% in one trading session last week following a Wall Street Journal report suggesting Reddit contemplated blocking Google’s access to its content completely.
Management will likely face intense questioning about this partnership during the earnings call. A successful renegotiation could deliver substantial high-margin licensing income. Failure could damage both licensing streams and organic search visibility.
Advertising Revenue Momentum Continues
The digital advertising environment appears favorable based on Alphabet’s Q2 results, which showed 14% ad revenue growth. This creates a supportive environment for Reddit’s upcoming disclosure.
Approximately 94% of Reddit’s Q1 revenue originated from advertising. While this concentration creates vulnerability during market downturns, current indicators remain encouraging.
The company has established a pattern of issuing conservative guidance, increasing the probability of exceeding analyst expectations.
Analyst sentiment reflects a Moderate Buy consensus on RDDT, featuring 13 Buy recommendations, 8 Hold ratings, and zero Sell opinions over the past quarter. The average target price stands at $226.29, indicating approximately 26% appreciation potential from present valuations.
Reddit’s second quarter financial results will be released following market close on July 30.
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