Reddit Posts Solid Growth in Q4 Performance Update

Reddit has shared its latest performance update, covering Q4 and the full year for 2024.

And the numbers are looking good for the app, with its enhanced business focus driving higher revenue, while its active user count also continued to climb in the last section of the year.

First off, on users, Reddit is now up to 101.7 million daily active users, up 3.5 million on its Q3 result.

That, comparatively, is still a much smaller overall audience than the other major social apps. But Reddit’s strength remains in contextual discussion, and focused relevance, with Reddit noting that 40% of internet users consider recommendations on Reddit to be the most influential factor in their purchasing decisions, surpassing expert reviews.

Which seems high, but the point is Reddit provides real, human, knowledgeable insight into a range of topics, including products, and that can make it a valuable outreach tool for brands, when used right. And with more ad options aligning with this, along with improved targeting, there may well be value in Reddit ads.

The only negative here is that all of Reddit’s growth is coming from outside the U.S., where it actually lost users in the quarter. Which is a concern because Reddit makes most of its money from U.S. ads.

Though, at the same time, Reddit is rationalizing and capitalizing on its U.S. audience, so it’s still making a lot more money over time. But it’ll need to concentrate on building its business outside the U.S. to maximize is opportunities.

In terms of revenue, Reddit brought in $428 million for the quarter, up 71% year-over-year.

Most of that was driven by the gradual expansion of Reddit’s ads business, which continues to deliver results for a growing range of ad partners.

Which has also been helped like new analytics and insights tools, like Reddit’s new “Reddit Pro” dashboard, which enables marketers to explore trending topics in the app.

Reddit Pro provides data on your post and comment performance, while also giving you easy access to trend insights, so you can tap into the latest, most relevant discussions in the app.

And that’s driving more advertiser interest, with Reddit reporting that brands using the app have created 12% more content based on those insights.

Reddit also highlights its “Ask Me Anything” ads as another key development, while its automation and AI options are also driving more value.

Reddit also says that its efforts to increase accessibility, through improved language translation tools, have also helped to drive platform growth.  

“We made meaningful progress improving our ML models to make the home feed and search results more relevant and translating content for global audiences with Machine Translation (“MT”) MT drove between 40-50% of international user growth in Q4 and our international playbook is driving community engagement in our focus countries.”

Which, again, is where Reddit is seeing more usage, and it’ll be interesting to see how it looks to build on that with an expanded international ad push. Because that costs money, and Reddit’s costs are already rising, as it continues to invest in its own AI and machine learning models to lean into trending and improved experiences.

Reddit also notes that it saw some impacts on its Search referrals in Q4, though they’ve been mostly corrected:

“Later in Q4, we experienced some volatility with Google Search triggered by a periodic algorithm change, but traffic from search has recovered so far in Q1, and we’ve regained momentum. What happened wasn’t unusual - referrals from search fluctuate from time to time, and they primarily affect logged-out users. Our teams have navigated numerous algorithm updates and did an excellent job adapting to these latest changes effectively. This particular swing was interesting, though, because we saw a corresponding increase in the query term “reddit,” which suggests users are searching with the specific intent of reaching Reddit, and this propensity continues to rise.”

That kind of seems to suggest that Google is restricting searches that include the term “reddit”, and it’s worth noting that Google does have a deal in place to incorporate Reddit data into its Search and AI results. That could mean that Google’s now surfacing more Reddit insights direct in the SERP, via its new AI overviews.

And if that’s the case, I wonder how Reddit will respond to Google corralling its traffic via this method.

Overall, it’s a good report for Reddit, showing steady progress and development of its various elements. Though it will be difficult for Reddit to maintain its AI momentum, given rising costs, and it’ll be interesting to see how it plans to contend with Google using its insights in its own products, especially given how significant Google Search traffic has been for its growth.

Essentially, Reddit’s putting a lot of reliance on that trendline continuing to rise, and if it slows, as it did in December, that’ll put a dent in the platform’s broader growth story, and potentially, the market’s optimism for its future.

Which means that it needs to make sure that it’s making money where it can, and as such, expect to see Reddit making a bigger push on ad sales in international markets in 2025.