Reddit wrapped up its first year as a publicly traded company with its Q4 earnings report on Wednesday.
The social platform took a major step forward in 2024, passing $1 billion in revenue for the first time – improving on the $804 million in annual revenue it reported in 2023.
Reddit’s total Q4 revenue was $427.7 million, up 71% year-over-year. Ad revenue in particular grew 60% YOY, for a total of $394.5 million in the quarter.
But Reddit’s earnings report wasn’t all roses – it still posted a net loss for the full year of 2024 of $484.3 million, owing to IPO-related expenses.
Plus, late in Q4, Reddit saw a drop-off in search referrals that CEO Steve Huffman blamed on changes to Google’s search algorithm. It was an interesting callout of Google, which has become one of Reddit’s closest partners.
Although Huffman said the downturn in search referrals had no revenue impact, investors may not have been convinced. Reports blamed the Google change for a 15% drop in Reddit’s share price in after-hours trading.
Meanwhile, Reddit’s ambitions to build its own AI-powered on-platform search business, which its execs discussed with investors, suggest even Google’s allies need to find ways to protect themselves from its influence – sometimes by copying its playbook.
More impressions, more revenue
On the advertising side, growth was driven by Reddit’s strategy of building a “multi-objective ad platform,” said COO Jen Wong.
Reddit has long considered performance marketing its bread and butter. Most of its platform’s perceived value to marketers comes from user conversations about intended purchases.
So, no surprises here: Mid- and lower-funnel revenue accounted for about 60% of total Q4 revenue and drove more than half of the quarter’s YOY ad revenue growth, Wong said. Mid-market brands and SMBs are catalysts on the performance side, she added.
The creative optimization and automated testing tech Reddit acquired from Memorable AI last year is helping to bring more midsize and SMBs into the fold, she said. Reddit recently launched a new ad review system, which decreases average campaign review time from 30 minutes to one minute, she added.
But upper-funnel revenue grew at the fastest rate in three years, she said, demonstrating strength with brand advertisers.
Impressions were up by double digits year over year, Wong said, driven by “underlying user growth, personalized ad loads, deeper engagement and improved monetization of the conversation page.” Ads placed within comment threads, which Reddit rolled out in the middle of last year, accounted for 3% of impressions in Q4.
Meanwhile, ad pricing was consistent with the previous year, she said.
Average impressions per user were up YOY, “as we benefited from ad placement and brand safety optimization work from prior periods,” Wong said. Reddit has brand safety integrations with DoubleVerify and IAS, the latter of which went live in Q4.
Reddit claimed 101.7 million daily active unique users in Q4, up 39% YOY.
International daily active uniques were the lion’s share, at 53.7 million – which represented a 46% YOY growth rate. International ad revenue was up 77% YOY, the fastest growth rate in more than two years, Wong said.
AI search opportunities
Asked by investors about future growth prospects, Huffman pointed to Reddit’s investments in on-platform search, such as Reddit Answers, a generative AI searchbot that pulls from Reddit’s platform for its answers. Answers launched in December.
In response to an investor question about how Reddit’s search platform offers anything distinct from Google, Huffman emphasized that Reddit’s search products pull results exclusively from Reddit’s human conversations. Other chatbots draw from the wider internet (which includes a lot of junk, he left unsaid).
Plus, Huffman added, users actively seek out Reddit’s content by adding “Reddit” to their search queries on other platforms.
He also alluded to this fact in his letter to investors. According to Huffman, the traffic drop-off Reddit saw from Google late in Q4 coincided with an increase in search queries that included the word “Reddit.” This indicates, he suggested, that users were trying to find Reddit even when it wasn’t showing up in search results. (The tactic may have been minimally effective, though, seeing as Reddit still lost traffic.)
“We see volatility from Google all the time, as does everybody,” Huffman said. But, he added, “Our relationship with them is great.”
Still, that wasn’t the only swipe Huffman took at Google during the call.
Asked by another investor whether Reddit’s licensing revenue from its deals with OpenAI and Google is under threat from solutions like Chinese upstart DeepSeek, Huffman said that, on the contrary, open-source AI platforms like DeepSeek are a boon to Reddit – even if they do scrape its data without permission.
He said Reddit currently uses DeepSeek’s tech and added that “we, and every company except for two on Earth, love open-source AI models,” alluding to Google and OpenAI, which operate proprietary models.
What DeepSeek represents, Huffman said, is the commodification of AI technology, which is great for the industry and Reddit specifically. “Basically, every aspect of our business can benefit from this technology: moderation, safety, copy generation, internal tools, search.”
