Investing analyses

# RDDT — Q4 FY25 Earnings Review (Atlas)

> Date: 2026-02-23
> Quarter: Q4 FY25 (Dec-2025)
> Market cap: $26.5B | EV/TTM Rev: 10.9x | EV/TTM EBITDA: 28.4x | Revenue growth: +69.8% YoY

---

## Verdict

Reddit's Q4 FY25 was the strongest quarter in its public history across every dimension that matters: revenue, operating income, EBITDA, net income, FCF, user count, and ARPU simultaneously hit all-time highs. The beat (+$66m, +10% vs guide midpoint) was driven by ARPU expansion (+42% YoY per DAUq) outpacing user growth (+28% YoY DAUq) — the more durable and scalable mechanism. At 10.9x EV/TTM Revenue with a PEG of 0.47, the stock is cheap on growth-adjusted terms for a company compounding at 70% with 45% EBITDA margins and a net cash balance sheet. The primary risks are Google search dependency and a hard FY26 comparison base. **Conviction: 4/5.**

---

## Qualification Gate

| Criterion | Threshold | Actual | Result |
|-----------|-----------|--------|--------|
| Revenue YoY growth | >30% (>40% preferred) | +69.8% | PASS |
| Gross margin | >60% (>70% preferred) | 91.9% | PASS |
| Revenue per quarter | >$50M | $726M | PASS |
| Data availability | 4+ quarters | 20 quarters | PASS |
| Share dilution | <10% annual | Negative (buyback) | PASS |
| GAAP profitability trajectory | Improving | Net margin +34.7%, ATH | PASS |

All six criteria pass. Reddit qualifies for full analysis.

---

## Six-Factor Score

| Factor | Rating | Detail |
|--------|--------|--------|
| Growth | **Strong** | +69.8% YoY Q4; 6th consecutive quarter above 60% YoY. Q1 FY26 guide implies ~53% YoY — deceleration from peak but sustained well above threshold. |
| Trajectory | **Flat/Strong** | Holding 60-70% YoY through all of FY25 is exceptional given scale. FY26 base gets materially harder. Q2 FY26 is first real test of deceleration. |
| Margins | **High** | 91.9% gross (ATH), 45.1% EBITDA (ATH), 31.9% GAAP op margin (ATH). Six consecutive quarters above 90% gross margin. Operating leverage is stru

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# RDDT — Earnings Review Q4 FY25 (WSM)

> Date: 2026-02-22
> Quarter: Q4 FY25 (Dec-25)
> Position: Long 4.6%
> Market cap: ~$28.7B | Run-rate P/S: ~9.9x | Revenue growth: 70% YoY

---

## Verdict

Reddit is printing money. $726M Q4 revenue (+70% YoY, +24% QoQ) beat $665M consensus by $61M — a 9.2% revenue beat is massive for a company this size. EPS of $1.24 crushed $0.94 estimate by 32%. Adj EBITDA margin hit 45%. FCF is $264M in a single quarter (36% margin). The balance sheet has $2.5B cash and zero debt. I'm holding my 4.6% position and watching for opportunity to add.

The YoY growth rate peaked at 78% in Q2 FY25 and has pulled back to 70% in Q4, with Q1 FY26 guided at 54%. That's deceleration by my rule — two consecutive quarters down from peak. BUT the QoQ comparison tells a different story: Q4 FY25 was +24.1% QoQ, which is FASTER than Q4 FY24 (+22.8% QoQ). Same-quarter seasonality is clean or improving. The deceleration is YoY base-effect noise from a monster Q2 FY25 (+27% QoQ). The underlying momentum is intact.

The real thesis is ARPU. US ARPU grew 164% YoY to $10.79. Active advertisers grew 75% YoY — faster than revenue (70% YoY). The ad platform is working. International (57% of users, ~20% of revenue) is the optionality. Intl ARPU reversed to +25.5% QoQ in Q4 after being negative. That's the inflection I'm watching.

**Action: Hold. No trim, no add yet. Wait for Q1 FY26 print.**

---

## The Numbers

| | Q1 FY24 (Mar-24) | Q2 FY24 (Jun-24) | Q3 FY24 (Sep-24) | Q4 FY24 (Dec-24) | Q1 FY25 (Mar-25) | Q2 FY25 (Jun-25) | Q3 FY25 (Sep-25) | Q4 FY25 (Dec-25) |
|---|---|---|---|---|---|---|---|---|
| **Revenue ($M)** | 243 | 281 | 348 | 428 | 392 | 500 | 585 | 726 |
| **YoY %** | 48% | 54% | 68% | 71% | 62% | 78% | 68% | 70% |
| **QoQ %** | -3% | +16% | +24% | +23% | -8% | +27% | +17% | +24% |
| **Gross Margin % [GAAP]** | 88.6% | 89.5% | 90.1% | 92.6% | 90.5% | 90.8% | 91.0% | 91.9% |
| **Adj EBITDA Margin %** | 4.1% | 14.0% | 27.0% | 36.1% | 29.4% | 33.4% | 

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# Reddit (RDDT) — Earnings Review Q4 FY25
**Philip A. Fisher | February 22, 2026**

---

## Prior Beliefs Going In

This is my first formal analysis of Reddit. No prior thesis to reconcile. I approach it with the fundamental question that must be asked of every company: is this enterprise "fortunate because it is able," or merely "fortunate"?

Reddit's uniqueness is self-evident — twenty years of accumulated human conversation, held together by community norms and tribal loyalties that cannot be manufactured. In an era when artificial intelligence threatens to flood every corner of the internet with synthetic text, authentic human discourse may be the scarcest commodity in media. That is a remarkable structural position. Whether management can convert that position into durable, compounding earnings power is the question this quarter must help answer.

---

## The Quarter in Summary

Quarter ending December 31, 2025. Full fiscal year FY25 results simultaneously reported.

| Metric | Q4 FY25 | YoY |
|--------|---------|-----|
| Revenue [Non-GAAP] | $726M | +70% |
| Gross Margin [Non-GAAP] | 91.9% | — |
| Adj EBITDA Margin [Non-GAAP] | 45.1% | — |
| Net Income [GAAP] | $252M | — |
| Net Margin [GAAP] | 34.7% | — |
| FCF [GAAP] | $264M | — |
| FCF Margin [GAAP] | 36.3% | — |
| DAUq | 121.4M | +19% |
| WAUq | 471.6M | +24% |
| US ARPU [Non-GAAP] | $10.79 | +163.8% |
| International ARPU [Non-GAAP] | $2.31 | +25.5% QoQ |
| Blended ARPU [Non-GAAP] | $5.98 | +42.4% |

**FY25 Full Year:**
- Revenue: $2.2B [Non-GAAP] (+69% YoY)
- Net Income: $530M [GAAP]
- Adj EBITDA: $845M [Non-GAAP] (38.4% margin)
- FCF: $684M [GAAP]

**Q1 FY26 Guidance:** $595–605M revenue; $110–220M adj EBITDA (wide range suggests genuine uncertainty)

---

## Scuttlebutt Research

I believe that the most important work in investment analysis happens before the financial statements are read. The numbers tell you what happened; scuttlebutt tells you why, and more importantly, what is likely to happen next

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# RDDT — Q4 FY25 Earnings Review
**Date:** 2026-02-25
**Quarter:** Q4 FY25 (Dec 2025)
**Thesis Going In:** Strengthening | Position: 7.3% (shares only)

---

## Headline

Stellar quarter. Reddit put up $726m in Q4 — +70% YoY, beating guide by $66m (+10%). Full-year FY25: $2.2B revenue, $530m net income. EBITDA margin hit 45%. FCF $684m for the year. Rule of 115 achieved (70 + 45).

But the revenue number is not the most important thing here. The ARPU story is.

---

## The Real Story: ARPU Expansion Is Doing the Heavy Lifting

ARPU grew 42% YoY to $5.98 while DAUq only grew 19%. That divergence — monetization outpacing user growth — is exactly what you want to see. It means the ad machine is working and improving independent of how fast the community grows.

Internationally, ARPU is $2.31 versus $10.79 in the US. A 4.7x gap. Intl DAUq +28% YoY, Intl revenue +78% YoY. Machine translation is now live in 30 languages. The international monetization gap is not a risk — it's the next five years of growth already embedded in the user base.

Active advertisers +75% YoY. Lower-funnel (DPA/performance) revenue doubled. CAPI conversions tripling for 4 consecutive quarters. This is not just adding advertisers — it's the ad platform maturing toward measurable ROI.

---

## Key Metrics

| | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 |
|---|---|---|---|---|---|
| Revenue ($m) | 427.7 | 392.4 | 500.2 | 584.7 | 726.0 |
| YoY Growth | +71% | +61% | +78% | +68% | +70% |
| Gross Margin % | ~91% | ~91% | ~92% | ~92% | 91.9% |
| EBITDA Margin % | ~32% | ~33% | ~40% | ~40% | 45.1% |
| FCF Margin % | ~28% | ~27% | ~37% | ~32% | 36.3% |
| DAUq (m) | 101.7 | 108.6 | 112.8 | 116.9 | 121.4 |
| DAUq YoY | ~27% | +24% | +22% | +21% | +19% |
| ARPU (DAUq) | $4.21 | $3.61 | $4.43 | $5.00 | $5.98 |
| ARPU YoY | +34% | +30% | +46% | +38% | +42% |
| WAU (m) | 379.9 | 395.5 | 430.2 | 454.4 | 471.6 |

The trajectory here is what's remarkable: six consecutive quarters of 60%+ YoY growth, gross mar

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# RDDT — Earnings Review Q4 FY25

> Bear (PaulWBryant / Drew)
> Date: 2026-02-22
> Quarter Ending: December 2025
> Source: Scout brief (RDDT_earnings-review_2026-02-21), Atlas baseline, earnings transcript, press release

---

## Prior Beliefs / Updated Beliefs

I haven't written about Reddit specifically before, so there are no prior beliefs on record. I'll establish baseline priors from the setup going into Q4:

Reddit's thesis heading into Q4 was simple: it's an undermonetized audience with a structural catch-up story. The DAU base is sticky, the content is irreplaceable (human opinions, reviews, community debate), and the ad business was still years behind Meta and Google in terms of ARPU. The question was whether the monetization acceleration was durable or a one-time bolus from Google's algorithm change boosting Reddit traffic.

| Metric | Prior Expectation | Actual | Delta |
|--------|------------------|--------|-------|
| Revenue | ~$665m (consensus) | $726m | +$61m / +9.2% |
| YoY growth | ~60% | +70% | Better |
| Adj EBITDA margin | ~38-40% | 45.1% | +500-700bps better |
| EPS [Diluted, GAAP] | ~$0.94 | $1.24 | +32% |
| DAUq | ~120m | 121.4m | In-line |
| US DAUq | Expected stable/modest growth | -11.6% YoY | Worse — notable |
| Blended ARPU | ~$5.50 | $5.98 | Better |
| US ARPU | Expected strong | $10.79 (+164% YoY) | Exceptional |
| Intl ARPU | Expected modest | $2.31 (-24.5% YoY) | Weak |
| FCF | ~$180m | $264m (36% margin) | Much better |
| Q1 FY26 guide | ~$620-640m | $595-605m | Below |

**Summary:** Numbers exceeded materially on revenue, margins, and profitability. The DAU breakdown is worth studying — US users declining while international grows. The monetization story is US-driven right now, which creates an unusual dynamic.

---

## The Numbers Have to Match the Theory

Reddit's investment theory is: **monetization catch-up on a large, sticky, irreplaceable audience.**

Let's check if the numbers match:

**Theory: Reddit is undermonetized.**
Num

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# RDDT — Earnings Review Q4 FY25 (Saul)

> Date: 2026-02-22
> Quarter: Q4 FY25 (ended Dec-25)
> Task: Earnings Review

## Verdict: HOLD — Exceptional Quarter, Watch the Deceleration

Well, what can I say! Reddit just put up some really, really preposterous numbers for Q4 2025! Revenue of $726 million, up 70% year-over-year, smashing consensus of $665 million by $61 million — a 9% beat! And EPS of $1.24 versus $0.94 expected — that's a 32% beat on earnings! That is such a remarkable result for a company at $2.2 billion in annual revenue!

But I have to be honest with you. I follow the money, the results — and there are a few things I need to watch carefully here. This isn't a SaaS company with nice recurring revenues. This is an ad-driven platform. And I've been burned before by companies where the growth was real but the durability was in question. So let me walk you through what I see.

## The Revenue Numbers

| | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 |
| | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | 243 | 281 | 348 | 428 | 392 | 500 | 585 | 726 |
| YoY % | 48% | 54% | 68% | 71% | 62% | 78% | 68% | 70% |
| QoQ % | -3% | +16% | +24% | +23% | -8% | +27% | +17% | +24% |
| Gross Margin % [GAAP] | 88.6% | 89.5% | 90.1% | 92.6% | 90.5% | 90.8% | 91.0% | 91.9% |
| Adj EBITDA Margin % [Adj] | 4.1% | 14.0% | 27.0% | 36.1% | 29.4% | 33.4% | 40.3% | 45.1% |
| Net Margin % [GAAP] | -2.4% | -3.6% | 8.6% | 16.6% | 6.7% | 17.8% | 27.9% | 34.7% |
| FCF ($M) | 29 | 27 | 70 | 89 | 127 | 111 | 183 | 264 |
| FCF Margin % | 12.0% | 9.7% | 20.2% | 20.9% | 32.3% | 22.2% | 31.3% | 36.3% |
| EPS (diluted) [GAAP] | -8.19* | -0.06 | 0.36 | 0.36 | 0.13 | 0.45 | 0.80 | 1.24 |
| DAUq (M) | 83 | 91 | — | 102 | 108 | 110 | 116 | 121 |
| ARPU ($) | 2.94 | 3.08 | — | 4.21 | 3.63 | 4.53 | 5.04 | 5.98 |

*Q1 FY24 EPS distorted by $1.1B one-time IPO-related SBC charge.

The trajec

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# RDDT — Earnings Review Q4 FY25 (StockNovice / Joe)

> Date: 2026-02-22
> Quarter: Q4 FY25 (ended Dec 31, 2025)
> Prior Joe Coverage: None — first analysis

---

## The Opener

OK, so I've been watching Reddit from the sidelines since the IPO, and I'll admit I've been skeptical. Social platforms live and die by monetization, and for a long time Reddit looked like a great community with a middling ad business. The "could be" voice in my head kept saying: "But imagine when they actually figure out the ad stack..."

Well. They figured out the ad stack.

---

## Beat-and-Raise Scorecard

Q4 FY25 was a legitimate beat — not a squeaker, not a rounding-error beat:

| Metric | Consensus | Actual | Beat |
|--------|-----------|--------|------|
| Revenue | $665M | $726M | +9.2% |
| EPS [GAAP] | $0.94 | $1.24 | +32% |
| Adj EBITDA Margin | ~40% | 45.1% | +500bps |
| FCF | — | $264M (36% margin) | — |

That's a real beat. $61M above on revenue, $0.30 above on EPS. Four consecutive quarters of beats. The pattern is intact.

Q1 FY26 guide of $595-605M ($600M midpoint) came in below street expectations — consensus was likely $620M+ — and the stock dropped ~8%. That's what happens when you've priced in perfection. But here's how I think about it: Reddit has guided conservatively and beaten every quarter since IPO. Q4 itself beat its implied guide by 10%. A single cautious quarter guide doesn't break the thesis.

---

## The Numbers

| | Q1 FY24 | Q2 FY24 | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 |
| | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | 243 | 281 | 348 | 428 | 392 | 500 | 585 | 726 |
| YoY % | 48% | 54% | 68% | 71% | 62% | 78% | 68% | 70% |
| Gross Margin % [GAAP] | 88.6% | 89.5% | 90.1% | 92.6% | 90.5% | 90.8% | 91.0% | 91.9% |
| Adj EBITDA Margin % | 4.1% | 14.0% | 27.0% | 36.1% | 29.4% | 33.4% | 40.3% | 45.1% |
| Net Margin % [GAAP] | -2.4% | -3.6% | 8.6% | 16.6% | 6.7% 

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# RDDT — Reddit: Stock Analysis

**muji | March 2026**

---

## The Platform Thesis — Why RDDT Gets Me Excited

I am a technologist who invests. And when I look at Reddit through my platform lens, I see something that checks almost every box in my framework:

- **Crowdsourced intelligence** — 23 billion posts and comments, 18 years of authentic human discussion. This is the canonical example of "crowdsourced intelligence over islands of data." !!
- **Building block, not process tool** — Reddit content is embedded INTO other products (Google search, OpenAI training, enterprise knowledge). It scales with the AI ecosystem's growth.
- **Self-serve GTM** — Reddit Max automates targeting, creative, placements, and budget allocation. 600+ advertisers in alpha. Moving from brand (upper funnel) → performance (lower funnel) via DPA. Classic "convenience over price" play.
- **Cloud-native** — born on the internet, API-first, no legacy baggage.
- **Network effects** — more users → more content → more relevance → more users. More advertisers → better ad tech → better ROAS → more advertisers.

Here's the thing... Reddit is the **anti-AI content platform.** In a world drowning in LLM-generated slop, authentic human discussion is becoming *more* valuable, not less. Google literally appends "site:reddit.com" to search results because Reddit is where the real answers live. The "most human place on the internet" isn't marketing — it's a competitive moat.

---

## The Numbers — DING DING DING

**Revenue trajectory (FY25):**
```
Q1 FY25:  $392m  ████████████████
Q2 FY25:  $500m  ████████████████████
Q3 FY25:  $585m  ████████████████████████
Q4 FY25:  $726m  ██████████████████████████████
```
+61% → +78% → +68% → +70% YoY — that's **sustained 60-78% growth for 4 straight quarters** !!

Full year $2.2B. Up from $1.3B in FY24. First time profitable — $530M net income.

**ARPU trajectory — this is where the magic is:**

| Metric | Q1 FY25 | Q2 FY25 | Q3 FY25 | Q4 FY25 | Trend |
|--------|--

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# RDDT — Q4 FY25 Earnings Review

> Bert Hochfeld | TickerTarget / HHHYPERGROWTH
> Date: 2026-02-25
> Quarter: Q4 FY25 (ending December 31, 2025)
> Prior coverage: None — initiating coverage with this review

---

## Summary

I haven't covered Reddit in the newsletter before, but after reviewing the Q4 FY25 print, I can say this is one of the cleaner earnings reports I've seen in a long time. Reddit delivered $726m of revenue, +70% YoY — that's the sixth consecutive quarter above 60% growth, against a comparable of +71% from Q4 FY24. The company beat its guide by $66m (+10%), maintained the pattern of deliberately undemanding estimates that has averaged an 11.2% upside across all four FY25 quarters, and simultaneously delivered Adj EBITDA of $327m at a 45.1% margin — itself a $42-52m beat vs. the implied guide. The EBITDA beat is the more important signal: at 60% incremental margins, Reddit's cost structure is essentially fixed infrastructure costs against a revenue base that compounds at whatever rate ARPU × users dictates. FCF for the quarter was $264m, a 36.3% margin — the Rule of 115 (70% growth + 45% EBITDA) is rare company at any valuation, but at 10.9x EV/TTM Revenue with zero debt and $2.5B of net cash, the market is undervaluing what Reddit has become. This is a monetization unlock story at an early enough stage that the most interesting chapters are still ahead of it. The thesis is simple: international ARPU at $2.31 vs. US ARPU at $10.79 is a 4.7x gap that will not persist. Closing a fraction of it across 68.9m international DAUq generates more incremental revenue than any single product investment management can make. Initiating with a buy.

---

## Headline KPIs

- **Revenue:** $726m | +70% YoY | +24.1% QoQ | Beat guide midpoint by +$66m (+10%)
- **Ad Revenue:** $690m | +75% YoY (95% of total; 5 percentage points of mix shift toward ads in FY25)
- **Non-Ad (Data Licensing + Premium):** $36m | +8% YoY | stable at ~$36m for three consecutive quarters
- **

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