RDDT - Earnings call transcript Q2 2024

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Operator

Good afternoon. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to Reddit's Second Quarter 2024 Earnings Call.

[Operator Instructions]

I would now like to turn the call over to Jesse Rose, Head of Investor Relations. your begin may you conference. Jesse,

Jesse Rose

Good Great. Second Welcome Reddit's everyone. XXXX Thanks, Earnings Christa. Quarter Conference to afternoon, Call.

Vollero, Joining me Wong, Drew Jen Co-Founder and CFO. today are Steve Reddit's Huffman, COO; Reddit's CEO; Reddit's and

our I'd Before include and those other risks, will Actual contemplated revise These outlook to like we results is these statements. get in to forward-looking you statements. remarks differ date forward-looking materially that statements vary filings. this may no represent any uncertainties as could forward-looking We cause these factors remind statements. results by that of today only our our included from the or concerning of undertake SEC started, forward-looking call. obligation update Information to

financial set of measures this non-GAAP financial in to forth measures. Reconciliation shareholders. will call, and During we is GAAP letter discuss our to both non-GAAP GAAP

accompanying letter over subreddit, release Relations at investor.redditinc.com and Our and our I'll second the available shareholders now Investor relations earnings quarter on Steve. And turn website press investor to are to RDDT. call

Steven Huffman

to to for a the search, trustworthiness recognizing daily our interests, authenticity questions users people users. of users conversations for revenue in more across Hi, positive progress has are grew explore to and quarter, increasingly, consecutive EBITDA more and continued In growth via call. User communities. More to find climb, we're turning their our adjusted million strong our momentum performance everyone. both users We basis. variety Reddit flow quarter strong kept second content with engage QX, and to year-over-year. of Reddit communities. profitable And for on coming million and the had both new the topics. cash reaching with active welcome over and product. Reddit and second joining, their XX% we on to are and XXX heights than an wide was another XX earnings over their active up answers QX business quarter our you and And for Thank in

Reddit on Our and product focused work to easier is make enhancing user use. experience faster, safer to the

and the images. Conversations more different users more a are up our on recent we've including and faster into the of video improvements intuitive The engagement number near instant improved loading conversations reached heart bring often, driving high, of app and navigation text, across The Reddit, from XX% comments viewed post comment types, QX. new QX with more platform. to and

people presidents hosted easier some sessions, and introduced to several celebrities Over We it Me notable schedule to with interesting easier U.S. feature, from AMA and ranging we've the to updates the figures to participate. post years, to a Anything and stories. regular Ask users sports host for for making

new hundreds our updates These During test strategy, us of into created, audience. to brands and ads, are including allowing the pilot, tie AMAs we've high-intent which brands placements product artists. services to their high-profile reach conversation new and businesses ad with those AMA seen for advertising and

platform allowing priority top moderators remains expansion safety safer As We're the AI, our largest opportunities. Using scale, Reddit's and and to reducing day-to-day and one the communities. we the for our moderation their burden at them on so looks need like growing platform more International Reddit, for and engaging continues a spend what does of are making moderation time tools. to scale. evolving

led International can result, outside available was in is daily seeing U.S. France meaningfully and translation of Immersive was users France, XX% through now our time. good of as is we International our machine the where Philippines, machine This XX like in QX, this U.K. with and countries translation. the key users fastest of a million, and in a we from scale believe both growing revenue. QX. XX% base growing focus and active including in over current U.S., growth countries year-over-year the results surpassing by exceeded user XX% one growth driver widely growth we're India, the French, our strategies, and was

expand aiming everyone translation regardless now to to Spanish machine accessible begin native and to Reddit Portuguese, German, make We of language. to will their

Looking making the data initiatives, progress and user licensing. economy, ahead, search we're emerging across our including

platform scoreboards user tickers to saw look and this international custom the monetization Starting a the in economy. our growing developers. We're communities. sharing with Xx more to the coming with QX, investing out users have year. money hundred and developer sports We're within QX, earn create beta post platform to than our developer in public quarters. engagement we working active I few the forward about enabling with in and excited towards including stock our to use to about this on platform empower In more

Okay.

and helping our on the will platform. Users uniquely rate in on let's communities discuss over search. Reddit's opportunity this important success context begin content year, new Internet search. run into and valuable and summarize content, our Next, is AI experience work billion testing powered of product we today, more in deeper dive is improving the and on search queries month becoming Reddit Reddit. shows, the product pages discover result a X users and search recommend new search to Later by games

third-party Internet the are search. seeing summarization where in search training ecosystem blending. search, to We're Turning and evolution an

protecting between are right our We openness and seeking platform. and users balance the

people OpenAI belief align with they're looking to our and and the communities with discover Reddit. helping on Internet, partnerships for in our Our public content policies find uphold what connected Google and

with and Our Reddit preference it end. engines in search big indexed be this open towards is in and search, to for small third-party discussions are and we both

Reddit's still Internet in the journey a to journey And our opportunities mutually made part privacy. are now of ecosystem fulfill we've user to with content you and Thank use access content. progress solutions ahead transparent the those users, to the with we've hand instances, public we believe as with us. blocked content in and happy early our Reddit company. that in quarters I'm better many of and been for X it up, remain execution beneficial Internet protect this to and to again Reddit's and I'll their Jen. Reddit not open have in finding We with wrap are being players some our search However, And To mission. for over first community. We're with our opportunities a broader

Jennifer Wong

continues rate Okay. pleased quarter Thanks, for half in with prior Hello, business another revenue. scale our across was in strong and to executed [indiscernible] to revenue we a XXXX. million. and the since ad made pay year-over-year continue accelerated QX ad made our saw and map. XX% business from progress grew of road on and prior quarter year-over-year results $XXX.X year-over-year the from QX quarter stable on the QX AdTech Ad Steve. accelerated everyone. The XX% to off, the $XXX.X scaling to The revenue diversifying year. and executing and business, grew as We the investments we're the million first expanding we strategies and growth market. the Total partnerships

our against pricing. ad We loads, underlying impressions drivers. growth revenue efficiency me enhancements decline saw and drive year-over-year in year-over-year double-digit user ad in from to product a Let discuss growth personalized ad

financial by mid-market verticals pharma continue grew channel, was The activation We and our verticals driven and both channels, scale deepening which geographies. year-over-year. XX% new over diversify across services, year-over-year, relationships. led and our by SMB and advertiser Strength XX% by including retail, existing each to grew over business in global

accelerated and year-over-year, the strength customers in revenue EMEA. and International X relationships by drivers And driven prior across growth the from mid-market quarter. big quarter XX% also agency in large the grew were

we in advertisers to against funnel. full focused driving map more our full number number objectives revenue advertisers across performance solutions; and the Performance as business. usability of productivity number half made lower continue and our was Our offering clicks sales to doubled for our force; on: QX our two, than enhance and the We QX. communities. ad growth advertising the closer them measurable our of progress for one, AdTech three, our Reddit more unique road quarter our number improving than of solutions bringing our funnel the of capabilities and again drove funnel we in We

each. me let Now discuss

First, of ad solutions. driving our performance

We launched execute approach Telium ecosystem Manager partnerships to new continued adds conversion one-to-many our Tech our ROAS, for compared or building solution product DPA, or seen public API conversion have adopters CAP spend, adoption. we and Google ads, a Mparticle. with return other performance This Early partnership We data. ad as about dynamic a a to to on ad our with campaigns. Xx out with higher

with Now our solution, accelerate drive early still this new to in we'll this Memorable advertisers map acquisition announced we intelligence which creative performance. helps tools help performance of and improving And the AI-driven solution. bring ad to our recently continue it's road AI, invest to to and for

help productivity GA, and help allowing to insights our to we're acquisition, integration usability both year. expand our advertisers have models beginning second, we Manager platform this optimize offering working and platform's Reddit reach. data our first next Reddit's to Ad to campaigns foundational marketing for which is force. stack adding towards are analytics, our integrate and to capabilities. and Brickler advertisers our for AI creative, and build ad Reddit's users ads intelligence API, unique launched and customized API We've to impact integrate to with and partners with improving ads sales the API With

our with new partnership and brand first-party robust brand Double announced safety with provide and we transparency partnership complementing a QX, our to extended fostering with In and Verify brands. measurement major and advertisers the IAS trust safety controls suitability with

that a bringing both ready where ad occur. feed to for formats between of the action our early ads. conversation of intent page, all using both a placements click-through in-feed conversation testing. launched of set views a and higher communities. screen lift and valuable unique XX% We We high are on new users conversation Advertisers and in ads compared and advertisers driving them using test offering in intent for and refreshed ads advertisers and the solutions and ads expanded rates ad surface to nearly our Third, old closer experience those comments

to with AMA Ask Anything bringing reach about the and next-generation and invested new ways more launched with our advertisers resulting to their hundreds Businesses new communities. QX, and engage of In to product, are offering share in brands hosting of types with also products. AMA created. in AMAs Me communities them and to ads new engage We promoting we and businesses our users version content and

to verticals format a brings content on scenes that We for helps new our program, ad sports engagement category material. Sports over this including how behind and see global and categories consider also videos, announced natural program highlight a Sports users and are other offers with how our passing and X,XXX might platform ad communities, deeply future. on later are the communities And placements the place unfolds AMAs about a active and Reddit, interest drive partnership year we'll and in start. the This sports expand Reddit's was which League advertisers. with partnering we to to this

over business. are exploring Next, of aligned I'll there licensing of still $XX.X grew privacy by our with we driven across to policies evolving, signed landscape agreements public market primarily Other shift is and half user in XXX% content This million, to alignment. and who where are first year-over-year data the commercial data the year. is licensing the agreements partners our revenue and

large-scale for progress good partnerships with access, has corpus on we've made its first protect good enterprise strategy we while marketing smaller made work explore recent new for and and To markets. potential with that of privacy and continue and available this progress. opportunities Sprinkler also of intelligence ways was platforms place licensing make and to scale Through a these additional company, guardrails bred and data these date, our Reddit, AI putting technology focused of OpenAI Overall, our large companies. half with to addressing to authentic users' and content. Reddit's verticals We'll year in and search lot a the partners emerging conversations

focus turns work the half to year the as now the of to business. back continue growing we Our

to Drew. the Now I'll turn call over

Andrew Vollero

half of Thank traction growth compensation. most and metrics the and economic second, continued our flow, dilution across in financial business a inflect cost important very important sound you, the and out continues on strong board, profitability QX cash good Jen, scales; the on our the and shined; CapEx, results first, saw stock-based like our start key X third, solid year. which to afternoon, rapidly drivers quarter, developed: as In themes built really we second rounded quarter delivered everyone. first Reddit

but users, about were solid rate Let's out first few The years. revenues, speak quarter up year-over-year. logged-in was total revenue growth the the really XX% point growth, metrics, margins million, growth OpEx. We end the fastest users and AUQ to XX%, year-over-year, the specifically XX% with users $XX.X and of strength in XX% logged last in grew quarter starting both with each key user growth saw gross exceeding and

Revenues Margin XX% impression licensing other our in margins growth. Google, over as contracts were primarily in Gross the $XXX pricing nearly grew in OpenAI deals efficiencies, fuel XX% others. new operating to revenues. QX, the while by million, Ad driven gains incremental and up by XX% the continue driven prior grew cloud revenue up XXX%, with were from leverage year, hosting growth quarter. shined also really from our XX%, from lower and revenue

For X% and OpEx quarters than sales. modest sequentially in QX, continues X% has targeted headcount our the scale the house where organizational few year-over-year. growth cost like very to up learning AdTech, averaged OpEx the leverage XX% areas and was X%. the of X front as over about consistent less machine The Total years hiring it's last we adjusted is growth adjusted last with company built

So as key can terrific traction on see, metrics. you

fast Second, let year fast level strong rapidly total the profitability adjusted breakeven. prior profitability GAAP touch and model. up costs was loss over be revenues continue grew grew in adjusted GAAP our negative QX million significant total mid-double-digit ahead adjusted $XX total very sequentially as nearly the well how our solid key $XX EBITDA $XX was XX% both cost X% adjusted and as execution less gains Xx and Revenue as against and as million, The reaching to QX, as year-over-year. from business in at internal our in QX million On costs on similar as That's EBITDA margins progress me long-term our inflecting than reached QX a prior slightly year-over-year. better year-over-year goal in of than grew net to is our Adjusted million, up and XX% growth million up of to XX% internal growth. basis, of $XX revenue year. twice economic XX% $XX goal the scales.

Now slightly of EBITDA in quarter X adjusted our we a our for quarter, XX%. a $XX adjusted change incremental positive change last revenue. relatedly, million EBITDA were million $XX in margins the on XX% than higher In QX, saw average

areas million change positive we're of cash $XX not like costs, point, and flow, seeing important on QX, third the stock-based dilution. an to Operating Now flow like in growth was and metrics but only cash good traction XXXX. $XX in CapEx, QX also million compensation from

cash first For flow half of million. the positive was $XX operating the year,

million, QX Our less the Stock-based million, CapEx second was stock of light, to basic million shares compensation modest $XXX quarter. very about $X recognition related IPO-related remains were but due the including diluted last XX% was the in were Stock-based outstanding compensation, $XXX quarter, fully of count million, revenue Share about revenue. from substantially X% were $XX than X% quarter up taxes, down expenses. in the as down for sequentially. movements sequentially, shares of

as $XXX we billion. profitability on and our over The amount for right cash the where today lot $X it medium In our gives flexibility term, of M&A flow. time On investing being: is believe share $X.X which scales first, capital cash million of look makes company priorities around a the to business positive will the billion, hand deploy other business in cash with to business, sense was and hand, us repurchases. capital into

acquisition ad performance [ the Memorable lower our optimization of completed to creative help for platform drive announced mentioned, Jen we ] recently As and AI advertisers. and funnel

The QX million, reflected and preliminary deal $XX.X July financial closed consideration The will be in million statements. late in of price $XX.X the cash. purchase including was

and of quarter, have visibility. for the share the third our As where thoughts date on we EBITDA we'll internal greatest adjusted we revenue look ahead,

quarter range $XXX million estimate third of the revenue EBITDA in to and million. $XXX the $XX $XX XXXX, in range million For adjusted to we the of million

QX have content and include in leagues. partnerships the anticipated the these QX We will beyond. year, benefits modestly in estimates These impact and financial from this to than contribute XXXX deals signed should recently the greater sports more with a anticipate revenue

the quarters of solid the were nice were summarize, of numbers to Both and Reddit. and QX for to XXXX. strength QX consistency first see So the half throughout

historically half to business our said, seasonally, That XXXX. of focus and and turned attention back the we've our scales

call me the let Now over turn Steve. to

Steven Huffman

Jen. Thanks, Drew. Thanks,

questions going up everybody else. our to X from open and We're then it to Okay. community, do we'll

have a using other distant in or past communities into content something question, Reddit's language translate a First that actively languages to interviews, better mentioned large being you is for connect Reddit's Is vision this just models built future. to internationally.

for or being was which language speaking full translation the means a testing group, minus in France, very And in immersive that's It's our see now real-time if first working well. experience. French, built. and for which availability, French GA, small this, you're something doing can holdout general it's it's -- you So it's

kicking was we're off now year out short, a those Spanish So as this successful. well. aim really later is Portuguese Long with to get our story German, feature. promising and test the This

and so term. have I And think it's an impact the in it real, should short

this source Advertising Second to Reddit. read revenue, for of the prime of and the question, quantity, or for profit To number revenue this generated of ad, increasing ads Jen. increase per one's is you featured ads, plan on focus I'll on do quality, Reddit.

Jennifer Wong

Steve.

early, that volumes and they revenue advertisers and So our want. they important ads auction And at to the price growing find the still our what's in want young. marketplace is outcomes is still platform

So we per do cost thousand which value opportunity can CPM, drive more demand to performance per drive ad or more see and impressions.

without where is best for to tell peer today. ads of today, are example, many platforms. there is in there the can like peers. Reddit ad on But outside are feed, light half the places load we about compared Reddit, in As on And still

for spending existing time So spaces load more users spaces. increasing versus ad designing in are we're ads more where focused on

conversation XX% an example, now opportunity. that's of for in they're screen So stages, views,

Steven Huffman

Jen. Okay. Thanks,

I the Drew them post and questions, and tomorrow. Jen, them the record For answers will rest community to of

Jesse, Okay. back you. to

Jesse Rose

why Great. on the that are Jen. some the we don't Thanks, from Thanks, line take open folks the line, questions Steve. Appreciate it. Christa, up now.

Operator

Instructions] [Operator

from first comes line Your JPMorgan. of the Doug question from Anmuth

Douglas Anmuth

and hoping XQ on the Drew, and third ad market the quarter. more provide the you health guide, in the for into one color was One I for particular, could Steve. more some Drew any in insight

some league like back revenue. -- in growth in seeing you if suggest of the either very It incremental is sequential it doesn't the even perhaps then conservative sports looks and something Just you're outlook the well. because perhaps business contribution OpenAI or much out benefits as revenue

just if call testing new done you anything providers checking here Steve, there? just was results And to I going to So Can you there. talked partnering with third-party there's well? are internally? all Is about you as out pages. then, elaborate search Or this be

Andrew Vollero

Okay.

On the X guide, XX Doug guided X here, to XX [ we ].

If you year-over-year of good number. that We think growth that's the midpoint think versus take pure is mid-XXs. the that's set. We a differentiated

in growing over X look you to high been quarters, If the mid- XXs. the last we've

we your bit feel So I take your point number. it's measurement like different. stake that a differentiated a is

You're looking at just the quarter. only second

point I there. your So take

the of looking that and the think you're terms sports that's beyond. that sort Look, are them. of the I bigger something revenue at deals of us drivers idea for In XXXX incrementality probably in a

get force, sold to et cetera. that sales have We our through

very would in look for impact So I modest QX. a

quarter. kind the a of NFL have particularly the little we'll think NFL I with of season. more, the That's the main part in bit fourth

be third think pretty So will modest. in the that incrementality quarter I

saw of OpenAI, the of we deal benefit the As to the about second quarter. kind relates half it in

seen. a to looking finger in there can we there incrementality good. the particularly third bit your guide our we're different quarter No, put at But I that what overall, be isn't on? than will the things point. Are that of that's little So there particular feels anything we've think

particularly the Now some and for in is full around still year, macro fourth uncertainty quarter the elections. there

but now little take point, that's than that. background. quarter, we've I I where than lower guide feels broader than in the think think third the But we last bit I been think it's a a your the feels do is a been So the we've X little over the I right But little take to overall where in better quarter, bit good in quarters. the second think lens business I

Steven Huffman

Doug. Thanks, Okay.

about search. question Second

talking over our A couple back on of end. the on we're about last So of lot Reddit has search. work the years been

results, those actual and the So results. speed improving of relevance the so

Some of on technology. that is first-party

enhance that the of those models. is also Some to some We're results are third-party of Again, with technology. beginning AI. first-party

third-party user these we'll And package rest models. I the Some to the year, start and because of the product what experience we script my a gone is that's long time. how in of really for those will unchanged change, was actually referring be results front-end to this see so

new opportunity. is on run a Many Reddit users search. Search huge a

onboarding, You've about connect users their heard me on talk interest helping to Reddit.

what typing For into exactly literally many they're they're interested a users, in. box

product But efforts improve significant it's, over there the product. will think, advertising important here really to consumer potential term, of our I'm And I So -- to service really, is then, there's as what it the area. that in-house be long course, referring of well. presentation

Operator

Company. Your next question & Martin Needham the comes Laura with line of from

Laura Martin

I will be your only X request to question. have

protector I'm And money and to the more or a earning Steve, these Historically, hasn't conversations of moves going creators agenda been sort platform a a to for money. try on it Twitch are on Putting line. to earn culture fine of hat, going your and are about which X So in people you Steve. towards now there ask guys hidden of YouTube

of how the time, unique do you're protect let same Reddit. culture conversations. money people these you wonderful from to make At So going this

Steven Huffman

Thank you, Laura. Great question.

this It's magical of the truly yes, think, breakup. things almost time people special I small should profound. and Reddit each I about through giving the I really, like decisions, one helping people decisions So helping which advice, of and spend sometimes watch honestly, should sometimes truly I go effort amount other, decisions big tonight, through think is

using Reddit, existing In whenever is we've experience new seen start incentives there, to that of we but Reddit, cannibalize my if on basically like change. include it add it does expands incentives, is Reddit. question in other way we not Your monetary what Reddit, a happens

the version exist door alteristic-free to can thrive that think the Reddit we But has. will just of of that that unlock existing and cases, have the subreddits it way or for grow use may exclusive will types content And now built areas, new private things new and so nature. of continue I be

example good images links and the we for Reddit, past. all of was back were didn't images is, at A in linked. and this, host It example text

other So new also for platforms ton to image grow. we there's and existing that or but a a to Reddit the around we'd all images. When websites link of added link communities built of based continued hosting, feature, sudden, text

I'd look So It's at Reddit, which cannibalize existing that this is as the one I as precious. is we that an opposed opportunity as expansion to said, of something going to is magical. truly think

And so we that's watch course, things closely, of it out. but how we'll, playing see these

Operator

the from comes question Citi. Ron of next Josey with Your line

Ronald Josey

wanted growth to well. in up and years Steve, saw in amongst usage comments as the think, maybe advertising. ask I of fastest saw XX%, DAUs we viewed, think also, up I in past couple logged on the I we and comments

each terms has on how I conversations with your just back wanted few evolved saw of Shred-It, terms onboarding made really hear And con. the ad to has just the dynamic the over that the mentioned site itself, about it you this here. really have new on and then, Jen, wanted changes the curious market. lasting implications months past be Can the So a I in processes Reddit. We have advertising whether team to hear of about the changed over in weeks advertisers stable other few driven

Steven Huffman

logs growth last up thank you among indeed year. that questions. XX% DAU you Yes, rate the years. over as That observed, is Ron, our in segment in Okay. fastest for is

So is couple quality a performance. to were then your structural say we're it when broadly helped improved into Reddit, we lot. very you over Shred-it, question, be change own you're And that push has which And I answered on been basically to a would feed. with the global a represents general last used user happy onboarding, a putting going web around is new through that. there which you we've years, of Red it

is core you was popular product experience. first the what years that the life. the community call Reddit into we That today. XX for get And the onboarding happens of So now maybe our feed we

interest a try there. you. then has and subreddit, in home in feed we specific find And so And from we that put to to you the those we grow communities

and and that gotten compounds has user retention dialed to first experience much of meaningful driving so improvements course, has the in to been growth. relevant and users, And more user which new new that

for And big so I time of word top think third-party very of had story this long funnel is a we've it of mouth. and the from search

the has those users we because can goal been, on shots so And get many question day. every retain we

over ad the X growing a and users, Jen, less much we've since new question stable at better gotten retaining last users of really, been last on So year, over the was we've year. month market. million spring a second more or there

Jennifer Wong

Yes.

elections. strong sentiment Can with first I think time few of in we can pauses the jitters. shooting. I a think things. election, We very rally real Look, of around I'd post. saw market election we -- think working the did the a very there will watching we're We're was U.K. pauses around watching snap Trump ad a a I are stable in saw few Ron. have very, Shred-It, QX, inflation, say say positive. things. geopolitics, some I it's One, see post can, the all,

flattish a there's back think half growing. bit lot versus also I So more caution. agencies recently, of being budgets a little I caution say signaled have will that of

play that's So caution how back there That's might we but [indiscernible], think a that holdcos, something kind a some from half. big I have ads, large about not is we're the of think I clinical which player political in in. not and the

cautious think So we're overall, still bit I well think it maybe is but more -- still if I positioned. little a there's

Operator

Stanley. of Nowak Morgan with Your next Brian the question comes from line

Brian Nowak

back spend? your go Can to what spent? want of that on sort mostly still I us Jen. -- side? just branded And they about the who you spending advertiser more growing over are of you're count, of you ad Are of then sort seeing Walk advertiser branded so update your driving of strong sort in advertiser talk actually going on to the branded the spend remember markets, on to ad growth us, advertisers sort Are advertiser seeing your I on per driving any progress us give kind the on us can headlines pre-IPO. Anything you advertiser what's XQ. through your help really the time? kind this of your you spend, beneath growing what's

Jennifer Wong

to. Happy Sure.

align seen was on just in I nicely on can well as product, so an objective think product the brand, brand takeovers, the come using category both fact, can really Brand reserve takeover our for fitting a against buy brand. And objectives you into we've is cetera. growing they folks category against et as your question like us. sports, as auction, where specific which so So specifically the subreddits,

we see the well of the Reddit nice brand free adoption products both been advertisers of like come that formats in So unique format. have as AMA of those into as refreshed some

brand across has solid objective, an is there and spend diversified as actually been really and So brand performance.

of the business, healthy pieces think it's of really number of terms underlying in I ways. a our In

is some future customers managed really been advertisers, start grow seeds the and segment you SMB. because active growing those one are mid-market products has And number the for that more can you we've for So and large and in those more managed objectives. advertisers number the of particularly in in small

future. us allows the think, for I that, seeds to So plant

part, becoming XX% is mid-market second our had of year-over-year, international diversification. growing SMB growth a over across growth The scale vertical The driver, business. drivers number XX%, we and a

group group. vertical that be tech it So used our #X was our to

I retail, in financial our pharma, so think, was This interesting. services, of CPG, the that really positive. That changing the actually it's which been has quarter, booking, group our book, face continues really diversification it included actually

an growth the and that we've has accelerated -- objective lower funnel then thing our in as in I'll been in converging auction. the is so And say final specifically and investing and

So for more objective more that channel. because allows performance, really see particularly delivers unlock the nice as scale an to that's that advertisers, in

So think is healthy. I really business the

We're the doing a at to managed good because advertisers well as job rates new high book the as new adding capabilities. or platform retaining advertisers of

Operator

question Goldman line next from Sheridan Eric comes the with Sachs. of Your

Eric Sheridan

building path that that acquisition little having market years around should and you Memorable in you impact thinking was and bit to organically the a being as asset is an the ahead. down on really topic why and thought to accelerating a about maybe theme Can team the AI. route The right about you for going How how versus acquire? the we that business felt integrated asset about be the broader you talk

Jennifer Wong

Sure.

this to both our that advertisers. that and more that that, layers making on for also valuable an and So and road that just we is that Memorable, develop be know was on add to we is ad all in just technology much ability our map -- one something come in I build, around it can creative, but optimization map want market, automated, just ad generation. we for driving the which accelerates stack we creative of the easier, value our of performance could and scalable their experience mean, how showed road of insight is our acquiring part leaders one really then the and to had It customers deals of the stack. our insights

of and acquisition, accelerate lower particular. it the a to the mean rates deliver end performance, the in end the funnel, technology the performance conversions. in lower we really and the of and have half at work our get help we're back quicker but will having I next of impact that and year, can where to ad fall creative -- integration ability formats with at year lot So doing talent impact start but particularly all the of it lower this we're will on integrating

Operator

the Your Rich of comes Greenfield question next from line LightShed. with

Unknown Analyst

daily of obviously user seen week. actual active about you faster the you're is in assume people to search great or questions. how of of upper how gap of and from talking that I a in the user. like Reddit become -- search-based is What platform. Steve, of you them And close sort that something in either that once DAU growing and while a couple drives guess do sort coming sort how -- it question I of comes there improving still you got it's Like I someone are convert which a to get that into who you've the daily that users historically be somebody your about you all or an users. sort than But talked people touching users? changes? is that funnel, these every over engagement daily But weekly your your Is addicted single time? have do product

up you've wanted same are on, color would that CPM's early side a that year-over-year pricing users that given platform. just seeing the then the just about the of CPM with what's are overall you being pricing of, Jen Any follow think up quickly advertising side are, to great. simply issue growing just on of happening just to, I in And can't the I Is the from comment on down. the how on Is be too keep made growth you, sort you it and ARPU?

Steven Huffman

Great.

will take half. Okay. I'll first thanks. the second Jen half. the take Rich,

So think first. good logged daily growth. there. happy -- we're with We're growing, first in is a Weekly out so position logged look, I is let's growing, in, things growing,

observation and And we in that's have correct. volatile to or more convert dailys. can be operate dailys, of we company we news necessarily they you. do and the more the of to growing we weekly don't even and so, because course, is how grow by monthlys your about third-party is how dailys. really I what course, think can But events affected search want Weeklys be more think

is users, you One users. you would our is them and ML, bit on very that easy the third-party users, back quality. all retain come -- core question. work, your differently, new to it's but there that on Do We simple in is getting think we session both about making a product see something them more. hard is a Do at search Reddit them And see it see users, core how every caution we engaging? onboarding that I work that uniquely platform is assumption day. which of dailys against Relevancy, getting -- come user back explain. to first many the something little the to do it's search the are

answers be the come effectively But that new -- learning Reddit, and or bit Reddit, are little join not experience session search. maybe looking engines that users other in I navigate the there a may They'll eventually, think myself I include front download potential using we has to over to search they're through experience. to them that the of questions. a So users in come come a heavier And community. they'll there website. their of They they'll time, [indiscernible] to of that from is value but get that number door. That's a our But cohort. app,

come relevancy that's and play where growing we're quality those retain then mentioned I growing users. around into everything product we're to And retention and And DAU.

account, with go communities So somebody another the they which longer Reddit. result. They more they that interesting spend on time actually Reddit, and there's And has we're deeper. happy the is and then more their dynamic on deeper join

And they actually Reddit maybe and course so on other where on Reddit users age age over they into platforms spend more years. of the out, time

So I think a really is powerful this trend.

ARPU Jen, half between of the interplay CPM. Okay. second question the was and the in users and users

Jennifer Wong

Sure.

think, DAU strong with in I So fortunate a Richard, user of We being the the look, little growth managed position more, revenue the, and manages revenue managed company we're having X. really we of and growth users ARPU at bit in have, nobody that side I in the when is share I But top I row think headroom why we've look revenue and think the ARPU. I headroom down. have think to and on continue we growing around been the that's growth,

the be that we it in may So a problem map. think first-class I have

the the On on what's the the CPM placement in driving page. is side, decline CPMs conversation really

doing unit -- newer we're are still that of building demand that. so right now, then we're the for a that and couple do -- a things that's unit. And and to -- So there

the the So that else unit. one unique. market anything different very in market. educating is very than It's about It's

partially an best to add-in of are the aren't platform. They their In some comments best the fact, most part people don't be -- the but of done. most because part there's comment, platforms don't reeducation Reddit, have

that second creative The that format actually of capability. a is has it that we've set so refreshed broader

the of in little just One that a things format. our functionality more is wanted that advertisers

that, advantage and take to So able we've recently of released they'll it. be

I increase finally, testing think inside the comments. ad then that And we're demand. can

page adds that because there's it It's just very testing. inventory it's demand experimental. to that been low So more that some It's very new. for

high yet. have wouldn't unit in that So obviously, that CPMs

that when So the on now XX% of but I views page. at you I screen mentioned are look page, think the conversation earlier

traffic ad going a on contextual demand intent, the we is that match the is high flow which impressions page, the really have to great highly through the that page. page, but to So of

this So we'll continue demand the to grow on new unit.

differential unit performing, will the the supply to time up good it but with the why really catch you been CPMs. I think it's take see That's for generated. demand that's high in a

Operator

Boone comes Your with of Andrew from next question Securities. line the JMP

Andrew Boone

just maturation you You this of need as more Steve, users is and people retail seeing you an a you search unlock you new via more time. influx to and Can anything And different do with then, mentioned retail acutely? the new Are as advertising how just well spend more of product. have an user opportunity earlier seen guys new to improved users talk what cohorts just Jen, about recently? the guys DPAs massive about opportunity.

Steven Huffman

then Me Jen. first Thanks, Okay. Andrew.

Okay.

of working new working, is the improvement of measurement think number experience seen a things because steady anything operating metrics. was, really that of we're is so last the seeing in can't up. retention, those move news cohort my question our which it seeing actually That's very Reddit, in of are we've always onboarding all In is happy I relevance, see or an Broadly, and couple at over we're retention to in And experiment. of individual quarters, internal hardest you with. that's the go users. new latest we one ML So performance user the the core

Reddit strategy easier while. run our just for to working these for So year. better, the you faster, that's safer, of to have been use, of a make simpler, kind But improvements let product last

on Jen, that question was So Reddit. new user retention, opportunity happy the among cohort. with particularly new the retail about the

Jennifer Wong

think But hardest, is level how has prediction the done the the from it level opportunity retargeting. given DPA. one I it to think Dynamic product big has its models targeting of feed its objective, a own detailed measurement really catalogs the have at ingesting and commercial in I is Reddit. models way about a on the it's their information back all right, to own the question its end-to-end for Yes, intent also Look, own -- they industry. and workflow and product ads, it's this is

ecosystem itself. big it So onto a is

working on and our incredibly API, models for better into is, and for what CAPI, and models So signal one, driving so improving better conversion feeding the number important signal performance; we're two, performance. we're

some finally, Third like measurement advertiser the is audiences, to to cases, maybe against; improve very continuing to side, from platform into both the the an loyalty target then, enabling in they our programs retail on then be that and able catalog they and first-party just to want for jet. and format for match have obviously, data targeting; networks specific media

we we want to adjust that even make can more and but catalogs So today, process easier scalable.

but is the DPA. and So just road, really we to year working would a this handful these our think business I 'XX goal are improve a across beyond. for is all can be it in with -- build a it say material that to the so foundations to of DPA test It of continue areas to of big more contributor partners a I longer and is opportunity.

Operator

of with Sandler. line Champion Piper Tom Your comes question next from the

Thomas Champion

the the better. talked to you've is to reliable past in make way Reddit grow about Steve, most

you just search, a curious What from customer guys I'm do think to the subreddits be functionality sports experience between the perspective. on. translation, most the potential laundry list of are text So content, impactful has you things working

Steven Huffman

I'd kind X Tom. broadly or X think to dimensions Good say there are it. Thanks, of -- this I question. ways X about

is general first like the the quality. So

one so is, Product outsized an there. mature content still impact experience fastest-growing markets search quality is our the this In And has of it, already because the like the actually ease is U.S. markets. use. call onboarding of

home you on a English, you in I America, have speak you live Reddit. guarantee If if

is going Your interest, through on somewhere. Reddit into your passion, are whatever you're

reveals reveal so that. And we the so we around and effectively onboarding is relevance do can that? And more question anything

driving U.S. the in growth that's of lot the so a And

content the of we outside Now need U.S., to the grow. base

translation best English. the ever outside grow one of machine of content the So base we've opportunities rapidly is to seen

languages. tests last mentioned of expanding French. couple to We're very this the in over well. went other I've quarters, our So That

So exciting I opportunity. think a this very is

content and market, will work of all quality every course, that base, people have Now to the recommend -- of base onboarding to but you the too. efforts have in the community that works

And translation so that's the is where affected. really machine

in machine U.S., block them the to it's tackle to the a that. the translation summarize, be quality it's on outside work. get of the can like where effect quality to and point product the multiplier U.S., So And of the top

Operator

Salmon Daniel Research. comes Your next from from New question Street the

Daniel Salmon

Steve, and a thus about your and lot search you talked model data third-party and search training with licensing relationship business. the

the I'm to the ones about includes type beginning much conversations about layer about dialogues. too an also back and you a tell us beginning broadly, restrict more that access more in forth the reports have is in some important seen those those us You talked bit of X Microsoft variables that, more don't that's partners? to potential that in can to sure with that transpire Reddit you detail take little partner. tend Bing. Or deeper potential we your to be content want news just in cases. a to example some of of speak But and

Steven Huffman

Dan. Sure. Thanks,

that's of But index peers. the folks open. The in open that put in consumer what's The some content the most look, and crawl super quo, we Everybody valuable. users, content, engines By calling use us can't most in our search. that search is Reddit so status think us see. So is other arrow the finds that. way, Reddit cases I Reddit the grow. the is still get corpus Reddit training businesses search for are old of on changed is we wins

used assume can data And longer intent for. is what no Reddit's being for we so

went of being open we a to from default so default situation And crawlers. blocking

Now users. we're still for open

content have You preference it is Reddit. for open to account be an with have out to we our noncommercial come corporates even Reddit but available to has use important make for to terms. to And our see there, still and free indexed, don't for be

want going of basically we to what a can't identify a them, data we data user to target for. or Reddit being the that again, And we data -- resell couple Reddit it's not users created you it speaks to public using because, And content and where is privacy, so policy ago. to used months released know ads

are terms of the And those so engagement.

available that. noncommercial some it's had players up for that make And as sign researchers small big has players But dynamic market free Reddit for the for for we We've some changed. up and had for sign we've ecosystem Now sure. use. say well. a medium still and I'd

used Reddit our to are preference said goes with as considered is but where many All what I Look, to everybody, conversations be think, and have we of of for. very data our ongoing. it's need I relationships times,

Operator

comes next with Benjamin Bank. the Your of Deutsche from Black question line

Benjamin Black

opening anticipated. it coming earlier So developer on is to the so than monetization up platform, we

to instance? a little So results flow-through about to Is of down. public -- And EBITDA quarters, last your you comparative broadly, guide couple a the step then XQ in embedded the data surprised just of the the midpoint and bit margins, there the Drew, can implies quickly maybe I you of was, the XX% more guide. built for bit on a the think, from swing some upside more in? factors Or talk talk what

Steven Huffman

Ben. Thanks, Yes. Okay.

platform. debt on question First

So beta going the is nicely.

side. with a year. running effectively iterating in now. in So the are We're user because stuff That's cool playing developers and the things we're some beta the beta one code in built this most public technology. it. hundred on got more both we've of closed servers We've of a on It's the still client complex our works. few for on we There's

where I'm So excited it. take see users to

very, to of get out I'd debt things of of there. and Street anticipate, kind scoreboard, which a of very us. some is is see stock build didn't I'd -- tickers users Reddit kind ones some for We aim ones, be see very like to to apps I'll excited fun we that. bets, story scale be is Our surprising excited common some interactive of of Wall more these platform at both year this and see somebody something that these love

is we're on is that then And to looking we're monetization. milestone the So surprise. for looking X the for connect other milestone dots just

app written by a user something really getting an prototype can so basically user. through platform buy a another developer And where end-to-end

proof scale getting second that of will think, this anything kind promise that. a year. margin progress important nice really about and can't Drew, concept like milestone. I of to QX. be, flow-through question we're was end-to-end towards or So that I But the making But

Andrew Vollero

higher you run good of Look, a of mentioned, there's There's things been the in going the range, of XX%, guide of The quarter, really a sort couple couple has, X XX on things where our I the quarter. I quarters, in think, enormous are think, margin XXs happening. last guide X than in us a for more it's Look, is itself Yes. XX% on. margin there's nothing incremental mean, as ]. the between last [ little incremental an that we second again, in revenues were friends. I are a

which pick up is there, we'll So nice. something

been nice contract prices margin, hosting. got as think has again, there's on I things over you we that small about structure. a think couple just about margin on last think to of months But our stuff the the XX a benefit

And you the third pricing so the in enjoyed We've in lap benefits kind mid-third year here start contracts those We'll year. those in that points signed to kind up last gross second our were of now basis quarter. of we full quarter. remember, of a margins quarter contract XXX

of a a raises So X other the that have -- bit The small typically that over quarters third the company will on be a won't couple margin. things little see seen in that. quarter. of we in Again, the we benefit last pays the

quarter. again, also the a on third stuff. bit bit cost small the a the more So we there, little then hire there'll structure be margin, on And more in

hired we typically that that come Historically, during folks we've folks of universities a from lot have the that time. start in,

little a So margin it's again. the on bit

right? we're well. costs associated little translate, for as with So a Maybe around lower But there's foreign There's of the guide what some kind the into of starting huge. you of So sort there's we'll nothing can in a is. bit model overall, do significant said, margin Steve in couple as that some the see languages, translation, quarter. the also of the markets math points business hosting nothing to

now things, those huge the structure. right margin So no are but in change

Operator

today comes Alan from Capital. with question Gould final Loop Our

Alan Gould

two. I've got

historically you I'm than much to were assuming goal impact what And on period billion for First, Olympics a you $X that what multiyear $XXX not engagement. is significantly that's as to political second you now. a one get I'm cash assuming on users' that. to had million is guide the of revenue? have that Drew, less for cash and

Steven Huffman

Alan. Thanks, Okay.

I that real First question, maybe Jen quick. and will tag team

activity zoom out, is certainly fluctuate somebody always is is What actually has traffic are doesn't are we've that somebody the So major there a of and so traffic Olympics, like events been because -- is our that sporting many are but that growing, the our much thousands from to big world pretty there on in seen moments always Reddit. one Bowl right? anything huge, having subreddits, moment, Super and time, But seen events? feeling elections, there's Internet add these the kind a when around always view Reddit. is on feeling more. having revenue a long of kind it or as or despite we've sometimes they Jen, of significantly subreddit moment, that's a on even steady point there large this of that's were on some for twice you Reddit a as yesterday

Jennifer Wong

reflects tracks a they critical moments something always there's there's of parts it these out that's which but throughout in us different ad, to in moments that, are not I kind just and overall, year. revenue. happening opportunities, Those say opportunities because think out, what not the how Olympics, and bump of the smooth they sales in like happening Reddit, from is -- so don't to but a Reddit see we there's on said, No, smooth focus you tend for

Steven Huffman

question Drew. with the final And Okay.

Andrew Vollero

Yes.

$X.X last Thanks has right at right, of quarters, the how you the you're over the sheet flow have been we which the a We about billion side, I medium for kind now couple and things balance positive billion. cash that over nice. Alan. wanted on the of gave think $XXX the on cash we sense the is to cash dimensionalize term. question. On

cash So build. the is to starting

priorities think a to about on also how the you give we wanted We here. sense

will The aren't priority business. investing first be a now and from to ideas in perspective. There the huge be capital continues investment right

starting at M&A. also look we're so And to

Memorable the us saw quarter. in tuck You in

that. money there's about to share sort for think well. So then as of forward we available move start we'll repurchases And as

the of capital priorities. sort those So are

I of think that's our test from billion million we think sort right stress perspective. credit look a the business of to it, too. a is facility of Obviously, how behind $XXX We we $X have at amount cash.

to and for what certainly it M&A available lot you wanted little I do company of to cash dimensionalize for So I how future. the start has to think wants, liquidity be and but like has we repurchases capitalization think things the in a a about might the bit share what

Jesse Rose

joining. open. Thanks, look Thanks, forward keeping Great. for We Take dialogue care. Krista. to everyone, the

Steven Huffman

See Appreciate you. folks. it,

Operator

you now And and disconnect. concludes conference this today's you may your for Thank call. participation,

Reddit (RDDT) 6 Aug 242024 Q2 Earnings call transcript