RDDT - Earnings call transcript Q3 2024

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Operator

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

[Operator Instructions]

I would now like to turn the call over to Jesse Rose, Head of Investor Relations.

conference. your begin may You

Jesse Rose

Thank you, Quarter to Third everyone. Good Earnings Conference afternoon, XXXX Welcome Call. Reddit's Rob.

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

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

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

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

Steven Huffman

last exceeded DAUq, has few XX% Thanks, for of from time, that Jesse. long-standing earnings milestone we a And been an to during million averaged first joining, XX the excited and call. XXX landmark I'm everyone. increase third share for to over our welcome the was for Reddit. quarter a a DAUq which quarter million We year. times quarter, Thank QX for Hey, you us.

for was the out proud time specifically. to share that Internet. the this out We Reddit they and or Reddit word announce recent influence real critical achieved House year-over-year, Our we far, I'm to underscoring community, hurricanes. profitability. advice when Reddit to answers, the United in continues the googled to so during most information people White saw the In play are the came when looking QX States, broader seek XX% grew in across revenue Reddit's GAAP sixth that XXXX, word grow also

the identify people Pro events. used by tools these They right to affected reach communities Reddit our to

MLB businesses and exclusive communities, to and now In of more are audience. thousands share using fact, and their were businesses to with NFL iPro, find the we see continue organizations come it including to Reddit to using Red content

conversations led both QX on XX% for community, are conversation place from as often. a and XX quite better improving into the seamless launched best or AMAs users billion, the faster focused created conversations AMA, Anything, we year-over-year refreshed a getting remain pages experience discovery Ask the experience quarter making simplifying and to are and product, the have few Internet posting for increased simply, and conversation highlights which tools better easier, in enabling the We that exceeded platform new the everybody. on We in moderator A which moderation. posts number we include of user smarter, means, by increase making faster growing makes views the in our reduced the contribution fivefold which and and making for format, Reddit the more Me removals, page continuously

After States, led translate of AI United the first and enjoy France, promising are to it International This XX% Spanish, to proving year, Corpus the we Italian Portuguese, growth their our coverage grew half with DAU non-English making the in Reddit we German. by other speakers Philippines. our beyond in into include growing for efforts year, in and accessible this India French more year-over-year, focus for our as And languages, expanded started notably results most in using here markets, XX% successful. to languages. native

success we've far, expand XX to and on more machine the than users through we plan quarter, based XXXX. countries translation Xx This quarter, machine translation so over to seen drove last

language their are we platform, regardless communities of global and from on truly Reddit. benefit a becomes in Reddit on everyone and As participate focused the ensuring

Reddit or what that on recommendations Reddit to have communities coming for for from buy, Looking real-world We users what directly answers. the on a part many of We the Reddit experience search looking and to This best. our and to want were includes from are or the looking are for products what key users authentic external searching strategy. users on Reddit. on the watch insights looking than all just to more know is advice are best services those ahead, search ensure including experience possible. They

Jen. our continues to for on So the and maintaining we'll the that profitably map, now new look over I'll of our all community conversations Internet. accelerate conversations go-to again XXXX to content beyond, we're commitment global hand journey us. business, to and more this Reddit for exciting ads seek place road ensuring be expansion on or Continuing easier you and opportunities experience to to through relevant making part being it development, finding focused scaling to and our growing on intuitive. product while of with a Reddit the and Thank whether

Jennifer Wong

Steve. Total objectives, Thanks, platform grew proposition verticals strong in and for by improvements Hello, revenue core our Reddit unique as QX to $XXX.X channels, million are driven year-over-year strong to grew growth XX% a geographies. year-over-year advertising It million. everyone. driving quarter The XX% $XXX.X and was across business differentiated growth.

growth of prior revenue more in the growth, ad year-over-year. user funnel saw strong year. Let ads, from across with load ad accelerated placement the more was year-over-year conversation pricing We efficient while impressions higher and mostly me in consistent Revenue discuss drivers detail. our expansion

and which revenue drove accounted for objectives Performance We value our of map. and the the in X/X funnel, performance, and of quarter continue road advertising XX% ad our the mid- lower growth more total than half improving funnel from deliver to customers more to about is revenue. middle by in particularly lower

new focus clients total markets as In we EMEA sales and and one, area quarter advertisers across and verticals driving XX% saw business, we more consumer solutions be lower our stack, We channels. momentum strength solutions of saw auto, to service. SMB the both This revenue as by We offering capabilities. by we an to on: continues of two, the advertisers midsized driven and provide clients largely goods, funnel; our international lines pharmaceuticals, our improving performance and saw number financial and We our business of customers, adding ad all grew was year-over-year productivity XX% large our over where this grew we led services and ad investment. our year-over-year for customers. including managed across to doubled continue The in across continue strength and clicks three, QX than Reddit-unique usability creatives. funnel in of across for the number and continued enhance force; scaled mid-market

our progress discuss each. I'll in

So ad performance solutions. our first, driving of

We in across and continue in measurement and number saw We to bidding. XX% QX, growth including invest optimization versus products auto QX and in conversions tools, are of nearly the funnel. adopting advertisers automation delivery formats our the

CAPI We more We quarter expand partner our over continue ecosystem. adopt adoption drive advertisers this CAPI to saw and Xx versus QX.

custom on offering the customer target advertisers audience also of an which our Reddit. our with ecosystem API, audience expanded to allows data We API their launch platforms ads their from

custom both Our Action and now audience include IQ partnerships Telium and with capabilities. Mparticle CAPI

sales for usability Second, our productivity for force. our improving and advertisers

and few for of manual the consolidate campaign the automation from we broad campaigns performance that improvements need and creation remove make to it create course reduce invested manual manager a Over optimization. steps tools categories. across work the easier year, that Ads

auto funnel interactions and force sets bidding customer to placement seeing this example, lower for product feature optimization automatically For multi support base. knowledge XX% from bids sales over maximize an and AI-driven extract And We're insights adoption to with workflows placement of performance. across campaigns. sales with streamlined our AI-powered

ads, months; third, recently QX, rate. ready and IS, safety reporting solutions with ads brand coming unique our which advertisers partnership double-digit driving in product, improvements launched brand to conversion launched the investing and and continue viewability include prebid creatives. expand also offering Reddit-unique our In in our design a of will We refresh protection we safety in and conversation

to digit test reach continue and ad anticipate could within near expand term, inventory the We mid-single improve we the In to this comments up as on impressions. we total the of surface. performance placements

licensing I'll to Next, our shift data business.

partnership QX, media data through the QX, small API, in and we entered opportunity with signed revenue new brand potential a Meltwater discussions licensing insights, In partnerships earlier industry monitor intelligence in and are accesses of we data Reddit's the the by allows platform. happening licensing partners. to continue social Meltwater, a our million content contact driven company. and in trends to We into uncover into tap with customers Other a which the was on year. $XX.X address set our data

evolve partnerships. Looking and of timing landscape visibility to additional continues ahead, the we into limited the have

content data expectations customers in ensuring on focused continue for meeting value are see We existing the and of to our partners. their uptime and delivery partners our end

traction new the Revenue strong are sales, Overall, leadership to for recent track quarter mention our the to we're in and funnel in the Mike Reddit sales advertising. operational board, contextual our businesses full and their support and I addition of partnerships leader a we me. Chief functions another solution Mike with want lead of to leadership sales leadership business. proven Reddit, on a and on Mike team, reporting pleased seeing Google customers and [indiscernible], remains and our record a our strong Mike brings help is from our key strategy grow this sales Officer. on will was through all built LinkedIn. With directly interest-based same, our to

improvements feels environment we we the are made QX, quarters. to ad to that the from the ahead stable, past business have differentiated Looking have benefiting structural industry core and growth over sustained current

Thank are continued elections, focused your on execution. and from impact joining for you any our remain we potential strategies for all We and for monitoring support. upcoming the

call turn the to Now I'll over Drew.

Andrew Vollero

featured to Reddit key our If sequentially, income remained been up third Reddit closer and look, Jen, key and basis, important continue on signs on good business you, quarter financial Thank million, headline QX with for deliver in the GAAP achieve million profitability. encouraging a to trends we financial of goal. GAAP an profitably. internal points is main The which but $XX as of a this has a X quarter goals, $XX was number for the trend, enablers afternoon, strength reached make scale breakeven that a likely strong Net namely everyone.

X where and outline XX%; strong second, margins third, company me EBITDA revenue really growth of Let strong accelerating margins XX%; cash to the First, of areas adjusted flow gross free XX% million. of shined: $XX and strong

meaningful a XX% a XX% QX, and year-over-year, points grew a acceleration revenue, XX which in bit each: QX sequentially. from revenues Let me percentage expand XX% driven in QX ad up ramp year-over-year in in by XX% First, grew on

key X Let summarize me for revenue drivers acceleration.

new the early customers. overall, working the our traction resources and in we're with investments First, ad are team for well, additional our sales and seeing products solid

slightly was click-through continue ad first contributor saw our performance to about for year, QX increased. growth Pricing gains and down long. click improved cost flat pricing half for while A fuel we year for year-over-year. in Second, of value as was ad impressions, the all strong it per the was whereas which growth declined, advertisers delivery year-over-year, rates to

than Third, our more channel broad we half than grew saw over growing across portfolio, with strength. some our XX% More year-over-year XXX%. verticals

revenue QX, a While investments in QX, but percentage in to rate of $XXX revenues in Total were adjusted up as be modest, sequentially, QX this the growth of less fueling down the quarter reflecting adjusted cost in revenue in XX% from quarter. to adjusted revenue part sequentially million, costs XX% than were the up last growth. than $XX growth million QX. growth X/X XX% acceleration total higher total costs continues accelerating, was XX% of the

bps exceeding incremental and XX% consumer platform XXX cost our Our coupled than ML ad tailwinds investments adjusted cost margins which with user ad QX, for remained hosting more of efficiencies, and gross growth, We cloud from and in increases support to up revenue performance. hosting offset with from revenue year-over-year. growth efficient saw

driven and build teams. higher was Adjusted costs hire sequentially people primarily due in slightly up were Total to from headcount engineering quarter yearly last the QX, were rising rate. and costs higher from XX% X% year-over-year college by and X% translation cycle merit hiring operating costs. in expenses year-over-year, our QX, seasonal higher than up graduate by machine slightly sequentially, our driven People

countries X the with quarter, the XX road more we on launched potentially machine in In translation map.

EBITDA than efficient efforts have million revenue. as translation X% much test the costs translation to of language content very per been to language it's The a modest Our adjusted revenue margin. quarter cost less EBITDA cost in strong how less financials adjusted was not than of and continue and our With a margin this continue QX each was was We'll $XX nearly surprising. double total today XX%. reflect translate. growth, $X for QX spend to positive way. million, That's XX% growth

flow-through year, by incremental fourth higher on a driven Adjusted time quarters EBITDA was over XX% That's last prior cost in XX%. leverage. than large million solid the part revenues, $XXX marking the X

million, to flow a is turn was million key ago. cash a year flow. cash Operating Our positive $XX from $XX into change profitability focus

the was year, cash For the of first flow operating X quarters $XXX million.

remains very is of $X date. was the less million $XX great revenue. Free light, million cash $XXX flow Our quarter CapEx flow Free for in and to and of cash than than which was less XX% to QX, million QX for see. revenue X%

at quarter. X.X strategy at Stock-based the cost withholding in per net diluted sequentially basic for helped Reddit against goal million In tax divested million, We're the $XX for employee Cash It $XX In X.X% scale. in IPO. year, number on up lower our this $XXX to return in ended we the about shares for XX% net the X.X% shares quarter, the and million $XX medium-term particularly could execute $X.XX total to was million up share. of sheet cash Reddit X% shares settled for was QX, to -- dilution encouraging the employee peers excluding diluted $X.XX in quarter. billion, where $X.XX line This compensation year. pacing outstanding was with both settlement million. Overall X% the and income Relatedly, our share QX grow QX balance of dilution the $XX per the at was balances or the to million, a revenue, sequentially. net diluted in of fully capital. see of vesting well

positive prior year $X.XX. a both the change where share diluted per from were earnings and was negative basic This

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

to Adjusted we revenue in to the XX% of quarter, representing representing of XX%. with estimate the range $XXX fourth adjusted $XXX EBITDA midpoint a year-over-year range midpoint. of a growth in million, million EBITDA revenue $XXX million, million XX% the the In at XX% $XXX margin to

year. on thought Let focus. me the revenue In the our with close been near QX largest financial this historically, term, areas of for has quarter

and flow margins cash profitably. revenue CapEx turning generation. focused meaningful focused on So financially, growth, on scaling we're longer and execution. Medium we differentiated low Reddit term, into are And is high

Steve. Let the to me turn call back over

Steven Huffman

you, Thank Drew.

I'm Okay. are then We're X questions. after will the in to with folks a communities in And that I Jen, in questions start do that subreddit ton going Drew there. of asking subreddit, going of few that two you. from the a were Thank great others and our who r/rddt report questions to There's a asked today. bunch do now. we'll later our call so

House process?" first "with out Reddit to getting to will officials/agencies from be account So government doing will Reddit official question, get be more help information for accounts to what White able having that official now, expand an people,

presence creators, So big to brands, people businesses, picture, able to want an we official have be Reddit. on

accounts. the beginnings official these and can Pro so of And with this is -- with see you of Reddit work work some our this

this, home to Reddit. or even a been on creator a their or entity to prior business there's for call think I no place

has And need launching been our a communities so getting for product a communities. or distinct we in launching that's into for a as that I gap to themselves pad historically the them pad from think a place as be and

communities in and lot a in so them we've is timely and we be use Reddit to year be information a way to well-labeled people this on seeing and House to to and of there updates. Reddit already intentional, reach which exciting Reddit, so was for need give course in really White of the the they of particularly local got space And it the be kind over and we everyone, want businesses

So thanks that for question.

stacks, to out "One us us the Google the me basically guess out, growth. give is logged Even XX%. XX%, be is Google logged -- is particularly X-year takes crushes. at worries question. of google Next out thing in in dynamic, out that logged at outgrowing expecting would DAU logged with question I most be is logged but DAU the log

cetera? are intention of Google show the they Google have the Google And famous Reddit we are, dynamics for traffic of on good you can be what the conversion the those about if at on in Also, some It questions the future? is [indiscernible] say worry should et if on how dying you queries, users? color and queries?" them, My could diverting if much people comment would

platform Okay. Look, with had Thank you specifically. for a question. the -- long we've I Google the we've think, Search long relationship a, and Google symbiotic

couple So Google there's important to big I traffic, the a classes think users if of within recognize. you that look think I of are

with people Google are to Reddit. first ending go on the So up the of intention who

opening of stat sixth this is lot that the in Google in I on my in mentioned U.S. we're a most remarks, searched Reddit word users. So those year. seeing the

are so literally people the And those Reddit Google. into typing word

case, up know So Reddit. to they're They're it. using, on Google in navigate they end going to this

The who general search ending also Reddit, up and more a valuable. second on class are of users on users is then Google running maybe

And Reddit as is these their to answers has this teach opportunity an questions. people that think the users so we of to

in that opportunity the say. does true new of a of so of a show and great give all it take what a go, And kind you great users as kind source us case, It's and away Reddit algorithm new and is to about. come audience it's

end coming answers the or algorithm never and that and are perspectives about Reddit advice content. through us want, has that's they're finding whether hear change here. directly other at day, complain consumers It great you'll us of people Internet Reddit celebrate what questions. for, has the So an or means. looking to the But It

Okay.

Now back the to audience. yes, it over in -- I'll turn

Jesse Rose

we from please. don't the why appreciate are I on open Steve. questions Thanks, Great. analysts that for Rob, line, the Thanks, Drew, Jen, the really it. line

Operator

Instructions] [Operator

Bank. first from line comes from Benjamin of Deutsche your the question Black And

Benjamin Black

Great.

search, sort of update So on pathway search the get be to and a timeline search? first What to And improve efforts of monetization here how really about and investments great DAU you platform incremental of would it improve think growth? to on potentially need to on do how out, on could you sort from one your status search. the

you And that on Also, quickly support secondly, bit learning so growth in user Can just international And on early just a translation. velocity? here growth you your could little are also sort far. of machine potentially click content double domestically. here seeing

Steven Huffman

Okay.

our a search question be strategy is of will into investment First on part Important XXXX. heading for specifically, and platform search, Yes. us focused

because of strikes a new both. on of all about. Reddit. I search. first many session run unique helps users home we out opportunity It think kind today, search things of care is It find the Even a new in users their their

into typing they're for. in, helps a literally a users and box, monetization they're Reddit interested So answer questions. text they're it's what core navigate looking what opportunity. It their

products of of So it's that one few everything. touches the kind

So we're an working in on this area XXXX. as investment

the about timeline is, the think think first, I for product. consumer monetization we

some we're both So the doing end. and on heavy back lifting front the end

movement And that now see throughout configuration think I course, is stable is, on big You'll in then when start and think more which we a a the monetization, on working I between product of can year. the opportunity.

So into first our the year. one it's heading investments users, next then but of monetization, top

that question of are Your early a lot machine -- is a feature Well, on the the has second learnings? this it. to [indiscernible] translation, had what

first focus French The the objective first, -- year on French-speaking In translate first of has was our yes. users attract English half in languages. we content Can kind language. we we of into attract content? was answer primary in our this other case, So is, been translated our France can can this

full Machine so scaling. corpus experience over like as search larger we're kind X-times And last, the other that has this simple We to is we that of is languages the year. users Reddit rolling indexed positive gets engines. translation learning, we following many quarter countries. trend. externalities. And the other One content XX immersive beginning into so into And of machine X then translated out translation into also the that drew did some course next a of we're translate

see about, new content to and start we're does And users are external bit U.S. see the gets English pages. And translated from who starting on language into of so what that a to show asking translated for little native you're arriving up search users. we

We're seeing some of that now.

I that. world more think one else. just the Reddit, through use of get over speaks fine I to that see the, to more of which time, lens of And think, somebody and we'll reasons is of a I the think to view

really that around I us so And is think machine translation, the people of fulfill mission helping connecting point from of our view, world.

Operator

the from Citi. from Your Ronald next comes line Josey question of

Ronald Josey

I and two, wanted for please, to Jen I this guess is and ask Drew.

revenue and more the us the that I'm upside to And quarter. ad impressions understand I here, talk trying guess, but Jen maybe the love a So between hear SMB stack in mentioned But I I then that to drove That's you to mix about understand Drew, join as Jen, thoughts one. others advertiser platform. demand on driving improvements. few are and to products newer the newer question your growth. would also, growth

view And positive then, Drew, how GAAP growth more again, operating highlighted to corner and just specifically, forward. is going over which see. OI, think clearly turned you we us XX%, versus leverage, achieving great whether the profitability on we you about Talk investments to

Jennifer Wong

Yes.

first of and I it, of which drivers. the go-to-market part is sort ad combination done the growth on we've It's think stack. work the a of

bring vertical these of new investments of like verticals all, pharma, to are our intentional some XX% on the that and relationships things to we client lines new half areas made were drivers than customers. finance, tech diversification, and like those year-over-year, business are develop So of where over first media like of entertainment, more growing capability

are you by that's that driven. Then driven So the go-to-market stack. ad really really have pieces

volume, conversion that marketplace, at want to that the outcomes and and more more our things mid-funnel they conversion they our they in they just lower in find in objective. we're advertisers, and funnel objective prices advertisers. lower we're the an year-over-year volumes -- of to funnel grows the the when the deliver volumes outcomes, That's revenue the want traffic So and growth able right, terms delivering almost because doubled like the outcomes

the as the funnel. grew significant lower nicely, in finally, mentioned, objectives a and I as year-over-year. grew been international, then X look really but at growth XX% that's all I quarter mean particular. driver you those in mid And the So it

which an particular, business our as in we across agency as relationships book area mid-market channels. to customer is develop, a and EMEA, in that both continue build channels, So well of large

So each drivers. growth of these, contributing is think, I

advertisers. advertisers thousands adding there our of Every new quarter, new onto are are We platform.

it's levels we not Now at the that possible. think is

think can is them to compared are thousands many new really of There business be that that more acquiring our platform, more I TAM where on platform. advertisers large today. we and are lines but the adding onto and we customers are

are seeds grow the base obviously planted of while our business. continue are future those So we that to for book

So think contributors. I both were

Andrew Vollero

Ron, about measurable. investments of the And We're we which it's news The business There's we're are making because we financial bias measurable, types investment frankly, Where The ] here is it's I tech, margin. are the back a making. investing? some it's ad now one getting it's invest, were decisions really easy the right on invest ROI short-term have happening company, now. of a investments of into. young that you're you're XX to gross [ the right? easy a world, is a that really where great in quick, on to mean done our investing immediate, payback, multiples side and

an from things that a ad that sense. perspective number added we've tech makes there's of So

can the You measure products.

visibility customers the into how direct access platform. have You your

that returns getting for And can not or so immediately. you whether you're see

a people a of up a a people to take opening new adding couple We're that country run to we're On look countries at. easy in take and the markets, at channels look P&L. side, easy

a be ground and X was the ago. maybe Small and So Jen meaningful able produce made you're the a leagues example talked with also the the deals [indiscernible] sports licenses an about investment world. simple of quarter. months would That on in put I tangibly investment, we some team to last

right it's decision. so And pretty now, a straightforward -- it's anyway,

X%, see we in X%, I look 'XX, XX% if year-over-year. our happening You the X of and quarters, QX to last this you the at right XX% X%, go that now cost over growth grew Like back P&L. quarter, if

the starting a you're that in and come see So really They're we're see payback. the investments Again, where measurable. in just to can term short are you place

the are margin it about, So really, now, are really the we organization you know, handle right very, returns pull-through. the high can because can ROI isn't decision difficult we with very execute? It questions gross have strong, a as the really and

Operator

comes Rich Greenfield line [Operator from Partners. LightShed next Instructions] of Your question from the

Richard Greenfield

am with parts, one but to myself. XX ask I'll question contain I tempted

Sorry, couldn't resist. I just

think this of but person I think saying, follows probably direct Jen's -- the what we of As on sort up at. I this was Drew should

And we but asking obviously be of slower, about is it's given platform? the why way the you're As to getting the thinking the this of seeing far relative of maybe lot we're ARPU think the should still user feels the is it's the now right and level where growth in absolute actually is, And guess of that solid measured number I like user engagement. growth, how of on the about turn, per of think the question lot growth. obviously level ARPU and low in a in very more terms overall, impressions users monetization is much you it's sort than being a slower what you're I pressured by rapid growth

can to understand happening and what have trying to actually just the about think Or And as dramatically Does you growth? to happen? same for growth puts takes get to user time slow the will [indiscernible]. actually at we that faster drive if ARPU both

Jennifer Wong

Thanks question, for Rich. the

mix output revenue users in, and it's output, just mix. right? like said manage in It's logged user users being an the we of logged we've of and out. It's mix ARPU. -- User are to Just this, what don't always things an geographies the

manage don't revenue I we the want. of of really outcomes And prices before, we ARPU want growth, So finding -- Look, advertisers drivers they we really have and and all driven are by growth, said of that. like revenue it's it's they volumes feel about those our differentiated sort -- the to are it. good we

see headroom do We in we we as And really over focus in of feel users over in also good we on do the spend quarter-to-quarter, time, time Reddit growth. come don't more we users value with like time they we user and about. in the because future really Reddit and ARPU believe increase differentiated have engagement said, which although actually us.

And So about those do the is of been And another is are way logged logged in grow to of in to think those users. who our growth value continue very in we inventory our bedrock steady most users. valuable the users. logged-in users it there's

to And just it's it. another so way about think

the to manage it, don't we again, see but headroom time. we the over do So in future

Operator

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

Andrew Boone

a I about understand that category do there's can puts takes limited bit but data where the the think go. kind of understood I about sales wanted of this you and of growth? could of help little here. visibility, How us guardrails to talk we from

Steven Huffman

it. I'll call customers. barbell in we take so market, the a, like there's of of are -- basically kind we're Okay. Look, it, a

with the be targeting got more would deals less We've but on to number we've that side a number done services. of there training there. social still folks, big access customers, customers there's the financial and that where Reddit, the customers there's on information be are we're would deals. real-time then training Those And conversations So in deals we're there. limited a of smaller more listening,

for keep market, built business, those APIs business. Look, extremely to to still on-platform more future business, it's the going. We've -- ourselves. But Reddit's it's for search, It's early us, really conversations if nice think story we'll I'd it's here. us our ads a support valuable But it's of it's say and for Reddit, I lot of of extremely I enterprise the kind -- this players in our of we're about the still days of a kind valuable. we're here, think it's level kind including have It's to is of data initiatives. thinking the

and opening trying for so reasons. consumers And I find my are -- as in said various remarks, broadly Internet Reddit's to content

building top And the and we're think I own making business. information and we on so about open this between for right look, batch our think this. of it we're finding how And accessible open is products

Operator

of from the question comes Naved Riley next from Securities. Your B. line Khan

Naved Khan

just the about you us Can think opportunity where pays up runway? road of in So just it's in do ad that there, talk monetizing terms to you great say you that XX%. are maybe conversation

Jennifer Wong

about I monetizing placements. think you're asking conversation

we're think and ads now. comments right I look, testing

from thinking both, a lot searching the years I in consumer where ads for think different opportunity think common. a honestly, we're page. think the the sections couple early we where people appropriate page it's launched post, ad I of information. And are happening The page I for a of of part because such that early of in design of that that experience designing we're of high-intent ago point in in view, format there's the the which still and is

lot of growing engagement. That's I opportunity minority of there. our So that's a think today, terms in inventory but is there's about -- a of

and there's we that's opportunity. of think that, And tandem. when and with that. a think more the want lot the terms to actually guiding I experience users through things going -- But [indiscernible] an are ad in getting that in deeper and they do follow I So come of information want move do both in that those that and we of the page will working the

designing don't the designing focused lever that in focus on delivering -- making and Again, formats we platform. look interested but performance we're sure is users We're ad we are headroom not increasing there's at formats, the on. we've against ad So really on a load there. seen we that to

really inventory with reach. grows that our So

Operator

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

Eric Sheridan

advertising investments you Maybe of trying about following longer additional response, in medium to last XXXX, budget and but performance community asking attribution of of that do conversation have the the that broader direct up one budgets, would ahead. think garnering with output still some to the and on to the see that to Jen. yield Jen, of progress measurement, for What you're as the answer scaling not you more continue unlocks building revenue the term. advertising solve the in or key scale years over

Jennifer Wong

Yes. It's a of things. Thanks, number Eric.

a really on Measurement for but we're there drive. is time. We ideally end-to-end nicely, still our So our That's to by but proceeding incredibly performance, it CAPI takes CAPI, covered measurement of want performance. we're continuing really XXX% conversion like revenue It's yet. important not important.

So with incredibly that's important. but measurement customers, our an is IT-driven process

The second automation simplicity. is

reach with take the there simple increased has of in advertisers especially not performance in market continue automation, scale, advertisers be outcomes. to That's of have order and quarter-over-quarter improve That's it for to product to But we year-over-year, advantage competitive what demands terms them of the and that and at great. really think users. we're our now smaller I great. to means for is performance yet. allow that away which So and market that, a simplicity We'll chip that's end-to-end and developed

building advertisers. of unlock the that but more we're that automation world will in something end-to-end more performance. That's

ingest, it's lower The but learning sub-objective believe journey objective, to third that different also I complicated think a catalog Shopping funnel we that for models, lower but would is It -- in just something more sort something performance. is it's own capability, of bolster that a our measurement that's building the lower shopping. we're requires Reddit, and birth in longer the a funnel. within is funnel its machine

So those things. X

Operator

Capital Kulkarni comes Your question Partners. Rohit line next from from the ROTH of

Rohit Kulkarni

have gen just tools about Question ad seen the new in customers about are among how what automation? tech. any your you talk result perhaps impact such lines AI Gen friction Jen, as providing of the a reducing are adoption coming advertisers of category Maybe you with mentioned AI? of, what using new around that already advertising you're And in you

Jennifer Wong

Yes. Thanks for asking.

in it drive having website, type ad and we So the -- resonance. and where does make headline a the a in your Reddity headlines that gives just Reddity launched you couple of ago actually gen we difference can ad a improved really from in URL using AI quarters your started you generator ads headlines put performance actually

called specialty performance image, what's et I company just image, AI. Memorable might creative. hero of understanding the an drive in Their of possible We and the think, creative of, color it ad of that's type the the a they the acquire in is how cetera. is components text, of example So did -- terms be a

the drive they optimize insights to So how creative. in

that the ad and integrate to stack, work insights our to those ability to capability into take -- we an do a have AI insights. gen and on We tied the want based having those next step actually be would

into early do terms and our them we map road to acquired asset, exciting ad a that it's them, related gen see integrating but in just and of we're fulsome creative So in AI. very we

is The taking be in coming of campaign around other platform performance, AI out is the automation execute to that that to campaign setup the little on really and going optimization. with of you'll top steps to a the that's easier in bit things tool see make in of terms terms of end-to-end

Operator

of line Jefferies. Colantuoni from question comes the next Your from John

John Colantuoni

on talked adoption talk adds about you conversation conversation quarter creating if premium some impact CPMs of sort pressure You of reception on pricing adds? and last putting some to conversation newer and of adds headwinds. the the Can pricing early about talk still are your also

Jennifer Wong

Sure. Yes, feed newer. I compared ads because would it's placement less And are we in the still that the conversation say placement has demand testing to that in comments.

we'll So page that like some for unit ad ways adding growing a does there ad But into been and that new are be adoption take we've obviously, demand. load that that time.

increase pieces wants helped outcome, benefit what customers the mentioned and a earlier surfaces these optimization, of the the fluidly across they're across to especially looking where demand us I they're for indifferent example, multi-placement that's of of can the advertiser more get X the outcome optimizing specific because really is for both So placement. when inventory, sort

advertisers can and of X about ad them the both. some for up that's and out we take units optimize sort creative in adjust et with get acquainted the different that having ad think groups, and so And helping fluidly and set the performance cetera, we optimization to those across unit where and friction

terms seeing on that So course, I against of But as demand engagement mentioned also increased good think a unit. I the that page. of supply, do increased demand. there We're of we're that is seeing lot earlier, in

opportunity good It in for That tandem. is early outcomes. ad converting we're page moving is a extremely And news page. ads formats with page. high that they're designing there's the page high incredible on contextual, So The the that and extremely intent. is great still in

incredible just So it's opportunity.

Operator

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

Andrew Boone

I have two.

you're tech could is ad first innovation drivers. most that to about, to us question through, about of sort sort earlier of just go the Eric's The think of one which you back Jen, we the excited all 'XX through walk have for for of into sort you be next built are budget and stack the really that growth you driver out products you 'XX add that guys? think of sort could the to of back-end performance going roll

search can you of starting second kind to timeline through one, then the your test Steve, building just walk then conceptual search, and of And us about search. monetization

Jennifer Wong

ad about the stack. to talk Happy Yes.

right? of things terms the have brand solution I would funnel and for that of I at think competitive want funnel traffic we're and like doing And impressions, to across that We lift brands, in for across in to We we purchase say objectives brand on conversions, install. full and outcomes lower the middle some then we're app card 'XX, be of the advertising. same performance journey key funnel strategy, in our for continuing want market advertisers. So terms deliver a the

more like can more There's can So at our that remember, do that growth. that user can there's measurement, measurement. of in scale we add can terms advertisers modeling all with journey. to do There's those objectives. more on modeling. just can that we the We're There's to more more that value we of beginning there. a to give we scale And lot more and in do

it's and So nice efficient. a deliver efficiencies still It's really will in. we driven more position be to market.

next efficiency scale will spend ad us. we them with more them will still which return So deliver their help on work and to year,

In opportunity brand proposition. that, we addition to of to an part see the enhance our

more from brand to a on basis. monthly in optimizations we've a engagement on advertisers easy. reach make opportunity the to On of performance And side automated can to We and that for things like optimizing because automation a it not unduplicated we've as high be optimization the well. automation that and lowest on but them, very automation, the given do side, terms advertisers successful end-to-end lot to our cost, the reach have has selection lot big brand the brand in drive some always the more that been of an the

that And so in. that something we're will investing be

want as we app That's really another build to funnel, can think install the on out funnel mentioned foundation to capability is we a in I nice way just have in to the before. advertisers second I conversions lower another The in while customers. get lower that shopping, talk

stack this advertisers. In now think automation. moment and And which do much simpler would activities really the the I that, that have you with second the the amount there's Google. your seen So up the which certain order you Advantages be place in that that those It customers do, need piece. the part from ad Like of to really campaign every at trust at automate can all so Max optimization set to for is scalable we're each understand you've is And with end-to-end have over third, they Performance second of make what's you to before does X automate steps. a and of build And you it. we before happening step.

think point. that are we there I at

And items so we've into starting automated put together been these investing and to more experience. a

competitive the of we in things background performance. continuing in 'XX X the from So year top we've this been map as terms that delivering the go about think invest starting into those road are to the and in, of on market

Steven Huffman

Okay.

what look, be doing [ map, are a in lifting on our side, high-level stakes era. products, lot table so this of road then search heavy to throughout XXXX, the kind search modernizing of it or so ] bringing so we'll And stakes table up

results We'll LLM lot all and search results that the pages. come as of And start is navigate well, do ranking [indiscernible] creating So in which sophisticated back-end to of beautiful Reddit. really getting more entry I a sophisticated there's making retrieval points our own our from as more well. of ability work mean more helping auto then improving results good into integrating users complete, back working the

they're arrive what users the search button who climb from them for. just example, kind on their queries search helping not but Reddit more for So of looking expand external of to Reddit, and

be will construction. heavy that of under all So

of start lot a over testing, do We so year. the course of next see you'll this the to

In terms hard It's start the all are some the product the in need ] to of monetize [ pickles monetization, product, right? when moving we have to stability and we over.

the answer. simplest that's So

we'll products is some likely think most begin we something we'll I planning. That's find like year. next

but I too not wouldn't hopefully And coming expect in in, so after. to dollars far XXXX, actual be

There's lots stuff follow of we'll product. So exciting coming. the

able I there. be next think to it quarter But with follow And is forward us year. getting each looking But think is along I a go opportunity to you'll process. we're as really the we big. multistep

Operator

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

Thomas Champion

you. maybe for Jen

And a just maybe emerged comments Curious market market bit signposts last any maybe call. sound agree, the in during the quite Your quarter? that the better 'XX. you on on than the what were early the if take

Jennifer Wong

last I the look, some to for spoke, the say Yes, what And when we I be would I'd probably say, around -- I bookings. question. seem caution it doesn't Thanks had think is, election. the about QX affecting

I think there is caution around delivery timing.

seem us So their time, affect be QX quiet growing with business periods there certain their advertising. their in continuing doesn't little but going for interest who are of advertisers in a might it to be and to

least far. stable but I it's probably that So so there's some that's signals optimism. where that are seen we've early, at it's say would 'XX, what the I think

which calls shift, at that I going And been will strength I all advertising or think unless up And there's think major client across is share objectives. good. brand say most folks been our they're think seen to in [indiscernible] the healthy. we've general, I be has really

market. efficiency-driven an still it's think I

brand. think But year-on-year. So that I in and I a think to sign. and at good always there I investment are interest still is mid- do ROAS the which is healthy there think pressure lower improve funnel, do

the investment. our actually far. view so I So all of in full That's terms healthy funnel place in think is a

Operator

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

Douglas Anmuth

privacy With the progress Google model those you OpenAI through language currently? could about. already Maybe in And like Great. future data making do for demand of some partnerships characterize working talked you've large requirements contract, you're you two and and under Steve. for that feel

frequent a [ of that the get could investors. But we hoping from So just And think of to takes is ] from coming getting daily that's traffic up some second, of you X% puts us help then and one. maybe through this question Google.

Steven Huffman

Sure.

Okay.

So first question is on data partnerships.

big any to folks. in, as matter as couple and that a we the for respectful Like that important mentioned ones, talking agreement think, noncommercial Google of are are well I you users. commercial -- that of I partners OpenAI. So mentioned, It's agreement our

that's business. data So policy. to needs our to be And also, fair inclusive of then it our public

have think of I even Reddit. far all me those say complex. nice-to-have. wouldn't not of Reddit, them for are to they're I so And say close kind none so to existential deals been but I'd

it us, for we're our users. terms open but business, to is and work business be principle general Our our for that open needs on and

don't each terms we're not or through working of to of off block if those. to kind afraid as we're cut you've also going But we're people seen, people we come think there. So to

look, source some think I Search a help, years. educate the And will. for to a some the external course, range we've of And some on users great Reddit. I look, traditional think, think I a products, the but it's channel new course, new on Google so symbiotic the hurt, more for sorts all over had then And are seen search it we've with kind new of of Google, a experiments about change XX core come always journey [indiscernible] effectively of a as outcomes. platform. I users Reddit been search to lot be of marketing and years, algorithm this And users. And Yes, mentioned, going relationship It's high of side. regardless. users with there'll of our utility Those to

log the been growth few So traffic. you that in But look yes, years, has very in reliable. there's and last volatility if our stable over

Our of -- majority vast And reliable. majority stable the the there. our has app revenue been where that's growth and is

yes, business we time growth very period, well. volatility and the actual the as logged reliable that what and on external users, forward over out has been on our So users, but stable looking see that's

Operator

Alan question line Capital. next comes from the Gould from of Our Loop

Alan Gould

-- you that? XX% in know to improved. don't quarter year-over-year I areas you know said And much XQ manage has ad but Drew towards what how that this to are minus I from contributing ARPU, a plus uptick in domestic pricing? XQ. had is pricing other significant of Jen, So year-over-year ARPU much X% said How

Jennifer Wong

is around on revenue just bounce quarter-to-quarter. reality growth. and mean, of user being That's growth to I going the focused So ARPU

conversions, in obviously formats don't contributors of ad necessarily our general ad The to the them things about significantly I really the And And clicks you yes, seeing are front. and by per of value mid- into because in the like and and lower quarter-over-quarter it's think is growing increasing that and of increases movements value an grown efficiency volume do we're impression that or that in too the Reddit. the volume in load growth. ARPU has gets, increases so or And read ARPU, much they're every the conversions -- that advertising click which definitely and mean, drivers I from I that delivering of just of way but business it's pricing, return their impression to advertiser it ARPU right? and terms the on

which ad spend competition for advertisers return think spending do advertisers is performance and which us in interest So those for helpful demand, on definitely objectives. which for I that delivering can in delivering drive drives objectives those and and and pricing and scaling drives

stack So a to of we've ad the work I do think it's in deliver performance. done lot the driven by

Operator

from comes from Street New Our next of line Dan the Salmon Research. question

Unknown Analyst

licensing, from how great for be hear your to for your is earnings. and This New could give evolving, us guys its language I both latest an It'd update Bill for trainers [indiscernible] was speaking large you it's on customers. model wondering, Salmon like data Dan Street. strategy about size go-to-market just

Jennifer Wong

Sure.

of mentioned barbell. our Steve kind as before, So go-to-market a is

AI a developing We are training with small have discussions group of who folks models.

interested that combination of -- of side but of are folks, who continue deals, well we what intelligence in training. as of the -- who to say AI total marketing corpus Look, data. other group are a of as to I be the on. small in to think And verticals world like freshness smaller a the I'd information both train to that is talk tend we to continue is we're slices interested folks usually maybe there's in The or more and they're training those volume. Reddit firms

their what building, of a product evolving their are really to they're how own it. those landscape. how companies to going trying what is they're strategies, out Reddit be, figure Many It's fits into investing,

evolving is we're sifting be landscape there think they're thought it's this, cetera. out we -- that help to a strategy. that well of I So in are partner But their a and where an I strategies, known it et and a part think

we that's are So just where in landscape. the

as at is a is but we're of talking go-to-market, small and companies who looking side what be engaging verticals. the end would So also other if us it's might marketing The are the companies. well brands and have both their some very your right? team, you to marketing client, customers we're the customers, there intelligence as customer intelligence term, doing There, to who out

If And to and the that helping you're services business. sure sort Reddit end understanding we're you customers have grow there, -- value. show who's bring that great we can doing what the that's data data value financial a customer a an them firm, have end what firm. end in services how of make financial is And really their customers their might Reddit experience the how

it data can what that's and Reddit people get to more about work that see like. We from the and value continue to what looks learn in insights you can get excited you and so

Operator

Please questions. further go no are ahead. There

Jesse Rose

Thanks, reach to look to We, call appreciate anyone If Thanks, Rob. course, questions, we'll open. the Yes, everyone. has hesitate I the here. not out. today. Yes. wrap everyone keeping of joining I follow-up forward please do any dialogue think

Steven Huffman

Thanks all.

Operator

XXXX Reddit's Call. This Quarter Third concludes Earnings

now may You disconnect.

Reddit (RDDT) 29 Oct 242024 Q3 Earnings call transcript