Reddit expects revenue above estimates as AI tools attract advertisers

Reddit forecast third-quarter revenue of $860 million to $870 million, above LSEG-compiled analysts' average estimate of $829.1 million. The company also expects quarterly adjusted earnings before interest, taxes, depreciation and amortization of $385 million to $395 million, above estimates of $369 million.

Reddit said its quarterly revenue surged 61% to $805 million, beating estimates of $730.4 million.

The company's ad tools are designed to enhance campaign performance by offering a library of successful ads, generating Reddit-specific ad copy, tracking visitor actions after ad exposure and enabling interest and community-based targeting within subreddit discussions.

"The company's advertiser growth in the second quarter was 70% year-over-year. So, we continue to onboard a lot more new advertisers onto Reddit," COO Jen Wong told Reuters.

She added the growth was particularly strong among mid-market and small- and medium-sized businesses and international advertisers.

But the growth in its U.S. daily active unique visitors (DAUq) slowed in the second quarter sequentially, even as global DAUq rose 18% from a year earlier to and slightly higher than prior quarter growth.