Reddit Q1 Revenue Up Over 60% with 90% Gross Margins and $300M Cash Flow
Q1 2026 revenue rose over 60%, delivering gross margins above 90%, adjusted EBITDA at 40% and free cash flow above $300 million. Ad revenue rose 74% YoY, and daily active users topped estimates; management forecasts Q2 revenue and adjusted EBITDA above guidance despite U.S. user growth headwinds.
1. Record Q1 Financial Performance
Reddit reported Q1 2026 revenue up over 60%, marking its seventh straight quarter of double-digit growth and delivering gross margins above 90%, adjusted EBITDA at 40% and free cash flow exceeding $300 million.
2. Advertising Business Growth
Advertising revenue surged 74% year-over-year, driven by increases in impressions and pricing; the platform’s bot verification and machine translation enhancements further strengthened its appeal to advertisers.
3. User Growth Challenges
Daily active users slightly exceeded estimates, but management acknowledged headwinds in U.S. user frequency expansion and the need to build localized content for international markets to reach the 100 million daily user goal.
4. Q2 Guidance and Outlook
Management projects Q2 revenue and adjusted EBITDA above current guidance, highlighting ongoing investments in performance improvements on iOS and Android and the multi-year rollout of Reddit Max for advertisers.