Reddit May Have A Bigger Earnings Problem Than A Revenue Problem

Reddit could have another monster quarter.

That might not be enough.

The numbers going into Q3 are getting ridiculous.

Revenue was $805 million in Q2, up 61% year over year. Advertising revenue hit $762 million, up 64%. Reddit has now posted eight straight quarters of revenue growth above 60%. Management guided Q3 revenue to just $860–870 million.

Then Q3 started.

July advertising data came in ahead of expectations. Piper Sandler raised its Q3 Reddit ad-spending estimate by 230 basis points.

Then August.

Average users jumped 8% month over month, the fastest monthly increase Reddit has recorded this year. Overall audience growth accelerated to 18% year over year, from 12.8% in July. International users were up 29.3%.

And September brought another change.

Reddit opened Reddit Max to all advertisers after previously keeping it in a limited rollout. The company had already said advertisers using Max increased more than 60% quarter over quarter and revenue from Max campaigns increased more than 150%.

So yes, the argument for a Q3 revenue beat isn’t crazy.

In fact, the strange part is how low Reddit’s own guidance now looks compared with the business it was reporting only weeks earlier.

The company said $860–870 million.

Wall Street consensus is already around $875 million.

And the bull case floating around is $1 billion.

But there’s a catch.

The market has already seen Reddit smash estimates.

Q1 revenue beat consensus by almost 9%.

Q2 beat by almost 10%.

Q2 earnings were $1.25 per share against an estimate around $0.97.

And the stock still got hammered after the Q2 report.

That’s the part I would pay attention to.

Investors aren’t simply asking whether Reddit can make money.

They’re asking whether the growth can survive the changes happening to the internet around it.

Google search traffic to Reddit has been falling. One recent estimate had Google’s traffic to Reddit down 10% year over year in September after a 7% decline in August. At the same time, Reddit’s app and logged-in audience have been growing.

That’s a fascinating split.

The old Reddit depended heavily on people searching Google, finding a Reddit thread and landing on the site.

The newer Reddit wants those people to become direct users instead.

If that transition works, Google’s AI search changes may turn out to have hurt Reddit’s traffic without killing Reddit’s business.

And the financial numbers so far suggest Reddit is getting much better at monetizing the people who actually use the platform.

Q2 advertising revenue grew 64%.

U.S. ARPU was up 51%.

International ARPU was up 31%.

Reddit’s weekly active users crossed 500 million.

This isn’t a company desperately trying to keep the lights on.

The weird part is the stock.

Reddit joined the S&P 500 in August, yet the stock has remained far below its 2025 high despite the business producing dramatically more revenue and profit than it was a year ago.

That creates a very unusual setup going into October’s earnings.

The company doesn’t need to prove that it can grow.

It has already done that.

It needs to prove that the market’s fear about the quality and durability of that growth is wrong.

And that’s a much higher bar.

If Q3 comes in around $900 million, Reddit beats guidance and probably looks great on paper.

If it gets anywhere near $1 billion, you’re talking about a quarter roughly 24% above the midpoint of management’s original guidance.

But then the market gets to ask the next question:

Can it do it again?

That’s where this gets interesting.

Because Reddit isn’t just selling ads anymore.

It’s trying to turn an enormous pile of human conversations into one of the most valuable advertising databases on the internet while Google, AI search and automated content are changing how people discover information.

The Q3 numbers will tell us whether the machine is accelerating.

The conference call will tell us whether management can convince investors that it isn’t a temporary spike.

And those are two very different things.

I wouldn’t dismiss the $1 billion argument.

But I also wouldn’t make the mistake of thinking a giant earnings beat automatically solves Reddit’s stock problem.

Reddit has already shown it can beat expectations.

Now it has to beat the expectation that eventually the growth slows down.