Reddit (NYSE:RDDT) shares surged in after-hours trading on Thursday after the social media platform delivered a "triple-beat" report, significantly outperforming Wall Street expectations on revenue, earnings, and user growth while announcing its first-ever $1 billion share repurchase program.
The San Francisco-based company posted fourth-quarter revenue of $726 million, representing a 70% year-over-year increase that crushed the $667.6 million analyst consensus.
This growth was fueled by a dominant performance in its advertising business, where revenue jumped 75% to $690 million as brands increasingly leveraged Reddit's niche community targeting.
Even more impressive was the platform's profitability: Reddit generated $252 million in net income, or $1.24 per diluted share, nearly 30% above the $0.96 expected by the Street.
The quarter marked a pivot from a "growth-at-all-costs" story to a cash-flow powerhouse.
Reddit reported $264 million in free cash flow, a massive improvement from $90 million a year ago.
Management’s confidence in this cash engine was underscored by the board's authorization of a $1 billion share buyback, a rare move for a company that only went public two years ago.