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.
CEO Steve Huffman noted that the platform’s machine translation initiative—now live in over 30 languages—is successfully unlocking international markets, with international revenue growth now beginning to outpace domestic gains.
Beyond advertising, Reddit’s Other Revenue (which includes its high-margin AI data licensing deals) reached $36 million.
While this segment grew more modestly at 8%, the company signaled that its partnerships with Google and OpenAI are entering a more stable, recurring phase.