Reddit on Tuesday reported a quarterly loss of more than $500 million in its first earnings report as a public company, largely due to stock-based compensation expenses incurred during its initial public offering in March.
But the social media company also posted strong revenue and user growth, underscoring the potential of its digital advertising business as people flock to the site. Last month, Google, Meta, and Snap also reported increased ad sales and double-digit revenue growth.
Reddit’s revenue was $243 million in the first quarter, up 48 percent from $163.7 million a year earlier and above Wall Street estimates of $214 million, according to data compiled by FactSet. The net loss was $575.1 million, compared to a loss of $60.9 million a year earlier. Stock-based compensation expenses totaled $595.5 million, up from $13.2 million a year earlier.
Daily active users increased to 82.7 million, up 37 percent from a year earlier.
“We see this as the beginning of a new chapter as we work to build the next generation of Reddit,” Steve Huffman, Reddit co-founder and CEO, said in a statement.
Reddit, which went public after more than 18 years as a private company, has become something of a litmus test for technology initial public offerings. The company successfully debuted in what had been a lukewarm IPO market, with its shares rising 48 percent on the first day of trading and giving investors reason for optimism. Reddit shares continue to trade above the company’s IPO price of $34.
Reddit, essentially a message board where users gather in forums to research and discuss common interests, has spent years trying to diversify its core digital advertising business. It has reached agreements with Google and other companies that want to license its large amounts of conversation data, for example to develop artificial intelligence technology. He has also tried to launch an e-commerce business.
Reddit projected between $240 million and $255 million in revenue in the current quarter, above Wall Street expectations.