Reddit on Tuesday reported a quarterly profit for the first time in its 20-year history. Shares of the company, popular for its user-led communities known as subreddits, rose more than 35% as markets opened the next day.
The company reported nearly 100 million monthly users, an increase of 47% from the year prior, and a profit of $29.9m. Its revenue reached $348.4m, a year-over-year increase of 68%, handily beating analysts’ expectations.
CEO Steve Huffman said the site’s new feature that translates English posts into French, Spanish, Portuguese, Italian and German via artificial intelligence drove the increase in users. Reddit plans to expand the feature to more languages in the coming months, according to Huffman’s letter to shareholders.
The company forecast current-quarter revenue above Wall Street estimates, helped by its AI content licensing deals and strong digital advertising spending.
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The company’s content licensing deals with Alphabet’s Google and Microsoft-backed OpenAI for training their AI models have also been boosting its revenue, analysts have said. The social media platform also has deals with sports leagues such as the National Basketball Association (NBA), which are helping the company to bring more sports content on the platform and attract ad dollars.
“Reddit’s AI partnerships with Google and OpenAI are a huge bonus right now, and while they contributed a good deal to this quarter’s revenue, they’re like training wheels on a bike – good for stability, but they won’t fuel long-term growth,” said Jeremy Goldman, senior director of briefings at Emarketer.
Source: www.theguardian.com