Reddit beat Wall Street expectations in Q4 with $726 million in revenue (vs. $665M consensus) and $1.24 earnings per share (vs. $0.94 expected), reporting 70% year-over-year growth and net income of $252 million. The company announced a $1 billion share repurchase and guided Q1 revenue to $595-605M, well above the $577M analysts expected.
The numbers look strong on the surface. Total daily active users hit 121.4 million in Q4, up 19% year-over-year. US revenue reached $583 million, beating estimates by $54 million. The company's shift from losses to profitability - full-year 2025 saw $530M net income versus a $484M loss the prior year - validates its post-IPO strategy around AI-powered advertising tools and data licensing.
The real question is hiding in the user metrics. US logged-in daily active users grew just 5% year-over-year to 23 million, down from 7% growth in Q3. This marks the sixth consecutive quarter of deceleration in the audience segment that matters most for Reddit's advertising business. Logged-in users with accounts engage more frequently and generate higher ad revenue than casual visitors arriving via Google search.
Reddit CEO Steve Huffman signaled the company will "phase out reporting on logged-in and logged-out later this year," arguing that new features like instant personalization blur the distinction between user types. That's convenient timing given the sustained slowdown in logged-in growth.
History suggests metrics don't get retired when they're trending the right direction. The industry has seen this pattern before: platforms emphasizing total reach over engaged users when core growth stalls. For enterprise tech leaders evaluating Reddit's API and advertising tools, the trajectory of high-intent users matters more than headline user counts.
Reddit's AI investment is paying off - its Max Campaigns tool cut cost-per-acquisition by 17%, and machine translation expanded reach across 30 languages. But the platform faces stiff competition from TikTok, Snap, and YouTube for both ad dollars and AI training partnerships. The $1B buyback suggests confidence, though it also signals limited M&A appetite.
Notably: Reddit's shares had fallen 40% in the month before earnings, with 19 down days. The strong beat triggered an immediate pop, but the logged-in user trend deserves watching. Q1 guidance will show whether growth reaccelerates or the pattern continues.