November 6, 2026·40 min read
Reddit, Inc. (RDDT), Financial Analysis
Insights derived from analysing SEC filings. Independent analysis, not a publication of the SEC.
Revenue Q3 2026
$895m
+53.0% year on year (Q3 2025 $585m)
Costs and expenses Q3 2026
$633m
+41.9% year on year (Q3 2025 $446m)
Operating margin Q3 2026
29.2%
+5.5 pts year on year (Q3 2025 23.7%)
Key findings
- Revenue +53.0% to $895.0m in Q3 2026; costs and expenses +41.9%. Advertising $847.0m, +54%; other revenue, mainly content licensing, $48.0m, +35%. GAAP operating margin 29.2% against 23.7%; net income $283.3m; adjusted EBITDA (non GAAP) $402.3m, a 44.9% margin. Revenue was above the Q3 guidance of $860m to $870m (10-Q and 8-K of 29 Oct 2026).
- Advertising: price per ad up about 34% and impressions up about 15% year on year (10-Q). US ARPU $13.82, +53%; international ARPU $2.43, +32%. International revenue $176.0m, +67%; US revenue $718.9m, +50%.
- Users: DAUq 130.3m, flat on Q2 2026 and +12% year on year; US DAUq 50.7m, (2%), international 79.6m, +24%. US logged out DAUq 27.3m, (4%). The shareholder letter states that search referral losses in October averaged more than 1m referrals per week and that, if they continue, total DAUq could fall by a low double digit % in Q4 2026 from about 130m.
- Q4 2026 guidance: revenue $1.00bn to $1.03bn, +38% to +42%, and adjusted EBITDA (non GAAP) $480m to $510m (8-K Ex 99.1). In Q1 to Q3 2026 revenue came in above the top of each quarter's guidance range.
- Content licensing: the Q3 2026 10-Q adds that agreements with the two partners bringing substantially all licensing contract value are "approaching the end of their respective current terms". Remaining performance obligations, mainly long term content licensing, were $62.4m at 30 Sep 2026: $31.9m for the rest of 2026 and $30.5m for 2027. The 10-Q also adds risks on AI agents, falling search traffic, scraping and logged in only tests.
- Shares fell 29.2% on 30 Oct 2026, from $129.60 to $91.73; at $93.81 (close, 5 Nov 2026) they trade at 19.1x TTM GAAP EPS of $4.90, 64% below the 52 week high. Model price in three years: base $170 (+82%), best $339 (+261%), worst $62 (down 34%).
Figures are read from the Forms 10-K for FY2024 and FY2025, the Forms 10-Q for Q1 2025 to Q3 2026 (Q3 2026 10-Q filed on 29 Oct 2026), the Forms 8-K with all their exhibits, incl. the quarterly earnings releases (Ex 99.1) and the letters to shareholders (Ex 99.2) for Q4 2025 to Q3 2026, which carry the financial commentary and guidance (Reddit files no separate CFO commentary document), the Form 8-K on the change of Chief Legal Officer, the 2026 proxy statement, the Form 8-K Item 5.07 vote results of the annual meeting, Schedules 13D and 13G, and Forms 4 on the record for central index key 1713445, together with the filings of Meta, Alphabet, Pinterest and Snap used in chapters 2 to 5. Accession numbers for every filing used appear in the Sources appendix. Share price $93.81 is the close of 5 Nov 2026; peer values use prices of 6 Nov 2026.
1 Revenue & Business Model
- Storyline: revenue rose +53% in Q3 2026 while DAUq stopped growing on Q2 2026, US DAUq fell 2% year on year and the shareholder letter warns of a further decline in Q4 2026 from lost search referrals; the 10-Q attributes advertising growth mainly to higher prices per ad (about +34%) and to a lesser extent to more impressions (about +15%). Chapters 2 to 4 follow the revenue drivers: advertising with pricing, international and ARPU; content licensing and AI search; users and search traffic with logged in and logged out users.
- Reddit reports one segment. The 10-K describes a platform of over 100,000 active communities; revenue comes from advertising (cost per click, cost per thousand impressions, cost per view or fixed fee) and other revenue, which is mainly content licensing plus Reddit Premium and Gold. Advertising was 94.6% of Q3 2026 revenue. Q4 is the seasonally largest quarter and Q1 the smallest (10-K).
- Revenue FY2022 $666.7m to FY2025 $2.20bn, a 48.9% CAGR; TTM Q3 2026 $3.09bn. Annual series cover FY2022 to FY2025; FY2021 is not included in the filings used. Reddit listed its Class A stock on the NYSE on 21 Mar 2024.
- Regions by billing address, Q3 2026: United States $718.9m (80.3%), international $176.0m (19.7%). About 57% of users visited from outside the US in Q4 2025 and over 90% of posts were in English; machine translation covers 35 languages (10-K). ARPU by region uses ad impression location and does not match revenue by billing address.
- Employees 2,555 at 31 Dec 2025, of which 1,981 in the US (10-K).
Table 1.1 Revenue, users and ARPU, last five quarters
| Line | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Revenue ($m) | 584.9 | 725.6 | 663.4 | 804.9 | 895.0 |
| Advertising ($m) | 549.3 | 689.7 | 624.7 | 761.6 | 847.0 |
| Other, mainly content licensing ($m) | 35.6 | 35.9 | 38.7 | 43.3 | 48.0 |
| United States revenue ($m) | 479.6 | 583.3 | 525.6 | 638.1 | 718.9 |
| International revenue ($m) | 105.3 | 142.3 | 137.8 | 166.8 | 176.0 |
| DAUq, global (m) | 116.0 | 121.4 | 126.8 | 130.3 | 130.3 |
| DAUq, US (m) | 51.6 | 52.5 | 53.5 | 53.2 | 50.7 |
| DAUq, international (m) | 64.4 | 68.9 | 73.3 | 77.1 | 79.6 |
| Logged in DAUq, global (m) | 50.2 | 50.7 | 52.0 | 52.6 | 53.5 |
| Logged out DAUq, global (m) | 65.8 | 70.7 | 74.8 | 77.7 | 76.8 |
| WAUq, global (m) | 443.8 | 471.6 | 493.1 | 514.6 | 515.2 |
| ARPU, global ($) | 5.04 | 5.98 | 5.23 | 6.18 | 6.87 |
| ARPU, US ($) | 9.04 | 10.79 | 9.63 | 11.85 | 13.82 |
| ARPU, international ($) | 1.84 | 2.31 | 2.02 | 2.26 | 2.43 |
Q4 2025 revenue lines equal FY2025 less 9M 2025. DAUq: daily active uniques; WAUq: weekly active uniques; ARPU: revenue per average DAUq in the quarter, regions by ad impression location (8-K Ex 99.2, 10-Q).
2 Advertising: Price per Ad +34%, International Revenue +67%
- Advertising revenue $847.0m in Q3 2026, +54.2%, 94.6% of revenue; growth year on year 75% in Q4 2025, 74% in Q1 2026 and 64% in Q2 2026 (8-K releases). Q4 2026 revenue guidance implies +38% to +42% for the company.
- Pricing and impressions (10-Q): price per ad rose about 34% and impressions about 15% in Q3 2026; in 9M 2026, about 35% and 21%. The letter states that growth came from both price and impressions, led by lower funnel objectives.
- ARPU: global $6.87, +36%; US $13.82, +53%; international $2.43, +32%. US ARPU is 5.7 times international ARPU. International revenue $176.0m, +67%, is 19.7% of revenue.
- Products (8-K Ex 99.2): Reddit Max, an automated campaign type using AI, moved from public beta in Q4 2025 to general availability in Q3 2026; the Shopify integration for Dynamic Product Ads became generally available in Q2 2026; video ad revenue more than doubled in Q3 2026. The Q1 2026 letter states that about 40% of conversations on Reddit are commercial in nature.
How digital advertising is changing
- Peer growth (Q3 2026): Meta advertising +25.9% with impressions +10% and average price per ad +14% (Meta 10-Q); Google advertising +10.6%, Search and other +12.0% (Alphabet 10-Q); Snap +14.3% and Pinterest +11.9% (8-K Ex 99.1).
- Margins: Pinterest operating margin 2.6% and Snap 4.5% in Q3 2026 against Reddit 29.2%.
- Automation: Reddit Max is an AI automated campaign type with Advertising API access; the 10-K lists Google, Meta, Snapchat, TikTok, Pinterest and X as advertising competitors.
- Scale: Reddit Q3 2026 advertising revenue of $847.0m compares with $63.1bn at Meta and $82.0bn at Google.
Table 2.1 Advertising revenue compared, Q3 2026
| Company | Line | Period | Detail | Revenue | Growth (%) | Op. margin (%) |
|---|---|---|---|---|---|---|
| Advertising revenue | Q3 2026 | price per ad about +34%, impressions about +15% (10-Q) | $847.0m | 54.2 | 29.2 | |
| Meta | Advertising revenue | Q3 2026 | Ad impressions up 10%, average price per ad up 14% | $63.06bn | 25.9 | n/a |
| Alphabet | Google advertising revenue | Q3 2026 | Search and other $63.35bn (up 12.0%), YouTube ads $11.21bn (up 9.2%) | $82.01bn | 10.6 | n/a |
| Snap | Revenue, mostly advertising | Q3 2026 | Operating income $76.7m; North America revenue $1.01bn, up 13% | $1.72bn | 14.3 | 4.5 |
| Revenue, mostly advertising | Q3 2026 | income from operations $30.3m | $1.17bn | 11.9 | 2.6 |
Margins are total company GAAP operating margin; Meta and Alphabet report no margin for advertising alone. Meta and Alphabet from their 10-Q; Snap and Pinterest from 8-K Ex 99.1. X files no reports with the SEC.
3 Content Licensing and AI Search: Two Agreements Near the End of Their Terms
- Other revenue $48.0m in Q3 2026, +34.8%, 5.4% of revenue; FY2025 $140.0m, +22%, and TTM $165.9m. Other revenue is mainly content licensing; Reddit Premium and Gold are not material (10-K).
- Concentration: substantially all contract value of licensing revenue comes from two partners under medium term agreements (10-K); the Q3 2026 10-Q adds that these agreements are "approaching the end of their respective current terms" and that Reddit may choose not to renew if terms are not in its long term interests. The filings do not name the two partners.
- Backlog: remaining performance obligations, mainly long term content licensing, $62.4m at 30 Sep 2026: $31.9m for the rest of 2026 and $30.5m for 2027; deferred revenue $38.8m (10-Q). Other revenue in Q3 2026 alone was $48.0m.
- Search on Reddit: over 80m people searched on Reddit weekly in Q4 2025 against 60m a year earlier; Reddit Answers was merged into core search in 2025 (8-K Ex 99.2, 10-K).
- Scraping: the FY2025 10-K states that litigation against unlicensed model builders has commenced; the Q3 2026 10-Q adds that unauthorized scraping and copying could reduce partners' incentives to sign licensing agreements.
How AI search and content licensing are changing
- AI answers: the Q3 2026 10-Q names LLMs and AI features that retrieve and synthesize information, such as those built by Google, Meta, OpenAI and Anthropic, as competitors that users may consult in place of Reddit, some of them trained on Reddit content.
- Alphabet: Google Search and other revenue $63.35bn in Q3 2026, +12.0%, with paid clicks +8% and cost per click +4%; traffic acquisition costs $16.37bn, +10.0% (Alphabet 10-Q).
- Meta: capex incl. finance lease principal $34.9bn in Q3 2026, +80.2%, for AI infrastructure; no data licensing revenue line (Meta 10-Q).
- Snap and Pinterest: neither files a content licensing revenue line in its Q3 2026 release; Reddit is the only company in the peer set that reports licensing within revenue.
Table 3.1 Licensing and AI search metrics compared, Q3 2026
| Company | Metric | Period | Detail | Value | Growth (%) |
|---|---|---|---|---|---|
| Other revenue, mainly content licensing | Q3 2026 | remaining performance obligations $62.4m; two partners hold substantially all contract value | $48.0m | 34.8 | |
| Alphabet | Google Search and other revenue | Q3 2026 | Paid clicks up 8%, cost per click up 4% | $63.35bn | 12.0 |
| Alphabet | Traffic acquisition costs | Q3 2026 | TAC rate 20.0% of ad revenue | $16.37bn | 10.0 |
| Meta | Capex incl. finance lease principal | Q3 2026 | AI infrastructure spend; no separate data licensing revenue line | $34.91bn | 80.2 |
| Snap | Content licensing revenue | Q3 2026 | No licensing revenue line in the Q3 2026 release | not disclosed | n/a |
| Content licensing revenue | Q3 2026 | Not disclosed | not disclosed | n/a |
Metrics differ by company and are not comparable one to one. Alphabet and Meta from their 10-Q; Snap and Pinterest from 8-K Ex 99.1. X files no reports with the SEC.
4 Users and Search Traffic: US DAUq (2%), Logged Out US Users (4%)
- DAUq 130.3m in Q3 2026, +12.3% year on year and flat on Q2 2026; growth year on year 19% in Q4 2025, 17% in Q1 2026 and 18% in Q2 2026. US DAUq 50.7m, (1.7%) and (4.7%) on Q2 2026; international 79.6m, +23.6%. WAUq 515.2m, +16.1%.
- Logged in against logged out: logged in DAUq 53.5m, +6.6%; logged out 76.8m, +16.7%, down from 77.7m in Q2 2026. US logged out 27.3m, (4.2%); US logged in 23.4m, +1.3%. Logged in and app users account for over 80% of monetization (8-K Ex 99.2).
- Q4 2026 indication (shareholder letter): search referrals fell by more than 1m per week on average in October; if the rate continues, total DAUq could fall by a low double digit % in Q4 2026 from a base of 130m. About 13% of eligible mobile web users see the app conversion prompt.
- New risk factors in the Q3 2026 10-Q: competition from LLMs and other AI products; declines in search engine traffic during the quarter; AI agents using Reddit content without visiting the platform; unauthorized scraping; experiments requiring users to log in; and changes to paid user acquisition marketing that could reduce user growth and ad reach.
- Marketing: sales and marketing rose +63% to $209.4m in Q3 2026 on user and brand marketing (10-Q); the 10-Q credits user marketing and product work for the DAUq gain year on year.
How search traffic and user metrics are changing
- Peer users (Q3 2026): Snap daily active users 495m, +4%, with North America 92m, down 6% (Snap 8-K Ex 99.1); Pinterest monthly active users 661m, +10%; Meta family daily active people 3.64bn in Sep 2026.
- Search clicks: Alphabet paid clicks +8% in Q3 2026 (10-Q); Reddit states that search referral traffic fell in Q3 2026 and in October (8-K Ex 99.2).
- Definitions: Reddit DAUq include logged out users; Snap counts logged in daily users; Pinterest reports monthly users; Meta counts people across its apps.
- Translation: machine translation covers 35 languages; the FY2025 10-K states that international DAUq growth from it may slow once the rollout is complete.
Table 4.1 User metrics compared, Q3 2026
| Company | Metric | Period | Detail | Value | Growth (%) |
|---|---|---|---|---|---|
| DAUq, global | Q3 2026 | US 50.7m, (2%); ARPU $6.87, +36% | 130.3m | 12.3 | |
| WAUq, global | Q3 2026 | weekly active uniques | 515.2m | 16.1 | |
| Meta | Family daily active people | Sep 2026 average | Family ARPP $17.72, up 23% | 3.64bn | n/a |
| Snap | Daily active users | Q3 2026 | North America DAU 92m, down 6%; ARPU $3.48, up 10% | 495m | 4 |
| Monthly active users | Q3 2026 | monthly metric | 661m | 10 | |
| Alphabet | Paid clicks | Q3 2026 | No user count disclosed | growth only | 8 |
Definitions differ. Meta from its 10-Q, Snap and Pinterest from 8-K Ex 99.1, Alphabet from its 10-Q; Alphabet discloses no user count. X files no reports with the SEC.
5 Financial Analysis & Ratios
- GAAP operating income turned positive in FY2025 at $442.0m, 20.1% of revenue, and reached 29.4% TTM, from an operating loss of $560.6m in FY2024 that included stock based compensation of $801.6m, mainly the catch up at the March 2024 IPO for units with a liquidity vesting condition (10-K). Gross margin TTM 91.5%.
- Net income TTM $991.7m exceeds operating income of $908.0m because of other income of $98.4m, mainly interest, and tax expense of only $14.7m. A full valuation allowance of $779.0m covered US deferred tax assets at 31 Dec 2025 (federal net operating losses $1.7bn); the Q3 2026 10-Q states that a release of a large part of it within 12 months is reasonably possible.
- Free cash flow TTM $1.20bn, 38.8% of revenue (operating cash flow less purchases of property and equipment); capex was $6.6m TTM, as hosting is bought from cloud providers under commitments of $880m with AWS (Jul 2026 to Jun 2029) and $580m with Google Cloud (Sep 2026 to Aug 2029).
- Balance sheet at 30 Sep 2026: cash, cash equivalents and marketable securities $3.03bn; no debt; the $500m revolving facility of 1 Jul 2025 is undrawn, with $5.7m of letters of credit issued. Equity $3.58bn.
- Buybacks: $340.0m in 9M 2026 for 2,193,461 shares under the $1bn program authorized on 4 Feb 2026, the first repurchases since the IPO; $660.0m remains. Fully diluted shares 206.3m at 30 Sep 2026 (8-K Ex 99.2). No dividend.
Table 5.1 Income statement, cash flow and balance sheet summary ($bn unless stated)
| Line item | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|
| Revenue | 0.7 | 0.8 | 1.3 | 2.2 | 3.1 |
| Gross profit | 0.6 | 0.7 | 1.2 | 2.0 | 2.8 |
| Research and development | 0.4 | 0.4 | 0.9 | 0.8 | 0.9 |
| Selling, general and administrative | 0.4 | 0.4 | 0.8 | 0.8 | 1.0 |
| Operating income | (0.2) | (0.1) | (0.6) | 0.4 | 0.9 |
| Net income | (0.2) | (0.1) | (0.5) | 0.5 | 1.0 |
| Diluted EPS ($) | (2.77) | (1.54) | (3.33) | 2.62 | 4.90 |
| Operating cash flow | (0.1) | (0.1) | 0.2 | 0.7 | 1.2 |
| Capital expenditure | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Free cash flow | (0.1) | (0.1) | 0.2 | 0.7 | 1.2 |
| Stock based compensation | 0.1 | 0.0 | 0.8 | 0.3 | 0.4 |
| Cash and investments | n/a | 1.2 | 1.8 | 2.5 | 3.0 |
| Total debt | n/a | 0.0 | 0.0 | 0.0 | 0.0 |
| Total equity | 0.3 | (0.4) | 2.1 | 2.9 | 3.6 |
FY2022 balance sheet items are not presented in the FY2024 and FY2025 10-K. FY2022 and FY2023 equity reflect convertible preferred stock held outside permanent equity before the IPO. Free cash flow is operating cash flow less purchases of property and equipment. Cash and investments include cash, cash equivalents and current marketable securities. Reddit has no borrowings. TTM equals Q4 2025 plus Q1 to Q3 2026.
Table 5.2 What changed, Q3 2026 against Q3 2025
| Metric | Q3 2025 | Q3 2026 | Change |
|---|---|---|---|
| Revenue ($bn) | 0.58 | 0.90 | 53.0% |
| Gross profit ($bn) | 0.53 | 0.82 | 53.9% |
| Operating income ($bn) | 0.14 | 0.26 | 88.9% |
| Net income ($bn) | 0.16 | 0.28 | 74.1% |
| Diluted EPS ($) | 0.80 | 1.40 | 75.0% |
| Operating cash flow ($bn) | 0.19 | 0.36 | 96.4% |
| Free cash flow ($bn) | 0.18 | 0.36 | 98.0% |
| Operating margin (%) | 23.7 | 29.2 | 5.5 pts |
| Net margin (%) | 27.8 | 31.7 | 3.8 pts |
Table 5.3 Ratio analysis
| Ratio | FY2022 | FY2023 | FY2024 | FY2025 | TTM Q3 2026 |
|---|---|---|---|---|---|
| Growth and margins | |||||
| Revenue growth (%) | n/a | 20.6 | 61.7 | 69.4 | n/a |
| Gross margin (%) | 84.3 | 86.2 | 90.5 | 91.2 | 91.5 |
| Operating margin (%) | (25.8) | (17.4) | (43.1) | 20.1 | 29.4 |
| Net margin (%) | (23.8) | (11.3) | (37.2) | 24.0 | 32.1 |
| FCF margin (%) | (15.0) | (10.5) | 16.6 | 31.1 | 38.8 |
| Cost and investment intensity | |||||
| R&D (%) revenue | 54.8 | 54.5 | 71.9 | 35.6 | 29.2 |
| SBC (%) revenue | 8.3 | 5.9 | 61.7 | 15.6 | 12.5 |
| Capex (%) revenue | 0.9 | 1.2 | 0.5 | 0.3 | 0.2 |
| Returns | |||||
| ROE (%) | (63.3) | n/a | (56.4) | 20.9 | 27.7 |
| ROA (%) | n/a | (5.7) | (24.6) | 19.0 | 25.0 |
| Asset turnover (x) | n/a | 0.50 | 0.56 | 0.68 | 0.78 |
| Liquidity and leverage | |||||
| Current ratio (x) | n/a | 11.08 | 12.63 | 11.56 | 10.80 |
| Debt to equity (x) | n/a | n/a | 0.00 | 0.00 | 0.00 |
| Net cash ($bn) | n/a | 1.2 | 1.8 | 2.5 | 3.0 |
| Efficiency and cash quality | |||||
| Days sales outstanding | n/a | 111 | 98 | 98 | 86 |
ROE and ROA use average balances where both year ends are available, otherwise period end balances; TTM uses balances at 30 Sep 2026. Effective tax rates are omitted because of the full valuation allowance.
Table 5.4 Valuation snapshot at $93.81 per share, 5 Nov 2026
| Measure | Value |
|---|---|
| Market cap ($bn) | 18.1 |
| Enterprise value ($bn) | 15.1 |
| P/E (TTM) (x) | 19.1 |
| EV/Sales (TTM) (x) | 4.9 |
| EV/EBITDA (TTM) (x) | 16.3 |
| FCF yield (%) | 6.6 |
| Price/Book (x) | 5.1 |
Cost structure and profitability
- Costs and expenses (revenue less operating income) $633.4m in Q3 2026, +41.9%, against revenue +53.0%; operating margin up 5.5 pts year on year and 0.4 pts on Q2 2026.
- Cost of revenue 8.5% of revenue against 9.0% a year earlier; gross margin 91.5% against 91.0%.
- R&D 29.4% of revenue, sales and marketing 23.4%, G&A 9.5%, against 33.6%, 22.0% and 11.8% a year earlier.
- Stock based compensation $131.3m in the cash flow statement, 14.7% of revenue; $136.4m incl. related payroll taxes against $93.6m. With depreciation and amortization of $4.3m it makes up the $140.7m between GAAP operating income and adjusted EBITDA.
- Operating cash flow $363.8m, +96.4%; capex $1.2m; free cash flow $362.6m against $183.1m.
Table 5.5 Costs as % of revenue, last five quarters
| Line | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 | Q3 2026 |
|---|---|---|---|---|---|
| Cost of revenue (% of revenue) | 9.0 | 8.1 | 8.5 | 8.7 | 8.5 |
| Research and development (% of revenue) | 33.6 | 27.4 | 31.2 | 28.7 | 29.4 |
| Sales and marketing (% of revenue) | 22.0 | 22.6 | 22.8 | 24.3 | 23.4 |
| General and administrative (% of revenue) | 11.8 | 10.0 | 9.9 | 9.4 | 9.5 |
| Stock based compensation (incl. in lines above) (% of revenue) | 14.3 | 11.7 | 10.3 | 12.5 | 14.7 |
| Operating income (% of revenue) | 23.7 | 31.9 | 27.6 | 28.8 | 29.2 |
| Capex (% of revenue) | 0.4 | 0.4 | 0.2 | 0.1 | 0.1 |
Guidance and capital return
- Revenue against guidance: Q1 2026 $663.4m against $595m to $605m; Q2 2026 $804.9m against $715m to $725m; Q3 2026 $895.0m against $860m to $870m. The Q4 2026 midpoint of $1.015bn is +40% on Q4 2025, against +53% reported for Q3 2026.
- Repurchases by quarter: $5.0m in Q1 2026, $234.6m in Q2 2026 and $100.4m in Q3 2026 (670 thousand shares at an average $149.81, 8-K Ex 99.1).
6 MD&A & Management Commentary
Q3 2026 results, Form 10-Q and shareholder letter
- Q3 2026 (10-Q and 8-K of 29 Oct 2026): revenue $895.0m, +53.0% and +11.2% on Q2 2026; GAAP net income $283.3m against $162.7m; diluted EPS $1.40 against $0.80; adjusted EBITDA $402.3m against $236.0m; free cash flow $362.6m against $183.1m.
- 10-Q revenue analysis: advertising revenue rose $297.7m, +54%, on an increase of about 34% in price per ad and about 15% in impressions; in 9M 2026 price rose about 35% and impressions about 21%. US revenue rose $239.3m (+50%) and rest of world revenue $70.7m (+67%).
- 10-Q users: DAUq flat on Q2 2026 at 130.3m, with rest of world +3% and US (5%) quarter on quarter. Reddit attributes the gain year on year to user marketing and product work, offset by changes at third party search engines. DAUq to WAUq ratio 25% against 26% in Q4 2025.
- 10-Q costs: cost of revenue $75.8m, +44%, from hosting usage; R&D $263.5m, +34%; sales and marketing $209.4m, +63%, from user and brand marketing; G&A $84.7m, +23%. Stock based compensation and related taxes $136.4m, 15% of revenue.
- Shareholder letter (8-K Ex 99.2): search referral traffic fell in Q3 2026, mostly logged out and web traffic, and the decline continued into October; app and logged in DAUq grew quarter on quarter and account for over 80% of monetization. Full tests of a logged in only experience start in select markets outside the US in Q4 2026. Video ad revenue more than doubled and Reddit Max campaigns became generally available.
Table 6.1 Guidance for Q4 2026 and the 2026 quarterly track record (Reddit guides one quarter ahead)
| Item | Outlook | Source |
|---|---|---|
| Q4 2026 revenue | $1.00bn to $1.03bn, +38% to +42% on Q4 2025 ($725.6m) | 8-K Ex 99.1, 29 Oct 2026 |
| Q4 2026 adjusted EBITDA (non GAAP) | $480m to $510m; midpoint 48.8% of midpoint revenue | 8-K Ex 99.1, 29 Oct 2026 |
| Q4 2026 DAUq indication in the shareholder letter | if October search referral losses of more than 1m per week on average continue, total DAUq could fall by a low double digit % from about 130m | 8-K Ex 99.2 shareholder letter, 29 Oct 2026 |
| Q1 2026 (set on 5 Feb 2026) | revenue $595m to $605m, actual $663.4m; adjusted EBITDA $210m to $220m, actual $266.0m | 8-K Ex 99.1 |
| Q2 2026 (set on 30 Apr 2026) | revenue $715m to $725m, actual $804.9m; adjusted EBITDA $285m to $295m, actual $342.8m | 8-K Ex 99.1 |
| Q3 2026 (set on 30 Jul 2026) | revenue $860m to $870m, actual $895.0m; adjusted EBITDA $385m to $395m, actual $402.3m | 8-K Ex 99.1 |
| Logged in only experience | full tests in select markets outside the US from Q4 2026; results to inform a global version | 8-K Ex 99.2, 29 Oct 2026; 10-Q |
| Capital return | $1bn repurchase program authorized 4 Feb 2026, no expiry; $660.0m remaining at 30 Sep 2026; no dividend | 8-K Item 8.01, 5 Feb 2026; 10-Q |
Management and CFO commentary
- CEO Steve Huffman, Q3 2026 letter (8-K Ex 99.2): search referral traffic fell in Q3 2026, mostly logged out and web traffic; October referrals fell by more than 1m per week on average; app and logged in DAUq grew quarter on quarter; full tests of a logged in only experience begin in select markets outside the US in Q4 2026; trailing twelve month revenue passed $3bn and Reddit joined the S&P 500 index.
- Q3 2026 letter, financial commentary: gross margin 91.5%, up 50 bps; net margin 32%; adjusted EBITDA margin 45%; operating cash flow $364m; capex $1m, 0.1% of revenue; fully diluted shares 206.3m.
- Q2 2026 letter (30 Jul 2026): search referrals were choppy and traffic more volatile late in the quarter; retention of new app users up 50% year on year on a relative basis; goals of 1bn daily users globally and 100m in the US.
- Q1 2026 letter (30 Apr 2026): US DAUq 53.5m, +7%; about 40% of conversations commercial in nature; stock based compensation and related taxes $78.8m, 12% of revenue.
- Q4 2025 letter (5 Feb 2026): over 80m weekly searchers on Reddit; the company planned to phase out logged in and logged out reporting later in 2026, which the Q3 2026 10-Q reversed.
Table 6.2 Management statements in their own words
| Speaker | Date and source | Statement |
|---|---|---|
| Steve Huffman, Co‑Founder and CEO | 5 Feb 2026, 8-K Ex 99.1 | “Our focus is on turning Reddit's authenticity into even more everyday utility.” |
| Steve Huffman, Co‑Founder and CEO | 29 Oct 2026, 8-K Ex 99.2 | “Our search referral traffic was down meaningfully in Q3” |
Table 6.3 Key disclosures in the Forms 10-Q and 10-K
| Item | Disclosure |
|---|---|
| 10-Q Q3 2026, user reporting | The FY2025 10-K said logged in and logged out DAUq would no longer be reported from Q3 2026; the Q3 2026 10-Q keeps the split, citing volatility in search referrals. |
| 10-Q Q3 2026, revenue | Advertising +$297.7m (54%) on price about +34% and impressions about +15%; 9M 2026 advertising +$860.5m (63%). |
| 10-Q Q3 2026, licensing backlog | Deferred revenue $38.8m; remaining performance obligations $62.4m, of which $31.9m to be recognized in the rest of 2026 and $30.5m after. |
| 10-Q Q3 2026, commitments | June 2026 AWS addendum: $880.0m commitment from Jul 2026 to Jun 2029; August 2026 Google Cloud addendum: $580.0m from Sep 2026 to Aug 2029. |
| 10-Q Q3 2026, liquidity | Cash, equivalents and marketable securities $3.03bn, about 3% held outside the US; 9M 2026 operating cash flow $937.9m and free cash flow $934.5m; RSU tax withholding $45.0m. |
| 10-Q Q3 2026, repurchases | 509,777 shares in August 2026 at $150.72 and 160,182 in September at $146.93; none in July. |
| 10-Q Q3 2026, taxes | A release of a large part of the US valuation allowance within 12 months is reasonably possible and would produce a one time tax benefit. |
| 10-Q Q3 2026, legal | Securities class action on Google Search and AI Overviews disclosures dismissed with leave to amend on 13 Aug 2026; second amended complaint filed 23 Oct 2026; motion to dismiss due by 23 Nov 2026. UK ICO penalty of £14.5m (Feb 2026) under appeal. |
| 10-K FY2025, competitors | For information: Google, Amazon, YouTube, Wikipedia, X and LLMs such as ChatGPT, Gemini and Anthropic; for advertising: Google, Meta, Snapchat, TikTok, Pinterest and X. |
| 10-K FY2025, licensing | Substantially all contract value of licensing revenue comes from two partners under medium term agreements; the filings do not name them. The Dutch data protection authority has inquired into licensing and GDPR compliance. |
7 Peer Valuation & Sector Summary
- Sector: digital advertising on social platforms and search. Peers in the table: Meta, Alphabet, Pinterest and Snap, all named as advertising competitors in the FY2025 10-K. X is also named but files no reports with the SEC and is omitted.
- Growth (Q3 2026): RDDT 53.0%, META 26.1%, GOOGL 24.7%, SNAP 14.3%, PINS 11.9%.
- Operating margin TTM: GOOGL 33.3%, META 32.9%, RDDT 29.4%, PINS 4.2%, SNAP (1.8%); FCF margin: RDDT 38.8%, PINS 27.0%, SNAP 11.8%, META 10.4%, GOOGL 4.2%.
- Valuation: RDDT 4.9x EV/Sales against META 6.4x, GOOGL 7.1x, PINS 2.3x and SNAP 1.4x; RDDT 19.1x TTM GAAP P/E against META 20.6x and GOOGL 14.8x. Meta TTM revenue of $241.6bn is about 78 times Reddit's.
Table 7.1 Peer comparison, latest reported trailing twelve months
| Company | Revenue TTM ($bn) | Revenue growth (%) | Gross margin (%) | Operating margin (%) | Net margin (%) | FCF margin (%) | ROE (%) | Net cash ($bn) | Market value ($bn) | EV/Sales (x) | P/E TTM (x) |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RDDT | 3.1 | 53.0 | 91.5 | 29.4 | 32.1 | 38.8 | 32.0 | 3.0 | 18 | 4.9 | 19.1 |
| META | 241.6 | 26.1 | 81.0 | 32.9 | 31.1 | 10.4 | 32.3 | (1.2) | 1,548 | 6.4 | 20.6 |
| GOOGL | 471.1 | 24.7 | 60.9 | 33.3 | 50.0 | 4.2 | 44.3 | 139.0 | 3,487 | 7.1 | 14.8 |
| PINS | 4.7 | 11.9 | 79.0 | 4.2 | 3.8 | 27.0 | 4.5 | 0.5 | 11 | 2.3 | 63.6 |
| SNAP | 6.6 | 14.3 | 59.1 | (1.8) | (2.3) | 11.8 | (6.8) | (0.7) | 9 | 1.4 | n/a |
RDDT, PINS and SNAP TTM to Sep 2026; META and GOOGL TTM to Sep 2026 from their Q3 2026 Forms 10-Q. Growth is Q3 2026 year on year. RDDT price of 5 Nov 2026, peers 6 Nov 2026. GOOGL net income includes about $129.6bn of equity gains; META TTM includes a $9.89bn legal charge and an $8.03bn tax benefit; RDDT tax expense is near zero under a full valuation allowance. X is omitted as it files no reports with the SEC. P/E is n/a where TTM earnings are negative. RDDT ROE here uses average equity of 30 Sep 2025 and 30 Sep 2026 (Table 5.3 uses equity at 30 Sep 2026). GOOGL market value prices all share classes at the Class A price.
8 Material Events & Contracts
- Six Forms 8-K from 6 Nov 2025 to 6 Nov 2026: four earnings releases with shareholder letters, the annual meeting results and the change of Chief Legal Officer; no Form 8-K/A.
- Change of Chief Legal Officer (8-K of 12 Aug 2026, Item 5.02): Benjamin Lee stepped down as Chief Legal Officer and Corporate Secretary effective 14 Sep 2026 and stayed as an employee to 25 Sep 2026; the company expects to appoint Paul Cappuccio. The filing carries no exhibit.
- Share repurchase program (8-K of 5 Feb 2026, Item 8.01): up to $1bn of Class A stock, authorized 4 Feb 2026, with no expiry and no minimum; it became a new risk factor in the FY2025 10-K.
- Board and officers: Maria Angelidou‑Smith was named Chief Product Officer (Q4 2025 letter); Reddit joined the S&P 500 index in Q3 2026 (Q3 2026 release).
Table 8.1 Forms 8-K filed in the last twelve months
| Date | Items | Event |
|---|---|---|
| 29 Oct 2026 | 2.02, 9.01 | Q3 2026 results (Ex 99.1 release, Ex 99.2 letter): revenue $895.0m, +53%; net income $283.3m; adjusted EBITDA $402.3m; DAUq 130.3m. Q4 2026 guidance: revenue $1.00bn to $1.03bn, adjusted EBITDA $480m to $510m. Letter: DAUq could fall by a low double digit % in Q4 2026 if October search referral losses continue. |
| 12 Aug 2026 | 5.02 | Chief Legal Officer and Corporate Secretary Benjamin Lee to step down effective 14 Sep 2026, staying as an employee to 25 Sep 2026; the company expects to appoint Paul Cappuccio as successor. No exhibit. |
| 30 Jul 2026 | 2.02, 9.01 | Q2 2026 results: revenue $804.9m, +61%; net income $252.8m; adjusted EBITDA $342.8m; DAUq 130.3m. Q3 2026 guidance: revenue $860m to $870m, adjusted EBITDA $385m to $395m. |
| 10 Jun 2026 | 5.07 | Annual meeting of 8 Jun 2026: eight directors elected, KPMG ratified, advisory say on pay approved. No exhibit. |
| 30 Apr 2026 | 2.02, 9.01 | Q1 2026 results: revenue $663.4m, +69%; net income $204.0m; adjusted EBITDA $266.0m; DAUq 126.8m. Q2 2026 guidance: revenue $715m to $725m, adjusted EBITDA $285m to $295m. |
| 5 Feb 2026 | 2.02, 8.01, 9.01 | Q4 and FY2025 results: Q4 2025 revenue $725.6m, +70%; FY2025 revenue $2.20bn, +69%; FY2025 net income $529.7m. Item 8.01: repurchase program of up to $1bn of Class A stock, authorized 4 Feb 2026. Q1 2026 guidance: revenue $595m to $605m. |
Table 8.2 Material contracts and financing arrangements
| Contract | Terms |
|---|---|
| Content licensing agreements | Two partners bring substantially all licensing contract value under medium term agreements "approaching the end of their respective current terms" (Q3 2026 10-Q); the partners are not named in the filings. Remaining performance obligations $62.4m. |
| Cloud hosting commitments | AWS addendum of June 2026: $880.0m from Jul 2026 to Jun 2029. Google Cloud addendum of August 2026: $580.0m from Sep 2026 to Aug 2029 (10-Q). Purchase commitments $372.2m at 31 Dec 2025 (10-K). |
| Revolving credit and letter of credit facility | $500m, five years from 1 Jul 2025, SOFR plus 1.25%, 0.15% commitment fee, secured by substantially all assets; undrawn, $494.3m available at 30 Sep 2026. |
| Share repurchase program | Up to $1bn of Class A stock (4 Feb 2026); $340.0m used for 2,193,461 shares to 30 Sep 2026. |
| Voting agreements of 19 Mar 2024 | Irrevocable proxies from Advance and Tencent give Steven Huffman voting control over their Class B shares; Advance also holds governance rights. |
9 Ownership, Voting Power & Annual Meeting
- Dual class control: Class B shares carry ten votes each. Through irrevocable proxies over the Advance and Tencent Class B shares, CEO Steven Huffman controlled 76.1% of total voting power at 31 Mar 2026 with about 3% economic ownership; Advance holds 83.5% of Class B, shown in the proxy table at 65.2% of total voting power; these shares are among those covered by Huffman's proxy (2026 proxy). Directors and executive officers held 3.5% of Class A and 97.1% of Class B incl. proxy shares.
- Institutions (Schedules 13G, 2026): Vanguard 12.5% of Class A across two filers, BlackRock 7.3%, Baillie Gifford 4.9% (5.2% in May); FMR fell from 8.9% in Feb 2026 to 2.3% in Apr 2026. Tencent reported 5.91m Class A shares (4.17%) in a Schedule 13G/A of 12 Nov 2025.
- 2026 annual meeting (8 Jun 2026): all eight directors elected, with votes for between 503.7m (Steven O. Newhouse of Advance) and 558.2m (Porter Gale); Newhouse received 55.3m withheld votes, 9.9% of votes cast. Say on pay 98.1%; KPMG ratified with 99.9%. No shareholder proposals.
- Insiders, 12 months to 5 Nov 2026 (111 Forms 4): open market sales $245.5m, of which $244.0m under Rule 10b5‑1 plans: COO Jennifer Wong $108.8m (612,803 shares), CEO Steve Huffman $71.4m (411,924 shares, matched by option exercises), CTO Christopher Slowe $30.0m, former CLO Benjamin Lee $26.8m and CFO Andrew Vollero $3.3m. Director Porter Gale sold 6,000 shares at $96 and $100 on 3 and 4 Nov 2026. Advance and Tencent filed no sales.
- Purchases: director Sarah Farrell bought 61,000 shares for $8.9m at $132 to $150 in Feb and Mar 2026 through Waygrove Partnership LP; she disclaims beneficial ownership. Monthly insider sales fell from $36.8m in Nov 2025 and $43.1m in Dec 2025 to $11m to $23m a month in 2026.
Table 9.1 Annual meeting vote results, 8 Jun 2026
| Proposal | For (m votes) | Against (m votes) | Abstain (m votes) | For as % of votes cast | Result |
|---|---|---|---|---|---|
| Elect Steven Huffman | 544.6 | 14.3 | none (plurality vote) | 97.4 | Elected |
| Elect Sarah Farrell | 558.1 | 0.8 | none (plurality vote) | 99.9 | Elected |
| Elect Patricia Fili‑Krushel | 557.5 | 1.4 | none (plurality vote) | 99.7 | Elected |
| Elect Porter Gale | 558.2 | 0.7 | none (plurality vote) | 99.9 | Elected |
| Elect David Habiger | 549.5 | 9.5 | none (plurality vote) | 98.3 | Elected |
| Elect Steven O. Newhouse | 503.7 | 55.3 | none (plurality vote) | 90.1 | Elected |
| Elect Robert A. Sauerberg Jr. | 523.1 | 35.9 | none (plurality vote) | 93.6 | Elected |
| Elect Michael Seibel | 541.5 | 17.5 | none (plurality vote) | 96.9 | Elected |
| Ratify KPMG LLP for FY2026 | 586.2 | 0.4 | 0.2 | 99.9 | Ratified |
| Say on pay (advisory) | 548.1 | 10.7 | 0.1 | 98.1 | Approved |
Directors are elected by plurality; the against column shows votes withheld. Broker non votes 27.8m on every item except the auditor ratification. Class A carries one vote and Class B ten votes per share, voting as one class.
Annual meeting remarks
- The Form 8-K Item 5.07 reports vote counts only; no management remarks, presentation or shareholder questions from the virtual meeting of 8 Jun 2026 were filed.
Table 9.2 Largest holders and voting power
| Holder | Class A (m) | Class B (m) | Share of votes or class | Source |
|---|---|---|---|---|
| Advance Magazine Publishers | 0.02 | 42.19 | 65.2% of votes; 83.5% of Class B | 2026 proxy |
| Steven Huffman (CEO), incl. proxy shares | 1.94 | 49.73 | 76.1% of votes | 2026 proxy; Schedule 13D/A |
| Entities affiliated with Tencent | 2.15 | 3.76 | 6.1% of votes | 2026 proxy |
| Vanguard (two filers) | 18.27 | 12.5% of Class A | Schedules 13G, 30 Oct 2026 | |
| BlackRock | 10.70 | 7.3% of Class A | Schedule 13G/A, 27 Oct 2026 | |
| Baillie Gifford | 7.09 | 4.9% of Class A | Schedule 13G/A, 21 Oct 2026 | |
| Jennifer Wong (COO) | 2.26 | 1.6% of Class A | 2026 proxy |
Proxy figures at 31 Mar 2026. Class B carries ten votes per share and is not listed. Huffman's figure includes the Advance and Tencent Class B shares over which he holds irrevocable proxies, so rows overlap. Shares outstanding at 28 Oct 2026: 146.94m Class A and 46.15m Class B (10-Q cover).
10 Risk Factors
- Item 1A of the FY2025 Form 10-K holds 49 risk factors, as in FY2024 (30,580 words against 30,150): 1 added (the share repurchase program), 1 removed (corporate culture, folded into the growth management factor) and 8 materially reworded. AI or generative AI appears in 11 factors against 9 a year earlier. The Q1 and Q2 2026 Forms 10-Q restate the section without material change; the Q3 2026 10-Q is the first filing of the period to add new factors.
Table 10.1 Risk factors with filed figures
| Risk | Disclosure and change |
|---|---|
| Content licensing renewals (new wording, Q3 2026 10-Q) | Agreements with the two partners bringing substantially all licensing contract value are "approaching the end of their respective current terms"; Reddit may choose not to renew if terms are not in its long term interests. Other revenue $48.0m in Q3 2026; remaining performance obligations $62.4m. |
| Search engine traffic (new, Q3 2026 10-Q) | Declines in search referral traffic during the quarter hurt DAUq growth and may continue. US DAUq 50.7m, (2%); US logged out DAUq 27.3m, (4%). |
| AI products and AI agents (new, Q3 2026 10-Q) | Users may find information through LLMs, AI agents and AI generated answers, incl. products by Google, Meta, OpenAI and Anthropic, some trained on Reddit content, instead of visiting Reddit. |
| Scraping (new, Q3 2026 10-Q) | Unauthorized scraping and copying could undermine the market for licensing Reddit content and bypass user privacy safeguards. |
| Logged in only tests (new, Q3 2026 10-Q) | Experiments requiring users to log in, in one or more international markets in Q4 2026, could reduce users and ad reach. Logged out DAUq were 59% of DAUq in Q3 2026. |
| User acquisition marketing (new, Q3 2026 10-Q) | Changes to paid user marketing could reduce user growth and ad reach; sales and marketing $209.4m in Q3 2026, +63%. |
| Share repurchase program (added, FY2025 10-K) | The $1bn program has no expiry and no minimum and may be suspended at any time; $660.0m remaining. |
| Dual class structure | Huffman controls 76.1% of voting power; Class B carries ten votes per share. |
| Litigation and regulation | Securities class action on Google Search and AI Overviews disclosures (second amended complaint 23 Oct 2026); UK ICO penalty of £14.5m under appeal; Dutch data protection authority inquiry into licensing. |
How risk factors changed
- Comparison: 10-K FY2025 filed 5 Feb 2026 acc 0001713445-26-000022 against 10-K FY2024 filed 12 Feb 2025 acc 0001713445-25-000018.
- Risk factor count held at 49 and total words rose 1.4% to 30,580 between the FY2024 and FY2025 10-K.
- AI or generative AI appears in 11 risk factors in the FY2025 10-K against 9 a year earlier; the term AI appears 34 times against 26.
- Logged out users are named in 1 factor in the FY2025 10-K against 4 a year earlier, after the 55% logged out share figure was removed.
- Regulatory text adds named rules and inquiries in Brazil, the Netherlands, the UK, Australia, France and India, including age assurance and minimum age laws.
- The Q3 2026 10-Q is the first filing in the period to add new factors, centered on falling search referrals, AI agents, scraping of licensed content and logged in only tests.
Table 10.2 Size of the risk factor section
| Measure | 10-K FY2024 | 10-K FY2025 |
|---|---|---|
| Risk factors (count) | 49 | 49 |
| Words in Item 1A | 30,150 | 30,580 |
Table 10.3 Risk factors added, removed and materially reworded
| Change | Risk factor | What changed |
|---|---|---|
| Added | Share repurchase program may not be fully implemented | New factor on the $1bn Class A buyback authorized in February 2026, which has no expiry, no minimum amount and may be suspended at any time. |
| Removed | Failure to maintain corporate culture as we grow | Standalone culture factor dropped; its text was folded into the growth management factor, which now covers both growth and culture. |
| Reworded | Intense competition and user base growth | Drops the statement that logged out users were 55% of DAUq in Q4 2024; adds AI and generative AI competition, reliance on machine translation for international DAUq and the need to convert search and marketing visitors into daily users. |
| Reworded | Search engine algorithm changes | Adds that search ranking of machine translated content may suffer if search engines deprioritize machine generated content. |
| Reworded | New products and services | Adds AI integration across the platform, the 2025 merger of Reddit Answers into core search, GPU and talent costs and interactive ads on the developer platform; drops the Contributor Program and video ad examples. |
| Reworded | Managing growth and corporate culture | Heading now adds culture; drops the headcount figure of 2,233 at 31 Dec 2024 and adds past and possible organizational changes for efficiency. |
| Reworded | Complex and evolving laws and regulations | Adds a Brazil Supreme Federal Court ruling on intermediary liability, Dutch Media Authority video platform registration, DSA duties, UK and Australia Online Safety Acts, Australia's Social Media Minimum Age law, France's Digital Majority Act and a Dutch data authority inquiry into content licensing; drops the March 2024 FTC inquiry example and Irish regulator text; notes the Collectible Avatars program sunset in November 2025. |
| Reworded | Data privacy scrutiny and regulation | Replaces older SCC and data bridge history with current legal challenges to the EU US Data Privacy Framework; adds a UK ICO investigation into Reddit's age assurance measures and new privacy laws in India. |
| Reworded | Disclosure controls and internal control | Moves from future tense to current Section 404 obligations, including the auditor attestation, and adds possible SEC investigations. |
| Reworded | Exclusive forum provisions | References to the amended and restated bylaws removed; forum provisions now sit only in the certificate of incorporation. |
Table 10.4 Risk factor updates in quarterly reports since the annual filing
| Filing | Change disclosed |
|---|---|
| 10-Q Q1 2026 filed 30 Apr 2026 | Full Item 1A restated (about 31,800 words); no material change found against the 10-K FY2025 beyond wording such as the Collectible Avatars program now described as deprecated. |
| 10-Q Q2 2026 filed 30 Jul 2026 | Full Item 1A restated (about 32,000 words); text matches the Q1 2026 10-Q apart from page break and formatting differences; no material change found. |
| 10-Q Q3 2026 filed 29 Oct 2026 | Item 1A grows to about 33,300 words with new factors and summary bullets on competition from LLMs and other AI products, continued declines in search engine traffic during the quarter, AI agents accessing Reddit content without visiting the platform, unauthorized scraping that could undermine the content licensing business, upcoming experiments requiring users to log in, and changes to paid user acquisition marketing that could cut user growth and ad reach. |
11 Stock Price, Scenarios & Sensitivity
- RDDT closed at $93.81 on 5 Nov 2026, after falling 29.2% from $129.60 on 29 Oct to $91.73 on 30 Oct 2026, the session after the Q3 2026 release. The price is 64.4% below the 52 week high of $263.32 and 5.1% above the low of $89.28. Price history starts at the listing in Mar 2024.
- Valuation: market value $18.11bn on 193.1m Class A and Class B shares, Class B valued at the Class A price; 19.1x TTM GAAP EPS of $4.90; free cash flow yield 6.6%; EV/Sales 4.9x after net cash of $3.03bn.
- Scenario model uses GAAP operating margins (TTM Q3 2026: 29.4%); revenue grows from TTM Q3 2026 $3.09bn for three years; other income $100m a year (TTM $98.4m); 21% tax rate after an assumed release of the valuation allowance; 206.3m fully diluted shares held flat as buybacks offset stock awards; price equals TTM Q3 2029 EPS times exit P/E.
Critical factors and core assumptions
Table 11.1 Critical factors behind the best case
| Factor | Current value | Best case requires | Evidence in filings and calls |
|---|---|---|---|
| DAUq after search changes | 130.3m in Q3 2026, flat on Q2; US 50.7m, (2%) | total DAUq growing again by H2 2027, logged in DAUq above +10% | letter: possible low double digit % fall in Q4 2026 |
| Ad pricing and ARPU | ARPU $6.87, +36%; price per ad about +34% | ARPU growth above 20% a year to 2028 | 10-Q MD&A Q3 2026 |
| International monetization | ARPU $2.43 against US $13.82; revenue +67% | international ARPU above $4 by 2029 | 8-K Ex 99.2 Q3 2026 |
| Content licensing renewals | other revenue $48.0m, +35%; backlog $62.4m | both agreements renewed at higher value, plus new licensees | 10-Q: two agreements near the end of their terms |
| Logged in only transition | logged in DAUq 53.5m (41% of DAUq); over 80% of monetization | registrations offset lost logged out reach | tests outside the US from Q4 2026 |
| Cost growth | sales and marketing +63%; stock compensation and taxes 15% of revenue | adjusted EBITDA margin above 50%; stock compensation below 10% of revenue | 10-Q MD&A Q3 2026 |
- Revenue base TTM Q3 2026 $3.09bn; GAAP operating income $908.0m (29.4%); Q4 2026 revenue guidance $1.00bn to $1.03bn.
- Best case: 30% revenue CAGR as logged in and app DAUq grow, search driven logged out traffic stabilizes, ad prices keep rising and both licensing agreements renew at higher value; GAAP operating margin 42%; 30x P/E.
- Base case: 20% revenue CAGR with a low double digit % DAUq decline in Q4 2026, flat to modest user growth after that and licensing renewed at similar value; GAAP operating margin 36%; 22x P/E.
- Worst case: 8% revenue CAGR as search referrals keep falling, logged in only access cuts reach and impressions, one or both licensing partners do not renew and advertisers shift budget to larger platforms; GAAP operating margin 25%; 15x P/E.
- Tax rate 21%; other income $100m a year on cash of about $3bn; 206.3m fully diluted shares; gross margin near 91%; capex below 1% of revenue; no dividend.
Scenarios, three years forward
Table 11.2 Scenario analysis, TTM Q3 2026 to TTM Q3 2029
| Measure | Worst case | Base case | Best case |
|---|---|---|---|
| Revenue CAGR, 3 years (%) | 8.0 | 20.0 | 30.0 |
| Revenue, TTM Q3 2029 ($bn) | 3.9 | 5.3 | 6.8 |
| Operating margin, TTM Q3 2029 (%) | 25.0 | 36.0 | 42.0 |
| Net income, TTM Q3 2029 ($bn) | 0.8 | 1.6 | 2.3 |
| EPS, TTM Q3 2029 ($) | 4.11 | 7.74 | 11.30 |
| Exit P/E (x) | 15.0 | 22.0 | 30.0 |
| Implied price ($) | 62 | 170 | 339 |
| Change against $93.81 (%) | (34) | 82 | 261 |
| Implied annual return (%) | (13.1) | 22.0 | 53.4 |
Operating margin, net income, EPS and prices in this table are on a GAAP basis, after stock based compensation. The 21% tax rate assumes the valuation allowance is released; the one time benefit is excluded. No dividend is paid.
Sensitivity analysis
Table 11.3 Sensitivity of implied price to revenue CAGR and operating margin at 22x P/E
| Revenue CAGR \ Operating margin | 25% | 30% | 36% | 40% | 42% |
|---|---|---|---|---|---|
| 8% | $90 | $107 | $126 | $140 | $146 |
| 12% | $100 | $118 | $140 | $155 | $162 |
| 16% | $110 | $130 | $155 | $171 | $179 |
| 20% | $121 | $143 | $170 | $188 | $197 |
| 25% | $135 | $161 | $191 | $212 | $222 |
| 30% | $151 | $180 | $214 | $237 | $249 |
Cells show implied share price in year 3. Close on 5 Nov 2026 $93.81. Blue cells sit above it, red cells below. Margins are GAAP.
Table 11.4 Sensitivity of implied price to exit P/E and operating margin at 20% revenue CAGR
| Exit P/E \ Operating margin | 25% | 30% | 36% | 40% | 42% |
|---|---|---|---|---|---|
| 15x | $82 | $98 | $116 | $128 | $135 |
| 18x | $99 | $117 | $139 | $154 | $161 |
| 22x | $121 | $143 | $170 | $188 | $197 |
| 26x | $143 | $169 | $201 | $223 | $233 |
| 30x | $165 | $195 | $232 | $257 | $269 |
Cells show implied share price in year 3. Close on 5 Nov 2026 $93.81. Blue cells sit above it, red cells below. Margins are GAAP.
Disclaimer
This analysis is for information only and is not financial advice. It is derived from public SEC filings retrieved via sec-api.io and is not a publication of the U.S. Securities and Exchange Commission. Scenario values are model outputs under stated assumptions and are not forecasts. Data as of 5 November 2026.
Sources
All company and peer figures are read from SEC filings retrieved through the sec-api.io MCP server. Share prices are closing prices.
Table A.1 Filings used, with accession numbers
| Form | Period | Filed | Accession number |
|---|---|---|---|
| 10-Q | Q3 2026 | 29 Oct 2026 | 0001713445-26-000116 |
| 8-K (2.02) Ex 99.1 and Ex 99.2 shareholder letter | Q3 2026 | 29 Oct 2026 | 0001713445-26-000114 |
| 10-Q | Q2 2026 | 30 Jul 2026 | 0001713445-26-000100 |
| 8-K (2.02) Ex 99.1 | Q2 2026 | 30 Jul 2026 | 0001713445-26-000098 |
| 10-Q | Q1 2026 | 30 Apr 2026 | 0001713445-26-000069 |
| 8-K (2.02) Ex 99.1 | Q1 2026 | 30 Apr 2026 | 0001713445-26-000067 |
| 10-K | FY2025 | 5 Feb 2026 | 0001713445-26-000022 |
| 8-K (2.02, 8.01) Ex 99.1 | Q4 2025 | 5 Feb 2026 | 0001713445-26-000020 |
| 10-Q | Q3 2025 | 30 Oct 2025 | 0001713445-25-000227 |
| 10-Q | Q2 2025 | 31 Jul 2025 | 0001713445-25-000196 |
| 8-K (2.02) Ex 99.1 | Q2 2025 | 31 Jul 2025 | 0001713445-25-000194 |
| 10-Q | Q1 2025 | 1 May 2025 | 0001713445-25-000102 |
| 8-K (2.02) Ex 99.1 | Q1 2025 | 1 May 2025 | 0001713445-25-000100 |
| 10-K | FY2024 | 12 Feb 2025 | 0001713445-25-000018 |
| DEF 14A | 2026 annual meeting | 23 Apr 2026 | 0001713445-26-000060 |
| 8-K (5.07) | 8 Jun 2026 | 10 Jun 2026 | 0001713445-26-000088 |
| 8-K (5.02) | 12 Aug 2026 | 12 Aug 2026 | 0001713445-26-000107 |
| 10-Q (peer PINS) | Q3 2026 | 29 Oct 2026 | 0001506293-26-000153 |
| 10-K (peer PINS) | FY2025 | 12 Feb 2026 | 0001506293-26-000021 |
| 10-Q (peer SNAP) | Q3 2026 | 4 Nov 2026 | 0001564408-26-000067 |
| 10-K (peer SNAP) | FY2025 | 4 Feb 2026 | 0001564408-26-000013 |
| 10-Q (peer META, reused) | Q3 2026 | 21 Oct 2026 | 0001628280-26-066773 |
| 10-Q (peer GOOGL, reused) | Q3 2026 | 28 Oct 2026 | 0001652044-26-000084 |
Table A.2 Peer and holder filings used
| Company | Form | Filed | Accession number |
|---|---|---|---|
| Baillie Gifford (RDDT holder) | Schedule 13G, 13G/A or 13D/A | 2025 to 2026 | 0001088875-26-000071 |
| BlackRock (RDDT holder) | Schedule 13G, 13G/A or 13D/A | 2025 to 2026 | 0002012383-26-003836 |
| FMR (RDDT holder) | Schedule 13G, 13G/A or 13D/A | 2025 to 2026 | 0000315066-26-000727 |
| 8-K Ex 99.1 | 29 Oct 2026 | 0001506293-26-000151 | |
| Snap | 8-K Ex 99.1 | 4 Nov 2026 | 0001564408-26-000063 |
| Steven Huffman (RDDT holder) | Schedule 13G, 13G/A or 13D/A | 2025 to 2026 | 0001827011-26-000020 |
| Tencent (RDDT holder) | Schedule 13G, 13G/A or 13D/A | 2025 to 2026 | 0001140361-25-041618 |
| Vanguard (RDDT holder) | Schedule 13G, 13G/A or 13D/A | 2025 to 2026 | 0002100119-26-001666 |
| Vanguard (RDDT holder) | Schedule 13G, 13G/A or 13D/A | 2025 to 2026 | 0002100121-26-001089 |
Table B.1 Exhibits to Forms 8-K filed in the last twelve months
| Filed | Exhibit | Document | Content |
|---|---|---|---|
| 5 Feb 2026 | EX-99.1 | Q4 and FY2025 results press release; $1bn buyback | Q4 2025 revenue $726m, up 70%; ad revenue $690m, up 75%; other revenue $36m, up 8%; FY2025 revenue $2.2bn, up 69%; ad revenue $2.1bn, up 74%; other revenue $140m, up 22% |
| 5 Feb 2026 | EX-99.2 | Q4 2025 letter to shareholders | DAUq 121.4m, up 19%; WAUq 471.6m, up 24%; logged in DAUq up 10%, logged out up 27%; US revenue $583m, up 68%; international revenue $142m, up 78%; ARPU $5.98, up 42% |
| 30 Apr 2026 | EX-99.1 | Q1 2026 results press release | Revenue $663m, up 69%; ad revenue $625m, up 74%; other revenue $39m, up 15%; Net income $204m (30.7% margin) against $26m; diluted EPS $1.01 against $0.13 |
| 30 Apr 2026 | EX-99.2 | Q1 2026 letter to shareholders | DAUq 126.8m, up 17%; WAUq 493.1m, up 23%; US DAUq 53.5m, up 7%; international DAUq 73.3m, up 26%; US ARPU $9.63, up 54%; international ARPU $2.02, up 51%; global ARPU $5.23, up 44% |
| 10 Jun 2026 | 8-K Item 5.07 (no exhibits) | 2026 annual meeting voting results | Annual meeting held 8 Jun 2026; Class B carries ten votes per share and votes with Class A as one class; All eight director nominees elected; Steven Newhouse received 503.7m for and 55.3m withheld, the most withheld |
| 30 Jul 2026 | EX-99.1 | Q2 2026 results press release | Revenue $805m, up 61%, eighth consecutive quarter above 60%; ad revenue $762m, up 64%; other revenue $43m, up 24%; Net income $253m (31.4% margin), up 183%; diluted EPS $1.25 |
| 30 Jul 2026 | EX-99.2 | Q2 2026 letter to shareholders | DAUq 130.3m, up 18%; WAUq 514.6m, up 24%; logged out DAUq 77.7m, up 27%; logged in 52.6m, up 7%; US revenue $638m, up 56%; international revenue $167m, up 84%; US ARPU $11.85, up 51% |
| 12 Aug 2026 | 8-K Item 5.02 (no exhibits) | Chief Legal Officer transition | Benjamin Lee to step down as Chief Legal Officer and Corporate Secretary effective 14 Sep 2026, staying as employee to 25 Sep 2026; Company expects to appoint Paul Cappuccio as Chief Legal Officer and Corporate Secretary |
| 29 Oct 2026 | EX-99.1 | Q3 2026 results press release | Revenue $895m, up 53%; ad revenue $847m, up 54%; other revenue $48m, up 35%; Net income $283m (31.7% margin), up 74%; diluted EPS $1.40, up 75% |
| 29 Oct 2026 | EX-99.2 | Q3 2026 letter to shareholders | DAUq 130.3m, up 12%; US DAUq 50.7m, down 2%; international DAUq 79.6m, up 24%; WAUq 515.2m, up 16%; US logged out DAUq 27.3m, down 4%; global logged in DAUq 53.5m, up 7% |
Read next
Expedia Group (EXPE) Q3 2026 Earnings SEC Filing Analysis: B2B Bookings Up 19%, B2C Adjusted EBITDA Margin 43.5% and a Slower Q4 Outlook
November 5, 2026·43 min read
Zoetis (ZTS) Q3 2026 Earnings SEC Filing Analysis: FY2026 Revenue Guidance Midpoint Down $655m Since February as US Companion Animal Falls 8%
November 5, 2026·47 min read