Inquired about specific product initiatives, especially around feed improvements, to convert weekly active users to daily active users, and sought updates on the strategy for data licensing partnerships given upcoming renewals.

Steve Huffman highlighted improvements to the feed technology as a key driver for frequency, noting significant headroom for enhancement due to current model limitations. He confirmed no change in data licensing strategy, emphasizing the multifaceted value of Reddit's content for AI training, grounding, and search indexing, and the goal to maximize value return to Reddit. “Our goal is to maximize the value return to Reddit.”

Challenged management on investor concerns regarding a "user problem" in the U.S. (slight DAU tick down, pressure from search shifting to AI) and asked about the confidence in achieving user growth targets. Also asked if there's a scenario where data licensing to Google and OpenAI doesn't happen next year.

Steve Huffman expressed strong confidence in product work driving growth, particularly new user retention, which is within Reddit's control, contrasting it with volatile external search. He stated the range of outcomes for data licensing is wide, and Reddit aims to maximize value, viewing it as an expanding marketplace beyond just Google and OpenAI. “We are confident because our product work is working.”

Asked for more context on the search referral headwinds (magnitude, cause) and for expectations on when data licensing resolutions might occur.

Steve Huffman explained that search ecosystem changes are not new, attributing recent volatility partly to a decline in machine-translated content and the impact of AI overviews not yet providing a "win-win" for publishers. He did not provide a specific timeline for data licensing resolution but reiterated the focus on maximizing value. “AI overviews has yet to make a similar level of positive impact.”

RDDT

Reddit (RDDT) Q2 FY26 earnings call: guidance and Q&A

Q: Asked about the trend in user growth, particularly in Q2 and early Q3, and management's ability to drive high-quality users to Reddit, given the stated goal of 1 billion global DAUs and 100 million U.S. DAUs.

Steve Huffman reiterated the focus on product work to drive daily direct users, citing a 50% YoY relative improvement in new app user retention. He acknowledged headwinds from search referrals but emphasized building Reddit as a direct destination, noting that U.S. and international weekly users both grew sequentially. “We grew our reach. We crossed 0.5 billion weeklies. U.S. and international weeklies both grew sequentially.”

Earnings call· Jun 2026 (Q2 FY26)· Communication Services· Jul 30, 2026

Source: earnings call transcript

Executive summary

Reddit Q2 FY26 — Strong Revenue Growth and Improved App User Retention

Reddit delivered robust financial results driven by strong advertising momentum and increasing monetization efficiency, achieving significant revenue growth and profitability. Despite headwinds in search referral traffic, the company is focused on improving direct user engagement and retention through product enhancements, particularly for its mobile app, to achieve its long-term user growth targets. Management also highlighted the value of authentic human conversation in an increasingly automated online environment.

Highlights

Total revenue grew 61% year-over-year to $805 million.
Advertising revenue grew 64% year-over-year to $762 million.
Adjusted EBITDA margin reached 43%.
New app user retention was up 50% year-over-year on a relative basis.
Operating cash flow doubled from $111 million to $262 million year-over-year.

Concerns

Search referrals were choppy and traffic was more volatile later in the quarter.
User acquisition spending needs stronger attention to improve returns.
U.S. daily active users (DAU) were sequentially down by 300,000.

Guidance & targets

Category	Target	Timeline	Confidence
Q3 2026 Revenue	$860 million to $870 million high materiality	Q3 · FY26	High
Q3 2026 Adjusted EBITDA	$385 million to $395 million high materiality	Q3 · FY26	High
Full-year SBC expense	low to mid-teens as a percentage of revenue medium materiality	FY26	High
Q3 2026 SBC and related taxes	$140 million to $155 million medium materiality	Q3 · FY26	High
Full-year dilution	lower end of 1% to 3% targeted range medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
U.S. U.S. revenues were up 56% year-over-year.	—	56%	—	—
International International revenues were up 84% year-over-year.	—	84%	—	—
Advertising Advertising revenue grew 64% year-over-year to $762 million, reflecting broad-based strength across the business.	$762 million	64%	—	—
Other Revenue Other revenue reached $43 million, up 24% year-over-year.	$43 million	24%	—	—
Scaled Channel (Mid-market and SMBs) Our scaled channel revenue, which includes mid-market and SMBs, doubled year-over-year.	—	doubled	—	—

RDDT operating KPIs by quarter

RDDT operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Daily active uniques (DAUq)	101.7M We finished the year with 101.7 million DAUq, marking 39% growth year-over-year, led by strong international growth at 46%. Source: earnings call transcript	108M We ended the quarter with 401 million weeklies and 108 million dailies, both up 31% year-over-year, and we continue to scale efficiently while investing in the future. Source: earnings call transcript	110M Daily active users grew to 110 million, up 21% year-over-year with growth in both the US and international markets. Source: earnings call transcript	116M We ended the quarter with 116 million DAUq and 444 million WAUq, both growing around 20% year-over-year. Source: earnings call transcript	121M+ In Q4 alone, we welcomed over 121 million daily active users to our platform, up 19% year-over-year and over 471 million weekly active users, up 24%. Source: earnings call transcript	120M+ And over the last 10 years, we've 10x that to over 120 million DAU. Source: earnings call transcript	—	—
Employees	2,233 We ended the year with 2,233 heads, up slightly more than 200 people net for the year. Source: earnings call transcript	2,300+ We ended the quarter with slightly more than 2,300 people, up 3% sequentially. Source: earnings call transcript	—	—	2,555 The company ended with 2,555 total headcount, up 14% versus last year and up about 3% sequentially from Q3, the same pace as the prior quarters. Source: earnings call transcript	—	—	—
Weekly active uniques (WAUq)	—	401M We ended the quarter with 401 million weeklies and 108 million dailies, both up 31% year-over-year, and we continue to scale efficiently while investing in the future. Source: earnings call transcript	—	444M We ended the quarter with 116 million DAUq and 444 million WAUq, both growing around 20% year-over-year. Source: earnings call transcript	471M+ In Q4 alone, we welcomed over 121 million daily active users to our platform, up 19% year-over-year and over 471 million weekly active users, up 24%. Source: earnings call transcript	<500M We already have tremendous reach today with nearly 500 million weekly users globally and 200 million in the United States. Source: earnings call transcript	—	—
Average revenue per user (ARPU)	—	—	$4.53 Average Revenue Per User, ARPU grew 47% year-over-year to $4.53, which is still low on an absolute basis and remains an opportunity. Source: earnings call transcript	$5.04 Average revenue per user, ARPU, grew 41% year-over-year to $5.04, which is still low on an absolute basis and remains an opportunity. Source: earnings call transcript	$5.98 Average revenue per user, or ARPU, grew 42% year-over-year to $5.98. Source: earnings call transcript	$5.23 Average revenue per user ARPU grew 44% year-over-year to $5.23. Source: earnings call transcript	$6.18 Average revenue per unique user grew 36% year-over-year to $6.18. Source: earnings call transcript	+18.2%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline
Reddit Max - App Install Objective	update	Q2 FY26
Reddit Max - Tailored Creatives	launch	Q2 FY26
Video in Comments	launch	recently launched
Shopping Listing Ads	launch	alpha test
Dual Attribution	launch	Q2 FY26
Shopify Integration	launch	May

Deals & partnerships

Shopify Integration to enable Shopify merchants to easily advertise on Reddit.

The Shopify integration became generally available in May, allowing merchants to sync catalogs and integrate CAPI automatically. Reddit plans to focus on improving the product experience, acquiring merchants, and increasing dynamic product ads adoption among these clients.

Risks & headwinds

Search referrals choppy/volatile Q2 FY26, ongoing

Traffic was more volatile later in the quarter; decline in machine translated content observed.

Mitigation:Focusing on building Reddit as a direct destination and driving more direct traffic to the app; converting web users to app users.

User acquisition spending needs stronger attention Ongoing

Returns on user acquisition spending need improvement.

Mitigation:Evaluating the mix of spend, improving user retention, balancing with brand marketing (e.g., 'People Are The Best' campaign).

AI overviews impact on traffic Ongoing

AI overviews has yet to make a similar level of positive impact for publishers and businesses.

Mitigation:Focusing on direct user engagement and building Reddit as a destination, rather than relying on external search traffic.

New users having posts removed Ongoing

New users are likely to have their post removed due to long-standing strategies (e.g., account age).

Mitigation:Using LLM-assisted moderation to help bring in prospective great users and improve post success rates, while keeping spammers out.

What to watch in Q3 FY26

New app user retention

Next quarter

Current Up 50% YoY on a relative basis

Target Continued improvement

Why it matters

This is a key product quality metric and a primary driver for converting weekly users to daily users, essential for long-term user growth targets.

new app user retention, an area we've discussed frequently, was up 50% year-over-year on a relative basis this quarter.

Find out whether RDDT delivers this. Inve re-checks your case every morning.

Q&A highlights

Asked about the trend in user growth, particularly in Q2 and early Q3, and management's ability to drive high-quality users to Reddit, given the stated goal of 1 billion global DAUs and 100 million U.S. DAUs.

Steve Huffman reiterated the focus on product work to drive daily direct users, citing a 50% YoY relative improvement in new app user retention. He acknowledged headwinds from search referrals but emphasized building Reddit as a direct destination, noting that U.S. and international weekly users both grew sequentially.

“We grew our reach. We crossed 0.5 billion weeklies. U.S. and international weeklies both grew sequentially.”

asked by Thomas Champion · answered by Steven Huffman

2 min read 6 chapters

Detailed narrative

AI and the Value of Human Connection

Steve Huffman emphasized Reddit's role as an "antidote to an automated web," providing authentic human perspectives and context amidst synthetic content. He highlighted that people crave real opinions and lived experiences, making Reddit a unique destination for decision-making across various aspects of life, from purchases to health and careers.

This focus on human connection is central to Reddit's mission and strategy, differentiating it from platforms increasingly flooded with AI-generated content.

Advertising Momentum and Diversification

Jen Wong detailed the broad-based strength in advertising, with total revenue growing 61% and ad revenue 64% year-over-year, driven by both pricing and impressions. The company saw significant growth in mid- and lower-funnel performance objectives, with conversion volume up over 100% and click volume over 30% year-over-year.

This strength was observed across industry verticals, particularly retail and travel, and in the scaled channel (mid-market and SMBs), which doubled year-over-year, demonstrating increasing resilience and flexibility.

Product Enhancements and User Engagement

Management discussed efforts to improve user experience, focusing on converting weekly users to daily users to achieve the goal of 1 billion global DAUs and 100 million U.S. DAUs. Key initiatives include updated feed models, driving web users to the app for higher engagement, and making posting easier within communities.

New app user retention improved 50% year-over-year on a relative basis, indicating positive momentum in product-led growth.

SMB and Ad Stack Development

Reddit Max, the AI-driven optimization tool, saw strong adoption with advertiser usage up 60% and revenue up 150% from Q1, demonstrating improved performance for advertisers like Lenovo. The company is expanding Max capabilities, including app install objectives and tailored creatives, and integrated with Shopify to streamline catalog syncing and CAPI for merchants. These efforts aim to simplify onboarding, enhance efficiency, and scale SMB engagement.

Search Referrals and User Growth Strategy

Steve Huffman acknowledged headwinds in search referrals, particularly later in the quarter, and noted the low visibility into search ecosystem changes, including a decline in machine-translated content and the impact of AI overviews. Despite this volatility, the company remains focused on building Reddit as a direct destination and driving user growth through product-led initiatives, emphasizing that its business thrives on direct, repeat users rather than drive-by traffic.

Capital Allocation and Financial Strength

Drew Vollero highlighted the doubling of operating cash flow, adjusted EBITDA, net income, and GAAP EPS year-over-year, with LTM operating cash flow crossing $1 billion for the first time. The company repurchased $235 million in stock and maintains a strong cash position of $2.8 billion.

Reddit's capital priorities include investing in the business, opportunistic M&A, and share repurchases, while maintaining a high level of profitability and managing dilution.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.