Reddit forecasts strong Q1 revenue on AI ad tools

Reddit expects first-quarter revenue to surpass analyst estimates, driven by AI enhancements to its ad platform.

The social media company forecast revenue between US$595 million and US$605 million, above the US$577.2 million expected by analysts.

In Q4 2025, Reddit’s revenue rose 70% to US$726 million, with daily active users up 19% to 121.4 million.

Its active advertiser base grew over 75% in the same period, supported by new account additions.

The company’s AI tools improve ad campaign creation and management, including features like AI-generated copy and image auto-cropping.

Reddit also announced its first share buyback plan of up to US$1 billion.

The firm’s earnings per share for Q4 reached US$1.24, exceeding estimates of 94 cents.

🔗 Source: Reuters

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Revenue growth also comes from AI data licensing. Reddits agreements with Google and OpenAI make up about 10% of total revenue, or about $130 million a year, according to an XTB.com report cited by AInvest 1.
Reddit has deals estimated at $60 million a year each with Google and OpenAI for AI model training. This line can swing, since OpenAIs use of Reddit data has changed over time 1.
Search visibility has climbed fast. Reddit ranked as the second most visible site on Google in the US as of August 2025, and it rose from 85th to 7th between July 2023 and April 2024, based on Sistrix (a search-engine visibility analytics firm) data cited by Beth Kindig 2.
Ad sales, high-margin licensing, and search traffic together give a fuller view of Reddits finances than ads alone.

Reddits AI-powered Max Campaigns target performance ad budgets, while also answering transparency complaints tied to similar tools from rivals, according to ADWEEK 3.
Reddit is betting advertisers will choose clearer controls, with extra creative and audience insights discussed in beta marketing commentary, versus a black box model 4.
Outside advertising, Reddit keeps signing AI training licensing deals and it is suing over alleged unauthorized scraping, including a case against Anthropic, an AI startup, per Beth Kindigs summary 2.