4 Key Takeaways From Reddit’s First Earnings Call After Going Public

After Reddit (RDDT) reported record-high user traffic and rising revenue in its first quarterly earnings report since its initial public offering (IPO) in March, executives joined the social media company’s earnings call to discuss user traffic, the data licensing business, opportunities driven by artificial intelligence (AI), and international growth potential.

User Traffic Hits Record High

“More people are visiting Reddit than ever before,” Reddit CEO Steve Huffman said on the call, highlighting the social media platform’s record-high user traffic, with daily active unique users jumping 37% year-over-year to 82.7 million in the first quarter.

Huffman indicated a primary focus for Reddit this year will be to make Reddit “faster, easier to use, and safer,” adding that “speed equals retention” and “retention equals growth.”

The company said its investments in machine learning and AI will also help “improve relevance, engagement and moderation.”

‘Still Early’ in Data Licensing Business

Huffman noted that the data licensing business is “still early in its monetization journey,” after Reddit had indicated in its IPO filing that licensing its data for AI training would represent a key source of opportunity for the company.

The CEO said that data licensing is currently reflected in its financials as “other revenue.” In the first quarter, other revenue sat at $20 million, more than quintupling from the same period a year earlier, primarily from new data licensing agreements signed in the first quarter.

The company has already announced a licensing agreement with Alphabet’s (GOOGL) Google and reported it also “signed licensing agreements with various companies in the social listening space.”

Reddit Could Also Benefit From the Spread of AI as People Seek Human-Generated Content

Huffman suggested the platform could also be well-positioned to benefit from the spread of AI-generated content as people seek content created by humans.

“In the AI era, people value authentic content more, or content written by humans, and that’s what Reddit is, and that’s what Reddit has,” the CEO said, adding that he thinks “there’s a thirst for authentic opinions and advice.”

“I think that’s the kind of irony of the technology shift that we’re going through, is the value of humans and fresh ideas continues to grow,” he said.

Using Translation To Catalyze International Growth

Huffman told investors the company is working on translating content to grow its international reach. International revenue, which grew 30% year-over-year to $43 billion, represented only 18% of the company’s total revenue in the first quarter.

Huffman noted that Reddit’s social media peers are skewed towards a majority of non-U.S. users, and said that a push into international markets presents a “huge opportunity” for the company.

“I think one of the big unlocks for us in the near to medium term is machine translation, or translating our entire corpus that’s today mostly in English into other languages,” Huffman said, adding translation can “help accelerate international transfer.”

Reddit is utilizing large language models (LLMs) to “do translation at human level quality” and is currently testing its French translations, with plans to move to Spanish, Huffman reported.

“I keep saying everybody has a home on Reddit today [and] that’s a true statement if you speak English, but we want to make that a true statement for everyone in the world,” Huffman said.

Reddit shares were up over 15% at $56.90 in extended trading as of 7:15 p.m. ET Tuesday following the company’s earnings call.