Social media service Reddit shows first-ever profit in nearly 20-year history as AI translation aids surge in user base

Social media site Reddit turned a profit for the quarter ended in September, the first in its nearly 20-year history, aided by artificial intelligence (AI) translation tools, the company said.

The firm said it showed a profit of $29.9 million (£23m) during the period on sales of $348.4m, representing a 68 percent year-on-year revenue increase and beating the $312.8m expected by analysts.

Analysts had expected a loss of 7 cents per share in the company’s third quarter, according to LSEG.

Reddit said it expects fourth-quarter revenues of $385m to $400m, compared with analysts’ predictions of $357.9m.

AI translation

“It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability,” said chief executive Sam Huffman in a statement.

Daily users surged to 97.2 million, 47 percent up from the same period last year.

Huffman said a new AI translation feature was one of the main drivers of user growth, especially in countries such as France, India and the Philippines.

The tool includes translations between English, French, Spanish, Portuguese, Italian and German and Reddit plans to expand it to more than 30 countries into 2025.

Huffman said “Reddit” was the sixth most searched word on Google in the US this year so far, and noted that the White House had used the platform to share information during recent hurricanes.

Advertising remains the company’s biggest source of revenue, but it said licensing agreements with Google and OpenAI are beginning to pay off.

AI training

Both companies have licences to use Reddit user content to train AI large language models.

The company went public in March at $34 per share. Shares surged more than 30 percent following the latest earnings to more than $100.

The shares are up more than 41 percent so far this year.

Reddit has said it is looking for new revenues sources, which could include subreddits protected by paywalls and monetised search.