Reddit (RDDT $91.73 -29.22%) reported Q3 2026 results on October 29: revenue of $895.0 million, up 53% from a year earlier and $25 million above the top of its own guidance. Our preview, published on October 24, forecast $900.6 million and called a beat against the $875.0 million consensus. The call held, and our number was $5.6 million from the result while consensus was $20.0 million short.
The stock still fell. Reddit closed at $129.60 before the report and traded at $91.01 on Friday afternoon, down about 30%. Reported revenue was not the problem. US daily users fell again, management said total users could drop by a low double-digit percentage in Q4, and the Q4 revenue guide came in below what analysts expected. This review compares our model with what Reddit reported, line by line, and says what we got wrong.
The data behind this piece
Explore the primary data Equibles carries for RDDT:
Our forecast against the results
| $M unless stated | Our forecast (Oct 24) | Consensus (Oct 20) | Reported | Our error | Consensus error |
|---|---|---|---|---|---|
| Revenue | 900.6 | 875.0 | 895.0 | +5.6 | -20.0 |
| US users × ARPU | 714.1 | n/a | 700.7 | +13.4 | n/a |
| International users × ARPU | 186.5 | n/a | 193.4 | -6.9 | n/a |
| US daily active uniques (M) | 52.4 | n/a | 50.7 | +1.7 | n/a |
| International daily active uniques (M) | 77.5 | n/a | 79.6 | -2.1 | n/a |
| US ARPU | $13.63 | n/a | $13.82 | -$0.19 | n/a |
| International ARPU | $2.41 | n/a | $2.43 | -$0.02 | n/a |
| Ad revenue | 856.6 | n/a | 847.0 | +9.6 | n/a |
| Other revenue | 44.0 | n/a | 48.0 | -4.0 | n/a |
| Adjusted EBITDA | 416.7 | n/a | 402.3 | +14.4 | n/a |
| Adjusted EBITDA margin | 46.3% | n/a | 44.9% | +1.4 pts | n/a |
| Net income | 284.9 | n/a | 283.3 | +1.6 | n/a |
| Diluted EPS | $1.41 | $1.32 | $1.40 | +$0.01 | -$0.08 |
Consensus is the mean of 26 analysts for revenue and 23 for EPS as of October 20. Reported figures are from Reddit's Q3 earnings release and shareholder letter (8-K, accession 0001713445-26-000114). Our model, like Reddit's ARPU, places revenue where ads are seen, so the regional rows compare users times ARPU; Reddit's separate revenue-by-geography line ($718.9 million US, $176.1 million international) uses a different basis.
The Q4 bar is the midpoint of Reddit's $1,000 million to $1,030 million guide, not a result.
What the model got right
The guide was conservative again. Our main argument was that Reddit had beaten the top of its revenue guide by 7% to 11% in each of the previous four quarters, and that the Q3 guide of $860 million to $870 million looked set the same way. Reddit beat the top by 2.9%, a smaller margin than before but enough. We had assumed a narrower beat than history suggested because of the July user numbers, and that caution was right: a model that repeated the 9% to 11% beats of the last three quarters would have forecast $948 million to $966 million.
Pricing carried the quarter. We built revenue as daily users times revenue per user, with almost all the growth from US pricing. US revenue per user was $13.82, up 53% from a year earlier, against our $13.63. COO Jen Wong said growth came “from both pricing and impressions, with pricing outpacing impressions”, and that click volume grew over 50% while conversion volume more than tripled.
Profit per share landed on our number. Stock-based pay and related taxes were $136.4 million, below our $147.5 million, which offset the lower EBITDA. Diluted shares were 201.9 million against our 202.0 million, and EPS was $1.40 against our $1.41.
What the model got wrong
US users fell faster than we modelled. We assumed US daily active uniques would fall 1.5% from Q2, to 52.4 million. Reddit reported 50.7 million, down 4.7% from 53.2 million in Q2 and down 2% from a year earlier. Logged-out US users, the ones who arrive from search, fell 4% from a year earlier to 27.3 million, while logged-in US users grew 1% to 23.4 million. US revenue per user was $13.82, above our $13.63, but not by enough: US users times ARPU came to $700.7 million, $13.4 million below our number.
International covered about half of the gap, for a reason we did not model. We had international users barely growing, to 77.5 million. Reddit reported 79.6 million, up 24% from a year earlier, and international ARPU of $2.43, so international users times ARPU came to $193.4 million, $6.9 million above our number. Wong said Reddit raised international user marketing in the quarter “in part to compensate for the lost reach from the declines of search referral traffic”. Some of those users were bought rather than organic, and Reddit said it will judge that spend over the next few quarters.
Costs grew faster than our assumption. We let a quarter of the extra revenue flow into costs, for adjusted costs of $483.9 million. Reddit reported $493 million, up 41% from a year earlier, and adjusted EBITDA of $402.3 million, a 44.9% margin against our 46.3%. The incremental adjusted EBITDA margin was 54%, below the high 50s to low 60s that CFO Drew Vollero had described for the past two years, so the case we called conservative was not.
Our Q4 forecast was too high. We forecast $1,071.7 million for Q4, a 19% step from Q3. Reddit guided to $1,000 million to $1,030 million, 38% to 42% growth from a year earlier, and adjusted EBITDA of $480 million to $510 million. Even a beat of the size Reddit delivered in Q3 would put Q4 near $1,060 million, below our number.
Why the stock fell anyway
The revenue beat was smaller than in previous quarters, and the user outlook got worse. CEO Steve Huffman opened the call with search:
“During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week. If this rate of decline continues, current trends would suggest that total DAUQs could fall in Q4 by a low double-digit percentage from our current base of 130 million DAUQs.”
Steve Huffman, chief executive, Reddit, Q3 2026 earnings call, 29 October 2026
He also said Reddit will begin testing a logged-in-only experience in select markets outside the US in Q4, which trades reach for engagement and ad targeting:
“It's better for our business because we have more signals for ads targeting, and being logged-in leads to higher engagement generally. It also allows us to protect access to Reddit's extremely valuable corpus of data.”
Steve Huffman, chief executive, Reddit, Q3 2026 earnings call, 29 October 2026
Our preview flagged users as the risk that had moved the stock in July, and the options market priced a move of about 13% either way. The actual move was more than twice that. A revenue model cannot tell you how investors will weigh a user warning against a revenue beat, and this quarter they weighed users far more heavily.
What changes for Q4
- Revenue. We now treat the $1,000 million to $1,030 million guide as the base case. Reddit's last five beats of the top of guidance ran from 2.9% to 11.0%; a 2.9% beat, the smallest of them, gives about $1,060 million.
- Users. A low double-digit fall from 130.3 million would leave total daily users near 115 million. Logged-in and app users, which Huffman said carry over 80% of monetisation, are the line to watch, not the total.
- Profit. The $480 million to $510 million EBITDA guide implies a margin of about 49% at the midpoint, up from 44.9% in Q3, so cost growth is expected to slow.
- Cash and buybacks. Reddit ended Q3 with $3.03 billion of cash and securities and no debt, bought back $100 million of stock at an average of $149.81, and has about $660 million left on its authorisation. At $91, the stock trades about 39% below that average price.
Sources
- Reddit Q3 2026 earnings release and shareholder letter, 8-K filed 29 October 2026, accession 0001713445-26-000114: document.
- Reddit Q3 2026 10-Q, accession 0001713445-26-000116: document.
- Reddit Q3 2026 earnings call transcript, 29 October 2026: transcript.
- Our preview: Reddit (RDDT) Q3 2026 Earnings Preview and Forecast, 24 October 2026.
This article is our analysis of public filings and our own financial model. It is not investment advice, and forecasts can be wrong. Equibles staff may hold positions in the securities discussed.