Reddit (RDDT $144.25 -4.00%) reports Q3 2026 results on Thursday, October 29, after the market closes, with the call at 4:30 p.m. ET. The stock goes into the print at $144.25, down 37% this year, and it fell 21.0% the day after the Q2 report even though revenue grew 61% and beat the top of guidance by 11%. Investors sold because US daily users fell from the previous quarter for the first time in more than a year, and management blamed weaker search referrals late in the quarter.
We rebuilt Reddit's quarter from its filings, the Q2 call and a September investor conference, one region and one metric at a time: daily users times revenue per user. Our answer is another beat. Advertisers keep paying more for each user, and the Q3 guide looks as conservative as the last four. The harder questions are the ones that moved the stock in July: whether US users stabilised, and what Reddit says about its data licensing talks with Google.
The data behind this piece
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Why Q3 should beat consensus
Reddit gives one quarter of guidance at a time, and over the last four quarters it set that guide low enough to beat comfortably. The pattern is consistent, and the gap has widened:
| Quarter | Revenue guide | Reported revenue | Beat vs top of guide | Adjusted EBITDA guide | Reported adjusted EBITDA |
|---|---|---|---|---|---|
| Q3 2025 | $535M to $545M | $584.9M | 7.3% | $185M to $195M | $236.0M |
| Q4 2025 | $655M to $665M | $725.6M | 9.1% | $275M to $285M | $327.0M |
| Q1 2026 | $595M to $605M | $663.4M | 9.7% | $210M to $220M | $266.0M |
| Q2 2026 | $715M to $725M | $804.9M | 11.0% | $285M to $295M | $342.8M |
| Q3 2026 | $860M to $870M | $900.6M (our forecast) | 3.5% | $385M to $395M | $416.7M (our forecast) |
The guide implies growth of 47% to 49%. At their midpoints, the last four guides implied growth 13 to 17 points below what Reddit then reported. We do not assume that gap repeats, because the July user numbers were a real change: US daily active uniques (DAUq) fell from 53.5M in Q1 to 53.2M in Q2, and management said the search headwind hit “particularly late in the quarter”, which means Q3 starts from a lower base. Our forecast is closer to the guide than history suggests, and it still clears consensus.
Our forecast for Q3 and Q4 2026
| $M unless stated | Q2 2026 actual | Q3 2026 our forecast | Q3 consensus | Q3 guidance | Q4 2026 our forecast | Q4 consensus | FY 2026 our forecast | FY consensus |
|---|---|---|---|---|---|---|---|---|
| Revenue | 804.9 | 900.6 | 875.0 | 860 to 870 | 1,071.7 | 1,045.5 | 3,440.6 | 3,391.3 |
| Adjusted EBITDA | 342.8 | 416.7 | n/a | 385 to 395 | 519.1 | n/a | 1,544.6 | n/a |
| Adjusted EBITDA margin | 42.6% | 46.3% | n/a | about 45% | 48.4% | n/a | 44.9% | n/a |
| Net income | 252.8 | 284.9 | n/a | n/a | 383.8 | n/a | 1,125.5 | n/a |
| Diluted EPS | $1.25 | $1.41 | $1.32 | n/a | $1.90 | $1.83 | $5.57 | $5.39 |
Consensus is the mean of 26 analysts for quarterly revenue (Q3 range $858M to $926M), 23 for quarterly EPS (Q3 range $1.20 to $1.48) and 31 for full-year revenue, as of October 20. Q4 applies a 19% sequential step to Q3 revenue, below the 22.8% and 24.1% steps of the last two years, and grows adjusted costs 14%, as they did from Q3 to Q4 2025.
Users and revenue per user
Reddit reports revenue per user (ARPU) by where ads are seen, so revenue is daily users times ARPU in each region. That makes the quarter easy to rebuild:
- US. DAUq were 53.2M in Q2 and ARPU was $11.85. From Q2 to Q3, US ARPU rose 19.0% in 2024 and 14.9% in 2025. We use 15%, which takes it to $13.63, up 51% from a year earlier, the same growth rate as Q2. With users down 1.5% to 52.4M, US revenue comes to $714.1M.
- International. DAUq were 77.1M and ARPU was $2.26. International ARPU rose 6.5% and 6.4% from Q2 to Q3 in the last two years; we use 6.5%. Users barely grow, to 77.5M, because the decline in machine-translated pages that Steve Huffman described in July hits international traffic. That gives $186.5M.
The bridge starts at $804.7M, Q2 users times Q2 ARPU, which differs from reported revenue by rounding. Almost all of the quarter's growth comes from pricing in the US. Users subtract about $9M.
The user chart is why the stock fell in July. International DAUq grew 28% from a year earlier, but US DAUq grew only 6%, and US logged-in users grew 1%, to 23.1M. Reddit stops reporting the logged-in and logged-out split from Q3, so the US total is the only clean read left. Management's answer is product work: new app user retention was up 50% from a year earlier, and weekly users crossed half a billion, with US and international weeklies both up from Q1.
Ad revenue and data licensing
Ads are 95% of revenue. Ad revenue grew 64% in Q2, the active advertiser count grew over 70%, and 11 of 15 verticals grew more than 50%, according to COO Jen Wong. Her explanation for the pricing is that advertisers get more conversions and clicks for the same money, which lets Reddit raise prices without losing them. That is the assumption behind our 15% ARPU step.
Other revenue, mainly content licensing plus products sold to users such as Reddit Premium, was $43M in Q2, up 24%. We model $44M. It is small, but it carries the biggest headline risk of the quarter. The Q2 10-Q shows how little licensing revenue is contracted past this year: $92.1M of remaining performance obligations at June 30, mostly long-term content licensing contracts, with $62.0M to be recognised in the rest of 2026 and only $30.1M in 2027. At a Goldman Sachs conference on September 8, Huffman said of Google that “we're in active negotiation”, and in July he told analysts that “the range of outcomes is wide” when asked whether Reddit might stop licensing data to Google and OpenAI. A new deal, a lapse or silence on October 29 could each move the stock more than a few million dollars of revenue would suggest, because the same relationship covers how Reddit appears in Google search and AI Overviews, where its referral traffic comes from.
Margins
The guide implies adjusted costs of about $475M at the midpoint, up from $462M in Q2. We let a quarter of our extra revenue go to costs, for $483.9M, which leaves adjusted EBITDA of $416.7M. CFO Drew Vollero said incremental margins have run “in the high 50s, low 60s” for two years, so this is conservative.
Below EBITDA, Q3 carries more stock-based pay. Vollero guided stock-based compensation and related taxes to $140M to $155M in Q3, up from $107M in Q2, as older grants at lower prices vest and are replaced by grants at higher prices. We use $147.5M. With $4.3M of depreciation, $25M of interest income on the cash pile and $5M of tax, net income is $284.9M, or $1.41 on 202.0M diluted shares. At the guidance midpoint the same arithmetic gives $1.28, below consensus, so the Street is already pricing a beat on profit.
Balance sheet, buybacks and dilution
- Cash. $2,786M of cash and marketable securities at June 30 and no borrowings. Total liabilities were $351M.
- Cash flow. Operating cash flow was $262M in Q2 and passed $1B over the last twelve months for the first time. Capital spending was $1.1M.
- Buybacks. The board authorised $1B in February. Reddit bought back $5M of stock in Q1 and $235M in Q2, 1.5M shares at an average of $157.57, and has about $760M left. The stock is now 8.5% below that average price.
- Dilution. Fully diluted shares were 207.0M at June 30, up 0.2% from a year earlier after buybacks. Management expects full-year dilution at the low end of its 1% to 3% target before buybacks, and cut its stock-based pay guide for 2026 from the high teens to the low to mid teens as a share of revenue.
What management said
“We did see headwinds in search referrals, particularly late in the quarter, and visibility with the referral traffic remains low, but we're focused on what we can control, which is our direct users driven by product efforts.”
Steve Huffman, CEO, Q2 2026 earnings call
“When you look at the volume of conversions growing and clicks growing, what that means for an advertiser is that they're getting more outcomes at equal or better prices.”
Jen Wong, COO, Q2 2026 earnings call
“The Q3 guide reflects continued momentum in the business, which also takes into account our current investment plans.”
Drew Vollero, CFO, Q2 2026 earnings call
“We saw a decline in our machine-translated content. So this is part of the volatility on the international side.”
Steve Huffman, CEO, Q2 2026 earnings call
“I can't comment on some of the specifics because we're in active negotiation, but the foundation is the internet consumer wants Reddit by name, and then a search platform needs Reddit's content because that's ultimately what people are searching for.”
Steve Huffman, CEO, Goldman Sachs Communacopia + Technology Conference, September 8, 2026
How the market is positioned
- Short interest was 22.1M shares at September 30, up 30% from 17.0M at June 30 and equal to 11.5% of the 192.4M Class A and Class B shares outstanding. At recent volumes that is 4.3 days to cover.
- Options. At the October 23 close, the at-the-money straddle for the October 30 expiration cost about $18.60, a move of about 12.9% either way, with implied volatility near 117%. The stock moved +7.5%, -7.4%, +13.1% and -21.0% on the day after each of its last four reports, an average of 12.3%, so the options market is pricing a typical Reddit report day, not an unusual one.
- Insiders. There have been no open-market purchases since March. Director Sarah Farrell bought 61,000 shares for about $8.9M in February and March, at $132.26 to $149.79, close to today's price. Since April, insiders have made 172 open-market sales of 605,027 shares, worth about $101.3M, and 171 of them were under pre-arranged 10b5-1 plans. The largest sellers since July were Jen Wong (about $39.9M) and Steve Huffman (about $20.3M).
- Valuation. At $144.25 the market value is $28.9B, or $26.1B net of cash. That is 33x the last four quarters' net income of $871M, 9.4x trailing revenue, and 20x the 2027 consensus EPS of $7.10.
Our assumptions
| Input | Q2 2026 actual | Q3 2026 base case | Basis |
|---|---|---|---|
| US DAUq | 53.2M | 52.4M | -1.5%: search headwind late in Q2 carries into Q3 |
| US ARPU | $11.85 | $13.63 | +15% from Q2, in line with the 14.9% step in 2025 |
| International DAUq | 77.1M | 77.5M | +0.5%: less machine-translated traffic |
| International ARPU | $2.26 | $2.41 | +6.5%, the Q2 to Q3 step in 2024 and 2025 |
| Other revenue | $43M | $44M | Existing licensing deals continue through Q3 |
| Adjusted costs | $462M | $483.9M | Guide midpoint plus 25% of revenue above it |
| Stock-based pay and related taxes | $106.8M | $147.5M | Midpoint of the $140M to $155M guide |
| Interest income, depreciation, tax | $25.0M, $4.3M, $4.0M | $25.0M, $4.3M, $5.0M | Flat cash balance after buybacks |
| Diluted shares | 202.0M | 202.0M | Buybacks offset new grants |
- Upside, $927.4M and EPS of $1.51. US users hold at 53.2M and US ARPU rises 17%, between the last two years' steps, with international ARPU up 7%. That is still a smaller beat on the guide (6.6%) than in any of the last four quarters.
- Downside, $856.0M and EPS of $1.24. US users fall to 51.5M, US ARPU rises only 11% as advertisers pull back, and international ARPU rises 4%. Revenue misses the low end of the guide for the first time.
Risks to our call
- Search traffic. Logged-out users, the group most exposed to search referrals, were 60% of daily users in Q2. If the referral decline that started late in Q2 deepened in Q3, US users could fall faster than our 1.5%.
- Pricing. Our model needs a 15% seasonal step in US ARPU. If advertiser demand softened in September, ARPU could rise closer to 11%, our downside case.
- Licensing. The Google negotiation could end with a smaller deal or no deal, and Reddit's placement in Google results is part of the same relationship.
- Disclosure change. Without the logged-in split, a weak US total will be harder to explain, and the market may assume the worst.
- Costs. Management said paid user acquisition “needs stronger attention” and is weighing more brand spending. A bigger marketing push would cut into the margin we forecast.
What to watch on the call
- US DAUq. Anything at or above 53.2M would answer July's concern. Below 52M confirms it.
- The Q4 guide. Consensus is $1,045.5M. If Reddit guides the way it has, 13 to 17 points of growth below where it lands, a guide of about $950M to $980M would fit our forecast and still look like a miss next to consensus.
- Google. Any update on the licensing renewal, and on Reddit's placement in AI Overviews.
- ARPU by region. US ARPU above $13.50 would show pricing still compounding at around 50% a year.
- Buybacks. How much of the remaining $760M was used in Q3, with the stock below the Q2 average price.
- New user retention. Whether the 50% improvement in new app user retention held, and whether it shows up in daily users.
Sources
- Q2 2026 results and Q3 guidance: 8-K filed July 30, 2026 (accession 0001713445-26-000098)
- Q2 2026 quarterly report: 10-Q filed July 31, 2026 (accession 0001713445-26-000100)
- Q1 2026 results and Q2 guidance: 8-K filed April 30, 2026 (accession 0001713445-26-000067)
- Q1 2026 quarterly report: 10-Q filed May 1, 2026 (accession 0001713445-26-000069)
- Q4 2025 results, Q1 guidance and the $1B buyback: 8-K filed February 5, 2026 (accession 0001713445-26-000020)
- 2025 annual report: 10-K filed February 6, 2026 (accession 0001713445-26-000022)
- Q3 2025 results and Q4 guidance: 8-K filed October 30, 2025 (accession 0001713445-25-000225)
- Q2 2026 earnings call transcript, July 30, 2026
- Goldman Sachs Communacopia + Technology Conference transcript, September 8, 2026
- Share prices, analyst consensus, short interest and insider trades: Equibles
- Forecast and assumptions: Equibles Research model, October 24, 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.