Reddit, Inc. (RDDT) June 3, 2026 Conference Transcript

All right, we'll go ahead and get started. I'm very pleased to have Steve Hoffman here from Reddit, CEO and founder, and we're going to go through a lot of big picture questions that we get all the time, some concurrent events, and then some business model questions, and we also have questions from a Reddit audience, so I think it should be a good discussion, so thank you so much for coming.

Yeah, thanks, Justin. Really glad to be here.

Great. Why don't we just start off with you? What do you spend most of your time doing, and what are some of your priorities right now?

So, the big goal for Reddit, well, if we start with our mission, our mission is communities for everybody. So, but to make that more concrete, we really think about how do we 10x our user base, how do we 20x our revenue? um so how do we get to a billion global dau and let's you know on the path to that i think our most nearest term milestone is how do we get to 100 million us dau um so broadly we're thinking about people and product so we've been going through i think a big evolution you know over the last year making really some foundational changes to our teams um so at the end of the day great products are made by great people and so it's been kind of just a constant evolution of reddit of just upgrading our team so whether we're evolving ourselves or bringing in outside folks but just to have the absolute best team possible so we're gonna have the absolute best execution possible so we can have the absolute best product possible um and then on user growth look our core product works amazingly well for our core users um but reddit can be a product that's challenging to get and so you know our work there i don't know if it's sexy i find it very interesting um but really just improving the quality of the product so the ease of use the performance the just increasing the likelihood that a new user is going to find their home on reddit um that is how i think we drive kind of durable compounding growth and then for us revenue like revenue has grown 70% for the last couple of years, been very consistent. I think we can very reliably turn users into revenue in a healthy way. So all roads point to us just growing users within our core product because the core product and the core business is working very well.

Great. Let's dive into users a little bit. It's a big question we get. And, you know, you have a huge broadly broad user reach in the U.S., but how are you thinking about turning those weeklies into dailies and anything new? I know you've been working on it for 18 months now. And what are your big initiatives right now to drive frequency?

Yeah, so weeklies and dailies themselves are both important measures of Reddit. But if we look at within our U.S. traffic, we have about 200 million U.S. weeklies and about 50 million U.S. dailies. And so when I think about that path to 100 million U.S. dailies, so roughly double from where we are today, I look at the potential of the 200 million weeklies we already have. And so if we think about the kind of three aspects of growth on Reddit, so reach is like the total scale. So already in the US, we're at 200 million weeklies, but how do we grow that to capture more of those as daily users? Frequency is the one that we're really thinking about right now. So how often do users come to Reddit every week? And so if you were to look at a histogram of how many days active a user is on Reddit, the two biggest bars would be seven days, as in they come every single day, seven days a week, or one day. And so quite simply, our job is to convert those ones into sevens. In between, there's actually not much, which just kind of tells the same story again, as once somebody really gets Reddit, they get it, and they're really hooked. But that journey can be challenging. So really increasing the reach there. And then depth. So this is how much time people are spending on Reddit. I think we're actually a very healthy spot here. You know, a U.S. logged in user spends on average 30 minutes a day on Reddit. And the older their account is, the more time they spend on Reddit. So a seasoned account spends, you know, more like 50 minutes a day on Reddit. And so again, this kind of tells the same story over and hours, once users get it, they actually go deeper and deeper over time. One of the ways Reddit is different than social media is our users don't age out of Reddit. They age out of social media, and then they age into Reddit. Because Reddit communities cover everything you're doing or thinking about from something mundane, like what should I watch tonight, right? The never-ending problem of life um to you know relationship challenges or kid challenges or medical maladies whatever it is you know reddit is there with you on your life's journey so it's really for us that frequency that frequency question excuse me um of of taking that potential energies we the potential energy we see in our weeklies and converting those into dailies and what's the biggest initiative right now to do oh my gosh okay i actually have an answer yeah um so it's going to be a combination of a lot of incremental improvements to onboarding and performance and ease of use and navigation in the app um and so we're chipping away at all of these things um the biggest one will be machine learning in the feed so reddit's going through this transition you know the the early version of the reddit products or for the first couple of generations of reddit was the front page of the internet so it's one front page of content for everybody that worked when our user base was homogeneous but now our user base is diverse our content base is diverse both great things but one front page doesn't work for everybody so we've been on this transition from one front page to more personalized experiences that is that is the short term medium term long term you know that that'll be the the the one that's carrying the most load and so when we talk about in my first answer the people on the product the people we're bringing are bringing in are the the machine learning experts who have worked on feeds like reddit at scale at greater scale than reddit the processes so that we can ship and iterate, you know, new models much more quickly. I think that'll carry the most load. But like I said, it's also a game of many inches over every part of the product. I think I've read it as this machine, and so we're always looking at what are the parts of the machine that have the most friction. So if you talk to me a couple quarters ago, I would say onboard. Actually, dramatically reduce the friction in onboarding. So now the success rate of users through the onboarding journey is like 80, 90 percent. That's great. So now the next step is we're putting them in this feed, and now we can see that feed really needs to level up as well to help users through that whole journey. And I'm guessing if we talk in six months or a year, I'll be talking about content creation or community creation, you know, the next parts of the machine as we look to the future.

Got it. I have one from the community. I want to read this so I get it right. Steve, you have a very passionate user base in your Reddit communities, and many of them are also shareholders. They think that your business is doing really well, but sometimes the stock price doesn't reflect that. Do you have any thoughts on that? I do.

I'm mic'd, so I can't share my thoughts. Okay, so look, I'm so grateful for the shareholders in our user base. It's a literal dream come true. One of the reasons we went public was so that our users could be shareholders but they feel this deep sense of ownership over reddit but all of our communities all the content everything interesting about reddit is created by our users and so i wanted them to have opportunity to be real owners there's a community on reddit called reddit stock that's where the shareholders hang out i see every post in there uh the good bad and the ugly i read everywhere um so to answer the question you're right the business is doing well i think we've We've had very consistent growth, like I said, 70% revenue growth over the last two years, over 90% margin, gross margin, profitable on a gap basis. I think doing really well. I think we're really proud of the business returns. Look, I think if you look over shareholder returns over the long term, I mean, since we IPO two years ago, we're up 5x. And we do take a long-term view of our business and shareholder returns. But we also get, you know, we've been higher than we are, you know, right now. I think there's many reasons for this. I think the biggest one probably is just uncertainty with AI. So we catch it, I think we catch it from a couple of dimensions. One is just macro uncertainty. It's what's happening in the economy, what's happening in the world. There's a lot of that. Of course, I think we and many others sit downstream of that. And then uncertainty specific, you know, to people in our space. Do you get disrupted by AI, displaced by AI? So if I work through these things, we've got a great business. Reddit is, I think, from a business performance point of view, one of one company. If you look at the revenue growth, the gross margin, the EBITDA margins, cash flow, we're very proud of our work there. and then we think about the ai uncertainty i'll just point to a couple of things which is humans always want to talk to other people and in fact i think in the ai world there's an increasing value placed on authentic human connection and conversation and that's ultimately what the red product is. And then second, on top of that, there are, I think, so many opportunities for, and we're seeing it now, that the paradox of AI, which is AI, as we know, it doesn't exist without Reddit. Reddit is used pre-training, post-training, grounding, search. So Reddit is an essential player in the modern version of the internet. And so I think what's most important to us is continue to execute our strategy, continue to grow users. And I think we'll see this play out. But look, I also would say that when our stock, when we think it's a good value, we'll be a buyer as well. We've bought a million shares this quarter already. So I think also So sometimes opportunities are presented in that regard as well.

I would say the Internet has not been a picnic this year. Hardware space is doing quite well. Maybe it's drawing some dollars. But let's go to current events. I know we've got a lot of questions on this. So what do you think about Google's product announcements at I.O.? And on that topic, how do you think about your upcoming data license contact renewals?

Okay, so I was touching on this a little bit in the last answer. Look, Reddit is an essential part of the internet ecosystem. The word Reddit is one of the most searched terms on Google. It's been in the top 10 most searched words on Google the last couple of years. Reddit has the best content on the internet. Google is the best search engine on the internet. I think combined, it creates an incredible amount of value for the Internet consumer. And so the Internet is better when I think that connection works very well. Now, the space is under a lot of evolution, but we recognize, I think, the importance that we play in this ecosystem. There is no LLM on Earth that wasn't trained on a that wasn't significantly trained on Reddit's data. including Google and OpenAI with whom we have big partnerships and including other folks with whom we have big lawsuits. But we've seen, I think, the appreciation for this value and Reddit's position in it evolve over the last couple of years. And as I mentioned, Reddit is an essential part of pre-training, of post-training, of grounding, of search. So really of every part of the stack. And so as we look forward, I think it's really important that this and relationships like this continue to exist and thrive and we continue to evolve together. And I think it's also, you know, we'll make sure that, you know, Reddit gets full value for what we provide to the ecosystem.

Any traffic flows or anything from I.O. that would change anything, in your opinion, or was it pretty status quo?

I think even without AI, right, search is search. Even despite our close relationship, we don't always know where that's going to go. So I think every quarter there are puts and takes. I think this has been a, I think the overall story here and the evolution of search on the internet is, you know, it's hard to say for sure where this goes. What is important for Reddit, and I think this is unique to Reddit, which is we have completely unique and differentiated content. And people don't want summaries on, I was going to say important questions, but sometimes it's like what I call them questions with no answers. So let me give you an unimportant question with no answer. What should I watch tonight? People want to hear the conversation. What cars should I buy? Like, where should I go? What's the best headphone? There isn't an answer. How do I deal with XYZ issue with my kid? Like, people want to hear from other parents. And so there's plenty, I think, of commodity content on the internet. And indeed, a few companies have been vaporized by AI, but not Reddit. And instead, I think Reddit actually becomes more and more valuable over time, and people start to appreciate what Reddit does more and more. So we keep doubling and tripling down on our mission, communities, authenticity, Reddit being the most human place on the Internet, and having confidence that however the ecosystem evolves, Reddit will be a destination.

Great. Let's do another current event, which is how do you see the competitive risk for Meta's new forum app? And what differentiates Reddit's model versus any other on the Internet, much less that?

Sure. So, yeah, the Meta released an app called Forum, which I think is just a reskin of groups. Reddit and groups, Facebook groups have coexisted for a very long time. um so i you know our our moat is very wide and and very deep i think if you look at we predate basically every social media company you've heard of um it will be 21 years old this summer so if you look at our traffic graph over time you can't see the evolution of any of these companies you don't see the rise and fall of anything so it's almost like reddit it's not almost like reddit is just playing a different game um because it's you know that the there's some similarities at first right it's posts on the internet um but i think the interaction and the the feeling is completely different so what other companies are doing in the social media space hasn't really had any effect on reddit the thing that affects reddit is red um and so what what is what has meant our driven our success in the past has been how well we're executing how well we're meeting our own users needs and that'll be the primary if not only driver of our success in the future like again I go back to my first answer where we've got the seven day a week users and one day a week users those seven day a week users could use any platform they choose to use Reddit every day and I think that potential is there for actually every single user.

Got it, okay Okay. Let's move on to capital allocation. I think you already mentioned you did some buybacks this quarter. You haven't been a big acquirer over time, but how do you think about that? And you are generating a ton of cash now, so it might be a little different. How do you think about that?

Yeah. It's a maybe first-class problem. We are generating a lot of cash. Reddit is a very light business, and so it's a great cash flow business, which is not something I imagined hearing myself saying 10 years ago, but I'm actually really proud of the... I kind of live in the user's product feeling side of this company most of the time, so seeing it be such a great business is, I think, I'm very proud of that work. Okay, so anyway, capital allocation. First priority is invest in the business, aka hire. Yeah, got a lot of margin to work with, though. We got a lot of margin to work with. Well, you know, once you give it, it's hard to make it back. But nevertheless, so hiring. We've been a modest headcount grower. So in this like mid-double digits, like kind of mid-teens, excuse me, for the last couple of years, I think that's kind of the right level for Reddit. Broadly, our management goal has been to grow revenue twice as fast as costs. We've been doing better than that, but we just want to make sure that we're staying in line there. So first, invest in the business, which is hiring. Right now, this is primarily ML engineers will probably invest in video is the other, I think, big product area for us looking forward and sales, of course. Second is M&A. We're not a big player in M&A or haven't been historically. We've done tuck-ins here or there, but it is a muscle that we're developing or want to develop primarily for people in technology. So it's a really another way of looking at investing in the business. And then third would be buybacks. And as I mentioned, we've bought a million shares this quarter, and we'll keep doing that as the opportunities arise. But I think we're in a great position where I think we can fund all of the hiring we want to do. We can fund the M&A we're looking at, and we can afford to do buybacks because Reddit has so much cash flow.

Got it. And then dovetailing into that, just the financial model, what do you think makes it unique? and, you know, you've got gross margins that are better than pretty much every company I cover. So, you know, how do you maintain that and what do you think about the financial model?

Yeah, so it's revenue growth 60% or more for the last seven quarters, gross margin over 90%, gap profitable. So truly a one-of-one company in that regard. And I think it comes down to a couple of things um so i mentioned before we've been um modest on hiring and so i think that's the number one management lever is just being very disciplined about how fast we grow headcount because that's really talking about that's really growing costs um two uh our our capex uh last quarter was like a million bucks um so we're just not a big spender we're not building data centers um i'm grateful for other companies that are doing that they build the data centers we rent the gpus and so that that model has worked great for us um we are our platform is lightweight and our company is lightweight and i think that is a structure that has served us very well and so it allows us to be um i think very nimble allows us to generate a lot of cash allows us to do interesting things on the M&A side and things like buybacks and while continuing to invest in the business. And then I look at, you know, some of our peers in the space from the challenges they faced and, you know, we can see those things coming and investors, by the way, ask all those questions. So it's just very important to us that we're telling a different story. Just why it was so important to have high margins out the gate, get the profitability quickly, show that we can grow the company without growing headcount because we've seen, you know, what happens when you don't kind of mind, you know, mind these things.

Got it. Also on that, you know, just thinking about your margins and how your goal is to get to 100 million users, why not hire 30% growth so you can get there quicker? Is this not how it works? How do you think about that?

Our new CTO element has the saying that's quickly become one of my favorites um two engineers can do in two days what one engineer can do in one day and and so like if there are opportunities where we can turn money into instant return of course we'll do that um but it's rarely that simple yeah um no look in some areas like are we hiring a bunch of ml engineers and that i say ml is probably going to be the number one driver of growth yes so to some extent we're doing that um but you know a big investment for reddit is like dozens of engineers it's not hundreds or thousands and i think the most important levers for productivity are do you have the right strategy are you consistent are you executing well do you have the courage of your convictions to see these projects through, you know, even if maybe they don't work in the first launch or first iteration or second iteration, just kind of have a belief in the outcome. I think those things for any company are what's most important is having the right ideas and consistency. I do think, you know, if we are successful in improving new user retention, which is really, I think, the output of having great product quality that opens the door for increasing for example marketing spend and getting a better return there um so we keep an eye on this right we look at this machine we want to be well positioned to like really step on the gas but i think for reddit the core strategy is removing friction from the machine and that's not a like a manpower uh that's not like man hours that's doing like smart hours got it okay i'll ask one and then we'll see if there's

one from the audience, you know, your growth has definitely outpaced street forecasts since you went public on the revenue side. Where are you when you, you know, you were very under monetized when you went public. Where are you in that journey to catching up to all the usage and what are maybe some unlocks going forward?

The business team's been doing very well. I think we We have the ads products are working well across the entire ecosystem. So large, medium and small customers, full funnel, you know, all the way from, you know, consideration to transaction. You know, I think one of the things that's been very powerful for us is that Reddit, the conversations on Reddit are naturally commercial. 40% of what people talk about on Reddit are commercial. Just turns out what do human beings talk about? It's like, what should I buy next? Now, it's not always what should I buy, but it's like, what should I watch? What should I wear? What should I go? Like, what's the best XYZ? And so there's a natural, I think, alignment between the consumer products and then the ads business on top of it. Our ad technology has gotten consistently better. I think we have a lot of market tailwinds. Advertisers want Reddit to be successful, but they want to spend money elsewhere. They want to spend money with us. And so, you know, the conversations I have with customers have changed dramatically, you know, over the last 10 years. it used to be all brand safety and then i think we did a really good job on safety and then it became what is community they're like hey you're not social media your community what is that now they're they totally get it they're users of reddit themselves and so now it's just hey we need this you know measurement integration like they'll come with their to-do list for us and more reach and so as i mentioned before i think reddit the business can very consistently reliably turn traffic into revenue so it all comes back to growing users in a healthy reliable sustainable way and the business i think will follow okay uh we'll see if there's a question out here i've got plenty more but anyone here's here's one over here Yeah, so what we said during earnings is that the content on Reddit is like oil and that it's a foundational research that enables this modern technology. And truly, AI, as we know, it does not exist without the content on Reddit. it's one of the largest sources of training data and it's the most so that's on one end of the stack that create the models and then reddit is the most cited destination across all models that's the other end of the stack and so reddit is used in pre-training right create the whole model it's used in post-training like teach the model how to speak like a normal person it's used in grounding like what do people actually think and then on top of that these models are running on a live search index of like what's going on on reddit so it's essential for the entire stack when we when we did the first round of these relationships this was two years ago the field was brand new and so what we've learned over the last couple of years is both i think within our company within our partners companies and i think just the internet more broadly has seen how important reddit is but you're not if you're using llms you see reddit all over the place and so um i think these relationships are essential for everybody involved for all parts right the internet consumer wins i think the search platform wins the ai model companies win and then we win as well right we would get both traffic and mind share and so um i think we have mutually a better understanding of where the value is and it's our job to make sure we've fully captured that value. And so I will say these relationships have been complex or rather the deals are complex. They're almost like M&A deals. But the relationships, I think, have been mutually really valuable. And so everybody, I think, is incentivized to continue doing them.

Got it. All right. We only have a couple minutes left.

I definitely want to get these two in okay we'll go a little more rapid fire but uh i know a lot of people care about the search product rollout so where are you with that and how are you thinking about possible revenues from search yes so search um so there's three use cases of reddit feeds community and search search is the newest search has grown 30 year over year on reddit our product formerly known as reddit answers now just known as reddit search um it's the llm search product um that was brand new product last year with like a million users now i think last quarter was 15 million users so that's growing nicely um uh many new users run a search in their first session on reddit and so it's also search is an essential part of the onboarding journey um but reddit search i think is the best at questions with no answers so you could try it right now like what show should i watch tonight i'd like this show what show would you recommend um i need help with this video game what's the best headphone all these things now a couple of those examples or maybe all of those examples are also commercial searches um and so we started to integrate um products into the search results and so just and i think we'll be able to do more and more integrations like that but really bringing our search results to life and kind of marrying I think the the organic user need with you know the advertising products because again it's such a natural fit it's what the users want anyway so I see a lot of opportunity there so over the last year we've done more more product integrations we announced a partnership with Shopify to do basically a one-click import of people's catalogs and so those things start to show up in Reddit ads in Reddit search. And so I think a lot of opportunity there as that search product continues to differentiate itself, continues to grow and provide more and more value for the searcher.

No ads right now, right? In search?

Ads are coming. Right now it's like product links. I think the reason I stutter is because I don't think the user cares. They say when I search for phone and I see a link for a headphone, they're happy. And then the monetization of that for us grows over time or starts to develop over time.

Got it. All right. I'm going to sneak one macro one before we wrap it up. The subject definitely has been subject to macro challenges. You mentioned that earlier to the user's question, but it seems like the market was not impacted much on results. Your Q1 was quite strong on the Middle East conflict. So why do you think spend has been so resilient so far this year? And maybe what differentiates Reddit if things do get a little worse going forward?

Yeah, we have seen confidence in the market. I think what we've seen, it's a good question. In the past, when the ads market seems to be sensitive with just what's going on globally. And so we'll see kind of shakeups of the whole industry will. But it's been remarkably consistent i'd say what we're seeing is maybe a lack of visibility and so people's people's horizons are maybe shorter than they've been but the spend is still there um and and i i think you know people have been have macro concerns about the u.s economy in general but the consumers are still showing up they're still buying and so um so as long as that activity is still there and we're not, we hear a lot of questions about it, but we're not seeing any signs of weakness from our point of view. So it's not to say that there can't be more, but it's hard to imagine how could the world be more chaotic. Famous last words, I guess, right?

Great way to conclude. That's awesome. Thank you so much, Steve, for being here. Really appreciate it.