In May 2023, Reddit announced that its API would no longer be free, signaling the demise of most third-party Reddit apps and the start of a new Reddit era. Reddit was always interested in making money, but the social media platform’s drive to reach profitability intensified with its API rule changes, which was followed by it going public and other big moves. With Reddit reporting this week that it has finally turned its first profit, we can expect further evolution from Reddit, whether old-time Redditors like it or not.
In its fiscal Q4 2024 results announced on Tuesday [PDF], Reddit said that in the quarter ending on September 30, it made a profit of $29.9 million. This is significant growth from fiscal Q3 2024, when Reddit lost $7.4 million. Revenue, meanwhile, was up 68 percent year over year, going from $207.5 million to $384.4 million. Reddit is expecting $385 to $400 million in revenue for fiscal Q4.
More Redditors
During the Reddit app-ocalypse, many Reddit users and moderators said they would quit the platform because they were disgusted with how Reddit treated third-party developers and moderators, particularly during user protests against the API rule changes.
Still, Reddit’s results show it averaging 47 percent more daily active unique users in Q3 2024 (97.2 million) than it did in Q3 2023 (66 million).
Reddit CEO Steve Huffman told shareholders [PDF] that “machine translation drove 4x incremental” daily active unique users in Q3 compared to Q2. Huffman’s letter says that Reddit plans to launch machine translation in more countries in Q4 and in 2025.
“Large-language model … driven machine translation is showing early traction in breaking the language barrier and driving millions of incremental users to the platform,” Huffman said.
Successful ad push
Of course, more users give ads sold on Reddit the chance to gain more eyeballs, something that can help drive ad sales. Reddit’s ad revenue has grown alongside its daily user base. In Q3 2024, Reddit made $315.1 million in ad revenue, a 56 percent year-over-year increase.
Reddit has historically made the majority of its revenue from ad sales. Huffman has long claimed that Reddit started charging for its API in order to prevent big companies, like Google, from using Reddit content for free AI training. However, the high pricing killing third-party apps also fed Reddit’s goals of getting users onto its native website and apps—where Reddit sells ads.