Reddit's Q2 2026 revenue rose 61% to $804.9M on roughly 40% higher ad prices, lifting operating margin to 28.8% and diluted EPS to $1.25, even as US daily users grew just 6% and were flat versus Q1.
Revenue
$805M
+61.1% YoY
Net income
$253M
+183.2% YoY
Diluted EPS
$1.25
+177.8% YoY
Operating margin
28.8%
Overview
Reddit's second quarter of 2026 (April–June) was driven almost entirely by what advertisers were willing to pay, not by how many new people showed up. Revenue rose 61% to $804.9 million, the company's eighth straight quarter above 60% growth according to its earnings release. The 10-Q attributes the jump to advertising revenue, which rose 64% "driven by an increase in pricing and an increase in impressions delivered": the price of ads rose about 40% from a year earlier, while the number of ads shown (impressions) rose about 17%.
Costs grew much more slowly than sales, so profit roughly tripled. Net income was $252.8 million versus $89.3 million a year earlier, and diluted earnings per share (profit divided by all shares, including those that options and stock awards could add) went from $0.45 to $1.25.
The weak spot is user growth in Reddit's most valuable market. US daily users grew only 6% from a year earlier and were "relatively flat" compared with the first quarter. Nearly all user growth came from outside the US, where each user currently brings in about a fifth of the revenue a US user does.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$804.9M
$499.6M
+61.1%
Advertising revenue
$761.6M
$464.8M
+63.9%
Other revenue (mainly data licensing)
$43.3M
$34.8M
+24.2%
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Operating margin is the share of revenue left after paying for running the business (hosting, engineers, sales, marketing, admin), before interest and tax. The Q2 2025 DAUq figure is derived from the stated 18% growth; the 10-Q presents it only in a chart.
Users: growth is mostly outside the US
Two Reddit-specific measures matter here:
DAUq (daily active uniques) is Reddit's count of distinct people (identified by a unique ID) who visit the site or open the app on a given day, averaged over the quarter. It includes people who are not logged in, such as those arriving from a Google search.
ARPU (average revenue per unique) is quarterly revenue in a region divided by that region's DAUq. It measures how much money Reddit makes from each daily user.
Global DAUq grew 18% to 130.3 million, but that growth came from two very different regions. The 10-Q reports 6% growth in the United States and 28% in the rest of the world. Compared with the first quarter, global DAUq rose 3%: 5% outside the US, while US DAUq "remained relatively flat."
According to management, year-over-year user growth was "primarily driven by the combination of third-party search engine algorithm changes and our growth initiatives, particularly in machine translation, marketing, and product improvements." Machine translation means Reddit automatically translates English posts into other languages so non-English searchers can find them. That largely explains the rapid growth abroad. Search-engine changes worked against Reddit this quarter: the company says quarter-on-quarter growth was "partially offset by third-party search engine algorithm changes."
Paid marketing is also doing more of the work. Sales and marketing expense rose 62% to $195.9 million, "driven primarily by an increase in user and brand marketing expenses." The risk-factor section says "our reported DAUq includes an increasing number of users from marketing efforts," and warns that cutting that spending could hurt DAUq.
Weekly active uniques (WAUq), a broader reach measure, grew 24% to 514.6 million. Daily users made up 25% of weekly users, compared with 26–27% in earlier quarters shown in the filing. In other words, Reddit's audience is widening faster than it is becoming habitual. The 10-Q's global DAUq chart shows logged-in DAUq, the most engaged users, growing only 7% year over year. Reddit says it will stop reporting logged-in versus logged-out DAUq starting in the third quarter of 2026.
Monetization: price, not volume
This is the core of the quarter. US ARPU rose 51% to $11.85, even though the US user base barely grew. The 10-Q credits the ~40% rise in ad prices to "improved performance across the full funnel of ad objectives and higher advertiser demand." Put simply, advertisers are seeing better results from Reddit ads, from brand awareness through to actual purchases, and are paying more for each ad. Impressions rose about 17%, helped by "ad load optimization and improvements, including new ad placements." Ad load means how many ads appear among the posts.
Revenue by customer billing address rose 56% in the US ($638.1M) and 84% in the rest of the world ($166.8M). International growth is faster from a small base. International ARPU of $2.26 is still less than a fifth of the US figure, and management expects the gap to remain "for the foreseeable future" because the US digital ad market is larger and more mature.
"Other revenue" is mostly content licensing, where Reddit charges companies (including AI developers) to access its posts. It grew 24% to $43.3 million, which is 5% of revenue. This quarter was an advertising story.
Costs and profitability
Total costs and expenses rose 33% ($431.9M → $573.2M), about half the 61% revenue growth rate:
Cost of revenue +53% to $70.3M, from "increased hosting usage to support product enhancements and user growth," partially offset by lower hosting prices. Gross margin (revenue left after the direct cost of serving the site) edged up to 91.3%.
Research & development +18% to $231.3M. It fell from 39% to 29% of revenue, which accounts for most of the margin gain.
Sales & marketing +62% to $195.9M, the one cost line growing as fast as revenue. It stayed flat at 24% of revenue.
General & administrative +10% to $75.7M, down from 14% to 9% of revenue.
Operating margin more than doubled from 13.6% to 28.8%. Net margin reached 31.4%. Net income is higher than operating income because Reddit earned $25.1 million of interest on its $2.8 billion of cash and investments.
Stock-based compensation and the GAAP vs. adjusted gap
Like many recently listed tech companies, Reddit pays employees partly in shares. That cost is real but involves no cash. Its preferred profit measure, Adjusted EBITDA, excludes it, along with interest, taxes and depreciation. Adjusted EBITDA was $342.8M (42.6% of revenue), compared with GAAP operating income of $231.7M (28.8%). Nearly all of the ~$111M difference is stock-based compensation and related taxes of $106.8M, 13.3% of revenue. Most of it falls in R&D ($69.1M).
The gap is narrowing. A year ago, stock compensation was $95.1M, or 19.0% of revenue, so it grew only 12% while revenue grew 61%. That is why the GAAP improvement (margin up 15 points) was larger than the adjusted one (up about 9 points, from 33.4% to 42.6%). Reddit also spent $239.6 million in the first half buying back 1.52 million Class A shares under a $1.0 billion program authorized in February 2026 ($760.4M remains). The earnings release says fully diluted shares were 207.0 million, up only 0.2% year over year. So far, the buybacks are offsetting the new shares issued to employees rather than shrinking the share count.
A tax quirk that will distort future earnings
Reddit paid almost no income tax: $4.0M on $256.8M of pre-tax income, or about 1.6%. This is because it still holds a "full valuation allowance" against its US deferred tax assets. Those assets are mostly past losses that can reduce future tax bills, but accounting rules have kept them off the balance sheet until profits look durable. The 10-Q now says there is "a reasonable possibility" that enough evidence will appear "within the next 12 months" to release a significant portion of that allowance, which "would result in a significant income tax benefit in the period when we release it." Expect one quarter's GAAP net income and EPS to jump because of a one-time accounting gain. After that, the tax rate should move toward a normal corporate level, which will push reported net income growth below operating income growth.
Cash and balance sheet
Operating cash flow was $261.9M (+135%). Free cash flow, which is operating cash minus capital spending, was $260.7M. Capital spending was only $1.1M because Reddit rents its computing from cloud providers. In June 2026 it extended its AWS cloud agreement through 2029 and committed to spend $880.0 million between July 2026 and June 2029. Reddit has no borrowings. Its $500M revolving credit line is unused apart from $5.6M of letters of credit. Cash, equivalents and marketable securities totaled $2.8 billion.
Takeaway: Reddit's 61% growth came from higher ad prices (about +40%), not more US users: US daily users grew just 6% and were flat versus Q1. The company is now making much more money from a nearly unchanged US audience, while fast international user growth comes at ARPU below one-fifth of US levels. Continued growth depends on advertiser pricing holding up.
Outlook
Management guidance (Q3 2026, from the July 30 earnings release): revenue of $860–870 million and Adjusted EBITDA of $385–395 million. That means 7–8% sequential revenue growth from Q2's $804.9M and an implied Adjusted EBITDA margin of about 45%, up from 42.6%. Reddit gives no GAAP profit guidance.
Our read:
The guidance points to continued margin expansion, with most revenue growth flowing through to profit. The cost lines to watch are sales and marketing, which is growing as fast as revenue and increasingly supports user growth, and hosting, now backed by the $880M AWS commitment.
Revenue growth depends on ad pricing, which cannot keep compounding at 40% a year forever. Impressions (+17%) are growing slower than pricing, and US users are flat. Once year-over-year price comparisons get tougher, growth will rely more on converting fast-growing, lower-ARPU international traffic into ad revenue.
Search traffic remains the structural risk the filing names itself. It lists changes in "AI-generated search or answer features" among its principal risks, and this quarter's sequential DAUq was already held back by search-algorithm changes. Losing logged-in vs. logged-out disclosure from Q3 will make it harder for outsiders to tell whether casual search visitors or core users are driving any change.
Expect GAAP EPS to jump for one quarter whenever the tax valuation allowance is released. Judge that quarter on operating income and free cash flow, not headline EPS.
Source: Reddit, Inc. Form 10-Q for the quarter ended June 30, 2026 (filed July 31, 2026); guidance and diluted share count from the Q2 2026 earnings release (Form 8-K Exhibit 99.1, July 30, 2026).