After 19 years of losses, Reddit finally turned a profit following its initial public offering. The online forum reported in its third-quarter 2023 earnings that it achieved a net income of $29.9 million on revenues of $34.84 billion, a 68% increase year-over-year. This marks a significant turnaround from the previous two quarters of losses, suggesting that Reddit may have finally found its footing.
Steve Huffman, co-founder and CEO of Reddit, stated in the quarterly report: "The third quarter marks a milestone moment for Reddit." He noted that the platform now has over 97 million daily active users, a 47% increase from the previous year. More excitingly, during this quarter, user numbers frequently surpassed 100 million, a significant goal for Reddit for a long time.
So, how did Reddit achieve profitability? Huffman pointed to artificial intelligence. He mentioned that Reddit began leveraging AI technology this year to translate platform content into multiple languages, allowing non-English users to enjoy these contents as well.
"The number of users brought by machine translation this quarter has quadrupled compared to the previous quarter," Huffman said, anticipating that by 2025, Reddit will extend its machine translation services to over 30 countries.
Currently, Reddit's translation feature mainly covers French, Spanish, Portuguese, Italian, and German. Reddit previously partnered with Google and OpenAI, allowing these companies access to its data API, while also utilizing these AI tools. Although the specific uses of these AI tools were unclear at the time, it is now evident that content translation was a focal point.
Reddit expects to remain profitable in the fourth quarter, with revenues potentially growing to $400 million and EBITDA reaching $125 million. However, Reddit needs to demonstrate to its users how it plans to use these profits to improve the platform. Huffman mentioned that enhancing the user search experience will be a key focus in the future, a much-anticipated improvement among users.
Huffman stated, "Looking ahead to 2025 and beyond, we will seek to accelerate our product roadmap, whether through new product development, global expansion, or growing our advertising business." However, he did not reveal many specific plans.
Key Points:
🌟 Reddit achieves its first-ever profit, with a net income of $29.9 million in the third quarter.
📈 Significant user growth, with 97 million daily active users and multiple instances of surpassing 100 million.
🤖 AI-driven translation expansion, expected to cover 30 countries by 2025.