Co-Founder/CEO Steve Huffman Interviewed with Bank of America this past week.

Primary Focus Areas:

Reddit remains squarely focused on adding more daily active users (DAUs) and reigniting the U.S. growth engine specifically. For context, U.S. DAU growth this past quarter was 7% Y/Y compared to 17% Y/Y for overall DAUs and 69% Y/Y growth for revenue. They are doing extraordinarily well in boosting ad load and extracting more monetization from their loyally engaged Redditors. While that is undeniably impressive, the monetization gap that existed when the company went public is starting to close, meaning in the coming years, revenues and user growth will start to closely track one another. This core objective is thus vital for extending Reddit’s rapid growth runway. To achieve its mission, Reddit has been focused on beefing up talent across user experience and especially machine learning. And they’ve done so while consistently sticking to their goal of revenue growth remaining 2x expense growth.

How is this new talent specifically going to turbocharge user growth after decades of existence? A few ways that I find compelling and think feature high probabilities of success. The most important factor is using the newly-added machine learning experts to personalize the home page. Up until now, that page has been static and a monotonous offering. It would routinely feed users a lot of stuff they had no interest in, with limited ability to customize their experience on this part of the app. That is now changing with dynamic personalization the way forward.

Native search is another big piece of supporting the overall new user engagement ramp. Most of these people come to Reddit with very little idea of where anything is or what they’d be most interested in. Considering this, leadership has worked hard to infuse agentic capabilities into their search process, making it more engaging, actionable and accurate in matching users and communities.

As the new user experience gets better from these projects, Reddit expects to unlock a lot more places to productively spend marketing dollars, which should also be a nice accelerant to user growth… and monetization. They’ve recently started embedding product links with Shopify’s world-class checkout (budding partnership) and a one-click process for new merchants syncing their catalogs on Reddit. Search clearly helps in many ways and is growing at a 30% Y/Y clip as of last quarter. In addition to all of these factors, older cohorts spend 50 minutes per day on the app while newer ones are around 30 minutes.  The longer people have the app and utilize it, the more time they spend on it.

Earlier in this section, I said I thought these changes would probably work in terms of boosting user growth rates. That confidence doesn’t come from guessing. It comes from covering Meta for years and seeing how very similar changes they’ve made have supported the same things Reddit is hoping to achieve. They have a wonderfully active and vibrant user base that obviously loves the ecosystem.

AI Disruption Insulation?