Reddit, Inc.

Good afternoon, everyone. Welcome to Reddit's third quarter 2024 earnings conference call. Joining me today are Steve Huffman, Reddit's co-founder and CEO, Jen Wong, Reddit COO, and Drew Valero, Reddit CFO. Before we get started, I'd like to remind you that our remarks today will include forward-looking statements. Actual results may vary materially from those contemplated by these forward-looking statements. Information concerning risks, uncertainties, and other factors that could cause these results to differ is included in our SEC filings. These forward-looking statements represent our outlook only as of the date of this call. We undertake no obligation to revise or update any forward-looking statement. During this call, we will discuss both GAAP and non-GAAP financial measures. Reconciliation of GAAP to non-GAAP financial measures is set forth in our letter to shareholders. Our third quarter letter to shareholders and accompanying earnings press release are available on our investor relations website investor.redditinc.com, and investor relations subreddit r slash rddt. And now I'll turn the call over to Steve.

Thanks, Jesse. Hey, everyone. Thank you for joining and welcome to our third quarter earnings call. I'm excited to share that Q3 was a landmark quarter for Reddit. We averaged over 97 million DAUQ, an increase of 47% from last year. And for the first time, we exceeded 100 million DAUQ a few times during the quarter, which has been a longstanding milestone for us. Our Q3 revenue grew 68% year over year, and I'm proud to announce that we also achieved GAAP profitability. Reddit's influence continues to grow across the broader internet. In 2024 so far, the word Reddit was the sixth most Googled word in the United States, underscoring that when people are looking for answers, advice, or community, they seek out Reddit specifically. We saw this play out in real time when the White House came to Reddit to share critical information during the recent hurricanes. They used our Reddit Pro tools to identify the right communities to reach people affected by these events. In fact, thousands of businesses are now using Reddit Pro, including the MLB and NFL. We're using it to share exclusive content with communities. We continue to see more businesses and organizations come to Reddit to find their audience. We remain focused on making Reddit the best place on the internet for conversations and community, which means, quite simply, we're continuously improving the user experience by making discovery easier, making the platform faster and smarter, enabling seamless contribution, and simplifying moderation. A few highlights from the quarter include our conversation page views exceeded 90 billion, growing 40% year-over-year in Q3 as users are getting into the conversations faster and more often. We refreshed the Ask Me Anything, or AMA, product which led to a five-fold increase in the number of AMAs created in the new format. And we launched better tools for posting that have both increased posts and reduced moderator removals, which makes a better experience for everybody. And as for growing beyond the United States, our efforts here are proving successful. International DAU grew 44% year over year, led by 53% growth in our focus markets, most notably in France, India, and the Philippines. This year, we started using AI to translate Reddit's corpus into other languages, making it more accessible for non-English speakers to enjoy in their native languages. After promising results with French in the first half of this year, we expanded our coverage to include Spanish, Portuguese, Italian, and German. This quarter, machine translation drove four times more users than last quarter, and based on the success we've seen so far, we plan to expand machine translation to over 30 countries through 2025. As Reddit becomes a truly global platform, we are focused on ensuring everyone, regardless of their language, can participate in and benefit from the communities on Reddit. Looking ahead, improving the search experience on Reddit is a key part of our strategy. We want to ensure that all users have the best experience possible. This includes users coming to Reddit from external search and those searching directly on Reddit who are looking for recommendations on what to buy, what to watch, or what products or services are the best. We know many users are looking for more than just answers. They are looking for authentic, real-world insights and advice from the communities on Reddit. So we're focused on making the experience of finding relevant conversations and content on Reddit easier and more intuitive. Continuing to look to 2025 and beyond, we'll seek opportunities to accelerate our roadmap, whether through new product developments, global expansion, or growing our ads business, all while maintaining our commitment to scaling profitably and ensuring that Reddit continues to be the go-to place for conversations and community on the internet. Thank you again for being a part of this exciting journey with us. I'll now hand it over to Jen.

Thanks, Steve. Hello, everyone. It was a strong quarter for Reddit as our unique proposition and core platform improvements are driving differentiated growth. Total revenue in Q3 grew 68% year-over-year to $348.4 million. The advertising business grew 56% year-over-year to $315.1 million, driven by strong growth across objectives, channels, verticals, and geographies. Let me discuss our ad revenue drivers in more detail. We saw strong year-over-year growth in impressions from higher user growth, more efficient ad load, and expansion of conversation placement ads, while pricing was mostly consistent with the prior year. Revenue across the funnel accelerated year-over-year. We continue to deliver more value to our customers by improving ad performance, particularly in the middle and lower funnel, which is two-thirds of our roadmap. Performance revenue from mid and lower funnel objectives drove more than half the growth in the quarter and accounted for about 60% of total advertising revenue. We more than doubled the number of clicks this quarter as we continue to enhance our lower funnel capabilities. We saw continued momentum across channels. The scaled business, including mid-market and SMB customers, grew over 80% year-over-year and continues to be an area of investment. This was largely driven by managed clients where we provide service. We saw strength across verticals led by auto, consumer goods, financial services, and pharmaceuticals, all adding new clients and lines of business in Q3. And total international revenue grew 57% year-over-year, as we saw strength in the EMEA markets across both large and mid-sized customers. In our ad stack, we continue to focus on, number one, driving performance of our ad solutions across the funnel, two, improving usability for our advertisers and productivity for our sales force, and three, offering our advertisers Reddit unique solutions and creatives. I'll discuss our progress in each. So first, driving performance of our ad solutions. We continue to invest in delivery formats and measurement and optimization products across the funnel. We saw nearly 50% growth in the number of conversions in Q3 versus Q2, and advertisers are adopting our automation tools, including auto bidding. We continue to drive CAPI adoption and expand our partner ecosystem. We saw over two times more advertisers adopt CAPI this quarter versus Q2. We also expanded our ads API offering and ecosystem with the launch of our custom audience API, which allows advertisers to target their audience from their customer data platforms on Reddit. Our partnerships with Telium, MParticle, and Action IQ now include both Cappy and custom audience capabilities. Second, improving usability for our advertisers and productivity for our Salesforce. Over the course of the year, we invested across a few broad categories. Ads manager improvements that consolidate steps and remove manual work from campaign creation. Automation tools that make it easier to create performant campaigns and reduce the need for manual optimization. For example, multi-placement optimization with auto bidding automatically sets bids and placement to maximize performance. We're seeing over 90% adoption of this feature across lower funnel campaigns. And AI-driven workflows for our sales force to extract product insights from customer interactions and streamline sales support with an AI-powered knowledge base. We also continue investing in brand safety and recently launched pre-bid protection with IAS, which will expand our partnership to include brand safety and viewability reporting in the coming months. And third, offering our advertisers Reddit unique solutions and creatives. In Q3, we launched a refreshed design of our Reddit unique ads product, Conversation Ads, driving double-digit improvements in conversion rate. We continue to test ad placements within the comments, as we expand inventory and improve performance on this surface. In the near term, we anticipate this could reach up to mid-single digit of total impressions. Next, I'll shift to our data licensing business. We continue to address the data licensing opportunity and are in contact with a small set of potential partners. Other revenue was $33.2 million in Q3, driven by data licensing partnerships we signed earlier in the year. In Q3, we entered into a new partnership with Meltwater, a media and social intelligence company. Meltwater accesses Reddit's content through our data API, which allows our customers to uncover brand insights, monitor industry trends, and tap into the discussions happening on the platform. Looking ahead, the landscape continues to evolve, and we have limited visibility into the timing of additional partnerships. We are focused on ensuring the end customers of our partners continue to see value in their content and meeting uptime and delivery expectations for our existing data partners. Overall, this was another strong quarter for Reddit, and we are pleased with the traction we're seeing in the business. I want to mention a recent key addition to our sales leadership team, Mike Romoff, our new chief revenue officer. Mike is a proven leader and brings a strong track record of sales, partnerships, and operational leadership from Google and LinkedIn. Mike will lead all of our sales and sales support functions, reporting directly to me. With Mike on board, our strategy remains the same, to help customers grow their businesses on Reddit through our full funnel solution built on our leadership in contextual and interest-based advertising. Looking ahead to Q4, the current industry environment feels stable, and we are benefiting from structural improvements we have made to the core ad business that have sustained differentiated growth over the past quarters. We are monitoring for any potential impact from the upcoming elections, and we remain focused on our strategies and execution. Thank you all for joining for your continued support. Now I'll turn the call over to Drew.