Reddit is becoming increasingly popular – and profitable

In May 2023, Reddit announced that its API would no longer be free, signaling the demise of most third-party Reddit apps and the beginning of a new Reddit era. Reddit has always been interested in making money, but the social media platform's drive for profit intensified with API rule changes, followed by its IPO and other big moves. With Reddit reporting this week that it has finally made its first profit, we can expect further development from Reddit, whether old Reddit users like it or not.

In its fourth-quarter 2024 results (PDF) announced Tuesday, Reddit said it made a profit of $29.9 million in the quarter ended Sept. 30. This is significant growth from the third quarter of 2024, when Reddit lost $7.4 million. Revenue increased 68 percent year-over-year from $207.5 million to $384.4 million. Reddit expects fiscal fourth-quarter revenue of $385 million to $400 million.

More Redditors

During the Reddit app ocalypse, many Reddit users and moderators said they were leaving the platform because they were upset with how Reddit treated third-party developers and moderators, especially during user protests against the API rules changes.

Nevertheless, Reddit's results show that there were an average of 47 percent more daily active unique users in the third quarter of 2024 (97.2 million) than in the third quarter of 2023 (66 million).

Reddit CEO Steve Huffman told shareholders (PDF) that “machine translation generated four times more” daily active unique users in the third quarter compared to the second quarter. Huffman's letter said Reddit plans to launch machine translation in additional countries in the fourth quarter and in 2025.

“Machine translation based on large language models is showing early success in overcoming the language barrier and bringing millions of incremental users to the platform,” said Huffman.

Successful ad push

Of course, more users give ads sold on Reddit a chance to attract more attention, which can help boost ad sales. Reddit's advertising revenue has grown alongside its daily user base. In the third quarter of 2024, Reddit generated $315.1 million in advertising revenue, an increase of 56 percent year-over-year.

Reddit has historically generated the majority of its revenue from ad sales. Huffman has long claimed that Reddit began charging for its API to prevent large companies like Google from using Reddit content for free AI training. But the high prices that plagued third-party apps also served Reddit's goals of attracting users to its native website and apps – where Reddit sells ads.