Reddit doesn’t behave like a normal ad platform. The numbers it dropped on April 30 made that clearer than ever.

Q1 2026 revenue: $663 million. Up 69% year-over-year. That’s the seventh consecutive quarter above 60% revenue growth. GAAP EPS of $1.01 per diluted share – a figure more than seven times higher than the same quarter last year – beat the consensus estimate of $0.62 by 63%. The stock closed the following session at $166.48, up roughly 13% from a prior close near $147. Not 14% – the original wires rounded up. Still, 13% on a $28-plus billion market cap company is not noise.

The options market had priced an expected move of roughly 11.5% heading into earnings. The realized move came in just under 13%. Calls outpaced puts 2:1 on the day, with volume running at 12 times the average daily level.

What Made This Print Different

Advertising revenue hit $625 million, up 74% year-over-year. Gross margin held at 91.5% – up 97 basis points from the prior year, marking seven consecutive quarters above 90%. Adjusted EBITDA margin expanded nearly 1,100 basis points year-over-year to 40%. Free cash flow reached $311 million, representing a 47% free cash flow margin on revenue. Operating cash flow was $312 million, up 145% year-over-year.

Those aren’t vanity metrics. A 91.5% gross margin with a 47% FCF margin means Reddit is printing cash at a rate that most software companies would envy. Adjusted operating expenses came in at $341 million – just 51% of revenue, down sharply from 61% the prior year. That operating leverage is real, and it’s compounding.

Average revenue per user came in at $5.23, up 44% year-over-year, ahead of analyst estimates of $4.81. U.S.-specific ARPU was $9.63 versus an $8.53 consensus estimate. U.S. weekly users approached 200 million. Global daily active uniques reached 126.8 million, up 17%, while weekly active uniques hit 493.1 million, up 23%. International revenue grew 76% year-over-year – slightly outpacing the 67% domestic growth rate – which matters because Reddit’s non-U.S. monetization has historically lagged. That gap is compressing faster than most models expected.

Search weekly active users grew 30% year-over-year. What’s interesting is that this positions RDDT as both a social platform and a structured data asset in the AI licensing economy. The company ended Q1 with $2.8 billion in cash and investments, and a $1 billion share repurchase program that still has $995 million unused. They have capital, and they have optionality on how to deploy it.

Slight tangent, but it matters: Reddit’s “Other revenue” category – which includes data licensing to companies like Google and OpenAI – grew 15% year-over-year to $39 million. That number is still small relative to the ad business, but the structural argument here isn’t about current revenue. It’s about what Reddit’s corpus of human-generated conversation is worth as a training and retrieval asset as AI models continue scaling. CEO Steve Huffman has openly framed Reddit as “the fuel” for AI. That framing is doing work in the analyst community even if the licensing line hasn’t gone vertical yet.

The Guidance Picture – Where It Gets Complicated

Q2 guidance came in at $715–$725 million in revenue, representing 43%–45% year-over-year growth. Adjusted EBITDA guided to $285–$295 million, with a 40% margin at midpoint. Here’s the part the original coverage often got wrong: the Q2 revenue range actually came in ahead of the consensus estimate of $712 million – not below it. Some desks flagged the deceleration in growth rate from 69% to ~44% as a concern, and that’s a legitimate read. But the right comparison isn’t Q1 to Q2 in isolation – it’s against what Reddit was lapping. In Q2 2025, total revenues grew 78% and ad revenue grew 84%. That’s the comp they’re running into. Against that backdrop, guiding to 43%–45% growth is not a capitulation. It’s management running a conservative model on a genuinely tough base period.

The adjusted cost basis for Q2 is guided at $430 million – a 29% year-over-year growth rate, lower than prior quarters as the company begins lapping its sales and marketing investments from Q2 2025. Cost discipline is holding.

Across 31 analyst estimates, the consensus price target sits near $216–$225, depending on the aggregator. With the stock trading near $162 post-earnings, that implies roughly 33–39% upside to consensus. Truist raised its target to $265 (Buy), Piper Sandler moved to $215 (Overweight), Raymond James sits at $225 (Strong Buy), and Goldman Sachs – the notable skeptic in the room – raised to $180 while maintaining Neutral. Goldman’s Neutral rating at $180 is the tell: they believe in the business but see limited margin of safety at current multiples. That tension between the bull and neutral cases is exactly where the interesting trade lives.

Options Positioning: Three Structures Worth Watching

Implied volatility has reset post-print, which changes how you structure the next setup. The elevated IV that existed pre-earnings has compressed. What remains is a stock that moved 13% on results and now has to prove the Q2 guide is a floor, not a ceiling.

• Bull case (defined risk): For traders expecting the ad revenue growth rate to sustain through Q2, a call debit spread in the May 22 or June expiration – targeting the $170/$195 range – captures upside while defining premium at risk. The thesis here is that 43%–45% growth guidance, set against a brutal Q2 2025 comp, is sandbagged. If Reddit executes at or above the high end of the range, the multiple re-rates.
• Neutral case: A short iron condor positioned between $140 and $200 takes advantage of post-earnings IV compression, collecting premium while betting the stock consolidates rather than extends in either direction. The risk is a macro catalyst – tariff escalation or a broader digital ad spending pullback – that pushes the stock outside the range.
• Bear case: If the Q2 revenue guidance range ($715–$725M) fails to impress a market that’s been pricing perfection, and if macro ad spending softens under tariff pressure, a put spread in the $145/$130 range defines downside exposure with limited cost. The bear case is not about Reddit’s platform fundamentals – it’s about multiple compression if the market stops rewarding growth-at-any-price narratives.

The one risk that doesn’t show up in the earnings model: insider selling. RDDT insiders have executed 321 sales versus just 4 purchases over the past six months. That’s not disqualifying – executives at high-growth companies routinely diversify – but it’s a data point worth tracking against the bullish analyst narrative. When insiders are selling into strength at 80:1 ratios, the question worth asking is what they know about the ceiling that the price target models don’t.

The Forward Read

Reddit is no longer a speculative social media story. At a 40% EBITDA margin, a 47% FCF margin, $2.8 billion in cash, and seven straight quarters of 60%-plus revenue growth, the fundamentals are doing real work. The company is targeting 100 million U.S. daily active users as a long-term milestone – it currently sits near 54 million – which means the domestic monetization runway is still open, not closed.

What’s not resolved: valuation. With the stock near $162, RDDT trades at a significant premium to the broader market on any traditional multiple. The bull case requires you to believe that 40%-plus EBITDA margins persist, that international monetization continues closing the gap with U.S. ARPU, and that the AI data licensing business eventually becomes a material revenue contributor rather than a strategic footnote. None of those are unreasonable assumptions. But none of them are guaranteed either.

Whether the valuation gives you enough margin of safety at current levels is the only question that actually matters going into Q2. The data supports the business. Whether it supports the price is a different conversation – and one that doesn’t resolve cleanly until July 30, when Q2 numbers are reported.

Tactical Checklist

• Confirmed: Q1 revenue $663M (+69% YoY), ad revenue $625M (+74%), GAAP EPS $1.01 (beat $0.62 consensus by 63%)
• Confirmed: Gross margin 91.5%, EBITDA margin 40% (+~1,100 bps YoY), FCF margin 47% ($311M)
• Confirmed: Q2 guidance $715–$725M revenue (ahead of $712M consensus), EBITDA $285–$295M at 40% margin
• Corrected: Stock closed +13.1% at $166.48, not the ~14% figure widely cited in initial coverage
• Watch: Q2 2025 comp is brutal – 78% total revenue growth, 84% ad growth – making 43–45% Q2 2026 guidance a base, not a ceiling
• Watch: International revenue growing 76% YoY, outpacing U.S. 67% – gap compression accelerating
• Watch: $995M of $1B buyback authorization unused – capital allocation optionality is real
• Watch: 321 insider sales vs. 4 purchases over 6 months – track against guidance delivery at Q2 print on July 30
• Consensus: 31 analysts, average target ~$216–$225; range $149 to $320; Goldman Sachs is the key neutral weight at $180
• Next catalyst: Q2 2026 earnings, July 30, 2026