Reddit Q4 2025: Strong Execution Meets Demanding Expectations
Revenue beats across the board, stock rises 4.5% after-hours, yet Q1 guidance deceleration signals forward concerns. Our four-lens analysis update.
This is an update to our full RDDT analysis and our prior structural risks deep dive
The Numbers That Matter
+70% YoY, 9.2% beat
32% beat vs consensus
+19% YoY
After-hours reaction
The Headline Paradox
Reddit beat every metric that mattered. Revenue of $726M grew 70% year-over-year, beating consensus by 9.2%. Adjusted EPS of $1.24 exceeded expectations by 32%. Daily active uniques hit 121.4 million, up 19% year-over-year.
And the stock rose 4.5% after-hours — a positive reaction validating strong execution. Yet this modest response itself tells a story.
This is what DEMANDING expectations looks like in practice. When a stock is priced for perfection, even beats paired with a positive reaction aren't enough if guidance signals deceleration. Q1 2026 guidance of +52-54% (down from +70% in Q4) showed the growth rate slowing, and the muted after-hours gain reflects forward concerns despite backward-looking strength.
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What Our Prior Analysis Got Right
CONDITIONAL Revenue Durability
We classified revenue as CONDITIONAL — dependent on ARPU efficiency gains outpacing traffic headwinds. Q4 confirmed this: revenue kept growing through the structural transition, with ARPU up 43% YoY. The conditions held. Revenue delivered.
DISCONNECTED Narrative
Data licensing revenue stayed essentially flat at +8% year-over-year. Management pivoted the narrative again — this time from "core business is ads" to "Reddit Answers is our AI play." That's the third AI narrative pivot in three quarters: data licensing essential, then data licensing downplayed, now AI search product. The DISCONNECTED assessment was confirmed.
DEMANDING Expectations
The stock rose 4.5% after-hours — validating execution strength — but this modest reaction to substantial beats confirms our DEMANDING expectations classification. The valuation requires not just beats but sustained acceleration. Q1 guidance (+52-54% vs +70% in Q4) signaled deceleration, tempering enthusiasm despite solid results.
What's New: The DAUq Revelation
External web traffic decline (2022-2025)
DAUq growth YoY (Reddit's own metric)
Our prior analysis flagged a -55% decline in external web analytics as a major risk. DAUq — Reddit's own metric for logged-in daily active uniques — grew +19% year-over-year to 121.4 million.
These numbers are not contradictory. They suggest something specific: users are shifting from Google-dependent web browsing (measured by external analytics) to owned app and logged-in channels (measured by DAUq). Reddit is losing the traffic it never controlled and growing the traffic it does.
Reddit Answers: 15M WAU, 15x Growth
Reddit Answers — an AI-powered search product — reached 15M weekly active users, growing 15x in one year. This could be Reddit building its own search experience to replace Google dependency. Or it could be an engagement feature that never monetizes. The distinction matters enormously.
The $1B Buyback Contradiction
New Buyback Authorization
Insider Personal Sales
Insider Purchases
Reddit announced a $1 billion share buyback program — a meaningful signal of corporate confidence. At the same time, our insider analysis shows $192.7M in personal sales by top executives with zero purchases.
This creates an unusual tension. The company is saying "our stock is undervalued" while the people who know the company best are saying "I'd like less personal exposure." Both actions can be rational simultaneously — a corporate buyback uses company cash, while post-IPO diversification is normal for founders.
But the optics complicate the governance alignment signal. The buyback doesn't cancel out personal selling; it adds complexity to the picture.
Updated Signal Ledger
Here is how our signals changed — and did not change — after Q4 2025 earnings.
Revenue grew +70% YoY; ARPU +43%. DAUq +19% provides new evidence of owned-channel growth. Confidence upgraded to MEDIUM-HIGH, but conditions unchanged.
Data licensing flat at +8% YoY. Third AI narrative pivot in three quarters (data licensing → 'core is ads' → Reddit Answers).
Beat every metric, stock rose 4.5% after-hours. Modest reaction despite beats + Q1 guidance deceleration (+52-54% vs +70%) confirms high bar.
$1B corporate buyback vs $192.7M personal insider sales. Corporate confidence, individual liquidation. Both rational — but not aligned.
Section 230 dependency unchanged. Data licensing legal basis still untested. Active litigation ongoing.
What To Watch
H2 2026 Comps Get Much Harder
Q3 2025 was +74%, Q4 2025 was +70%. Lapping these quarters in H2 2026 means Reddit needs to sustain $700M+ quarterly revenue just to show flat growth. At current deceleration rates, the math gets difficult.
10b5-1 Plan Expirations (Feb-May 2026)
Several insider selling plans expire in this window. Do insiders renew? Let them lapse? Adopt new plans with different parameters? This is more informative than any earnings metric.
Reddit Answers Monetization
15M WAU and 15x growth is impressive engagement. But is it a real product with a monetization path, or an engagement feature that cannibalizes existing ad-supported page views? The answer determines whether the AI narrative pivot is real this time.
Q1 2026 Guidance: +52-54%
The deceleration from +70% to +52-54% is expected given comparisons, but the trajectory matters. If actual results come in below guidance, DEMANDING expectations become even more demanding.
Bottom Line
Reddit continues to execute well. The stock continues to be priced as if "well" is not enough. Q4 2025 was objectively strong — 70% revenue growth, 19% DAUq growth, 32% EPS beat. DAUq data provides genuine new evidence that Reddit is building owned engagement channels.
But the modest +4.5% after-hours gain confirms our prior assessment: at these valuations, beats are table stakes. The market wants acceleration, and Reddit guided for deceleration (+52-54% in Q1 vs +70% in Q4). The narrative continues shifting — data licensing is flat, and Reddit Answers is the new AI story. The $1B buyback adds corporate confidence but does not resolve the governance alignment question.
Investor Posture: HIGHER SCRUTINY — Unchanged. Execution remains strong but structural dependencies and demanding valuation persist. The DAUq evidence is positive but does not resolve the core question: what multiple should this business trade at when growth decelerates to 30-40%?
Read the Full Analysis
Explore the complete four-lens assessment including debate transcripts, evidence citations, and updated monitoring triggers post Q4 2025 earnings.
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