Content licensing agreements with AI companies like Google and OpenAI now contribute approximately 10% of Reddit's total revenue, according to COO Jen Wong. Despite this new revenue stream, Reddit remains committed to its advertising business, which saw a 71% year-over-year increase in fourth-quarter revenue. The company has secured two significant licensing deals, one valued at $60 million with Google, while ensuring partnerships align with its user privacy and representation standards.
Advertising continues to be the primary revenue source, generating $427.7 million in Q4, with a 60% year-over-year growth. Reddit's recent initiatives, such as AMA Ads and Pro Trends, aim to attract mainstream brands. The acquisition of Memorable AI in August has bolstered ad targeting and user engagement, leading to doubled click and conversion volumes year-over-year.
Reddit's user base is also expanding, with weekly active uniques increasing 42% year-over-year to over 379 million. Average revenue per unique visitor rose to $4.21, marking a 23% increase from the previous year. Logged-in users, which grew 27% year-over-year, are deemed essential to Reddit's business model.
Looking ahead, Reddit plans to enhance its machine learning and AI capabilities, focusing on automation for advertising performance. The company aims to integrate more data signals to refine its advertising tools, leveraging community insights for better targeting.
For the full year, Reddit reported $1.3 billion in revenue, a 62% increase, with ad sales reaching $1.2 billion—a 50% growth from 2023. However, the company has not yet achieved annual profitability, reporting a net loss of $484.3 million for the year, despite a $71 million net income in Q4, an improvement from the previous year.
