Reddit is eyeing more mergers and acquisitions in the future
What's the story
Reddit, the popular online forum, is planning more mergers and acquisitions (M&A) in the near future. The company's Chief Financial Officer Andrew Vollero revealed this during their fourth-quarter earnings call. He said they are looking for businesses that could either leverage Reddit's scale or help expand its user base. Vollero emphasized they are "looking to buy capabilities, technologies, and companies."
Integration strategy
Not overly focused on scaled opportunities
Vollero further clarified during the call that they aren't overly focused on scaled opportunities but rather see them as a spectrum. He reiterated their interest in capabilities and technologies that could add to their business, something they've been successful with in the past. Vollero highlighted Reddit's adtech team's skill at integrating acquired technologies into their existing systems instead of building them from scratch.
Past success
CFO warns against ruling anything out
Vollero credited these strategic acquisitions for improving Reddit's monetization capabilities as an ad-supported business. He warned that while adtech acquisitions have worked in the past, they aren't ruling anything out. This means they could also consider companies that could deliver when added to a company of its size. The CFO said these deals save them a lot of time and provide a proven product.
Financial health
Strong earnings report for Reddit
In the last quarter, Reddit reported strong earnings with $726 million in revenue. Of this, $690 million came from ads. The company also witnessed a 19% year-over-year increase in its global daily active unique users to 121.4 million. Its earnings per share of $1.24 beat estimates, further highlighting the company's strong financial performance and user growth potential.
AI focus
Growing revenue opportunity from AI
Reddit also sees a growing revenue opportunity from its AI search product in the future. This raises the question if the firm is looking to this area for M&A as well. Reddit has been ramping up its AI investments recently, including an AI search engine. The company has acquired several start-ups in recent years, including adtech players and AI optimization tools like Memorable AI in August 2024.