Q3 results of Reddit Inc. (RDDT, Financial) beat Wall Street estimates thanks in large part to increased user engagement. The company, which went public in March, had its shares rise as much as 43% in New York trade Wednesday, setting a new high. Six times its three-month daily average volume, about 23 million shares had changed hands by noon. Reddit's stock has more than doubled in value since its IPO, surpassing the 12% rise in the S&P 500 during the same period. Reddit estimated Q4 sales between $385 million and $400 million and modified EBITDA between $110 million and $125 million. Both projections outstripped Bloomberg's consensus projections of $87 million and $356.2 million, respectively.
With daily active unique users rising 47% YOY to 97.2 million in Q3, Reddit's ad income increased 41% to $315.1 million. Income from other sources added still another $33.2 million. "Reddit continues to be one of the most visited and trusted sites in the world with opportunities available to us that aren't available to most companies," CEO Steve Huffman said, stressing Reddit's growing impact. U.S. and foreign average revenue per user (ARPU) climbed 12% and 16%, respectively; the company's gross margin rose by 280 basis points to 90.1%. Compared to a loss of $7.4 million a year earlier, net income for the quarter came to $29.9 million. Earnings were $0.16 per share, which exceeded the predicted loss of $0.06 per share. Rising 68% to $348.4 million, total revenue exceeded consensus forecast of $314.83 million.
