Gagan Ghotra

NOTE – the content on this page is extracted from Reddit’s Q2 2024 Letter to Shareholders using Google’s Gemini 1.5 Pro Large Language Model which can be accessed as a chat interface through AI Studio.

This blog post just have key points mentioned from page 1 to 9 – after that there is a lot of information about financials of Reddit as a business. I’m ONLY interested in technology & product side of Reddit’s business that’s why I’m not including that financial info in this blog post – if your interested in knowing it I would recommend reading the PDF starting from page 10.

User Growth and Engagement

• Record users: Daily Active Users (DAUq) hit an all-time high, averaging 91.2 million for a 51% year-over-year growth.
• Global reach: International DAUq surged 44% year-over-year, highlighting Reddit’s growing global presence.
• Fastest growth in years: Both logged-in and logged-out users experienced the fastest growth rate in over two years.
• Comments are key: The number of comments viewed reached a new peak, signaling strong user engagement and discussion within communities.

Product and Business Developments

• Machine translation success: Machine translation fueled significant user growth in France, prompting expansion to Spanish, German, and Portuguese.
• Mid-Market & SMB growth: Advertising revenue from mid-sized and small businesses saw over 50% year-over-year growth, demonstrating diversification efforts.
• Full-funnel advertising success: Advertising revenue grew across the entire funnel, with performance advertising leading the charge.

Reddit’s Rise – Engagement, Growth, Global Potential

• Users Turning to Reddit for Search: This speaks to a growing trust in Reddit’s content, positioning it as a potential competitor to traditional search engines.
• 10% Increase in Comments Viewed: Not just users, but engaged users. This is a significant jump in a core metric, showing Reddit’s changes are driving conversation.
• Hundreds of High-Profile AMAs During Pilot: This implies strong early adoption of the improved AMA product, likely attracting brands and raising Reddit’s profile.
• International Growth Outpacing US in Key Markets: France’s success with machine translation is a leading indicator, suggesting huge untapped potential globally.
• Developer Platform in Public Beta, Hundreds Active: Early but promising. This opens the door for user-generated features and a more dynamic Reddit experience.
• Monetisation of Developer Platform Coming: Huge implication – empowers creators, potentially changes Reddit’s content landscape and revenue models.
• Testing Al-Powered Search & Recommendations: Shows Reddit is strategically positioning itself within the evolving search landscape, potentially challenging Google.
• Third-Party Search Negotiations Balancing Openness & Protection: Reddit is taking a stand on data usage, aiming to benefit from its content without exploiting users.

Growth and User Engagement in Europe

• Top 5 Fastest Growing Communities: In the UK, Germany, and Spain, showing Reddit’s rapid international growth is tied to real-time events.
• #1 Most Viewed Subreddit in the Netherlands: During the finals, indicating Reddit’s potential to capture massive, geographically concentrated audiences.
• Used “Full Product Toolkit” for Engagement: This goes beyond basic posting, using AMAs, live chats, and even community funding to fuel participation.
• Nearly Half a Million Daily Visitors: For r/euro2024, with over 80% from international markets, proving the platform’s draw for global sporting events.
• Developer Platform Used for Scoreboards: Again, shows sophisticated engagement, letting fans build tools within Reddit rather than just discussing externally.

Olympics 2024

• Olympics Committee Actively Engaging: Through AMAs and original content, showing even major organisations see Reddit’s value for direct community reach.
• r/olympics Subscriber Growth More Than Doubled: This indicates the Olympics’ natural fit for Reddit, likely due to its international and passionate fanbase.
• Developed Olympics-Themed Awards: This shows a deeper level of integration than before, gamifying the discussion and likely driving revenue through micro transactions.

Record-Breaking User Traffic – Q2 2024

• Q2 DAU Grew 51% Year-over-Year: Not just an increase, but accelerating growth, showing their strategies are paying off.
• 342 Million WAU: This massive number demonstrates the platform’s wide reach, even among less frequent users.
• Reddit’s Role in Search & Discovery Increasing: This positions them as more than just a discussion forum, but a potential destination for finding information.

As per Reddit
DAU – Daily Active Users is defined as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a 24-hour period.

Similar to this
WAU – Weekly Active Users is defined a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a trailing seven-day period

International Growth Outpacing US

• International DAUq Up 44% Year-over-Year: This is HUGE. Shows global markets are where the most potential lies, validating their localisation efforts.
• UK, India, France, Philippines Leading the Charge: Diverse markets with large populations, indicating a broad appeal beyond just English-speakers.
• Machine Translation Expansion: After France’s success, rolling out to Spanish, German & Portuguese targets millions more users, suggesting ambitious growth plans.

Developer Platform Driving International Engagement

• Sports Subreddits Utilising Custom Features: This shows niche communities are finding unique value, making Reddit stickier for specific interests.
• r/euro2024 & r/ipl Examples: Highlights Reddit’s appeal not just for discussion, but as a place to follow live events and participate in real-time.

Conversations Drive Engagement & Value

• 47% of screenviews on posts & comments: This is HUGE. It shows most user attention is on engaging with each other, not just passively consuming content.
• High-intent users seeking information: This makes conversations valuable to advertisers, as people aren’t just browsing, they’re actively looking for answers/opinions.
• New ad formats & discovery tools being implemented: This shows Reddit is directly monetizing its core strength, and making it easier for brands to reach the right people.

Speed & Ease-of-Use Improvements

• Near-instant comment loading & shortcuts: Addresses a past weakness, making the platform feel snappier and encouraging users to go deeper into discussions.
• 10%+ increase in comments viewed: Direct result of these changes, proving their effectiveness. More comments = more engagement = more data for Reddit.

Revamped Ask Me Anything (AMA) Feature

• Easier to host, schedule, and participate: Lowers the barrier for everyone involved, likely leading to more AMAs, which attract both users and media attention.
• Over 100 communities using it, 200+ high-profile AMAs: Shows strong adoption, likely attracting bigger names in the future as it becomes the place for this format.

Focus on Al for Deeper Dives

• Plans for Al-powered features within conversations: This is where it gets interesting. Imagine AI summarizing long threads, or surfacing the most relevant replies to your questions.

Advertising Growth and Dynamic Product Ads

Advertising Growth & Diversification

• Fastest Revenue Growth in Two Years: This overall success allows for more investment in things like the conversation features mentioned previously.
• International Revenue Up 49% Year-Over-Year: Ads are working globally, not just in the US, which is key for a community-based platform expanding to new markets.
• Mid-Market & SMB Growth Accelerating: This shows Reddit is attracting not just huge brands, but the businesses that make up a large portion of ad spending overall.
• Full-Funnel Performance Strong: Meaning ads work at all stages (awareness, consideration, purchase). This is important for attracting diverse advertisers with different goals.
• EMEA Region a Standout: Europe, Middle East, Africa growth suggests Reddit’s format translates well beyond its initial markets, good sign for long-term prospects.

Dynamic Product Ads (DPA)

• Aiming to Capitalize on User Purchase Decisions: Many users are already on Reddit discussing products. This is about turning that intent into directly measurable sales.
• DPAs Pull From Advertiser’s Existing Catalog: Lowers barrier to entry for brands, as they don’t need to create Reddit-specific ads, just feed their data into the system.
• Early Results Show 1.9x Higher ROAS: This is HUGE for advertisers. If consistent, DPAs become not just an option, but potentially the preferred way to advertise on Reddit.

Reddit’s Content and Data Licensing

• “Reddit’s authentic, human conversations and content cannot be found anywhere else on the internet”
  
• “Took additional steps in Q2 to protect and control where and how content is used”
  
• “Strategically exploring data licensing agreements” ranging from marketing analysis to large tech companies: This isn’t just about selling raw data dumps. Reddit is targeting specific industries where their conversation insights are most valuable.
  
• “Exploring go-to-market strategies for new verticals, including the financial services industry”
  
• New partnerships with OpenAI and Sprinklr

Conclusion

That’s it
Here is one of my favourite Reddit avatar.