(Reuters) -Reddit forecast fourth-quarter revenue above Wall Street estimates on Tuesday, helped by its AI content licensing deals and strong digital advertising spending.
Shares of the San Francisco-based company, popular for its user-led communities known as subreddits, rose 22% in extended trading.
Reddit’s quarterly results, third after going public in March, stoke confidence that more advertisers are turning to the platform, driven by initiatives including translation in other languages using machine learning to tap new users.
The company’s content licensing deals with Alphabet’s Google and Microsoft-backed OpenAI for training their AI models have also been boosting its revenue, analysts have said.
The social media platform also has deals with sports leagues with the likes of National Basketball Association, which are helping the company to bring more sports content on the platform and attract ad dollars.
Reddit expects fourth-quarter revenue to be between $385 million and $400 million, compared with analysts’ average estimate of $357.9 million, according to data compiled by LSEG.
The company’s daily active unique visitors increased 47% to 97.2 million in the third quarter ended Sept. 30, while its global average revenue per user (ARPU) increased 14% to $3.58.
Revenue rose 68% to $348.4 million in the quarter, beating analysts’ estimate of $312.8 million.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Maju Samuel)
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