AI-powered growth fuels a nearly 50% rise in monthly users, while partnerships with Google and Openai drive record revenue.

Reddit made history this week, posting its first-ever quarterly profit after two decades in operation, a milestone that has propelled its stock up more than 35% as markets opened on Wednesday. The popular community-driven platform, known for its subreddits covering diverse topics from tech to niche hobbies, achieved a net profit of $29.9 million and brought in a revenue of $348.4 million, marking a 68% year-over-year increase that far surpassed analysts’ predictions.

Fuelled by a surge in user engagement, Reddit’s monthly user base grew by an impressive 47% from the previous year, reaching nearly 100 million active users. CEO Steve Huffman attributes this growth to a recent feature powered by artificial intelligence that translates English posts into French, Spanish, Portuguese, Italian, and German, making the platform more accessible to global users. “We’re excited to see how the AI translation feature has helped users connect across languages and cultures,” Huffman said in a letter to shareholders, noting that Reddit plans to expand this functionality to even more languages in the near future.

AI integration has not only drawn new users but also boosted Reddit’s financial standing through partnerships with major tech players. Licensing agreements with Alphabet’s Google and Microsoft-backed OpenAI to use Reddit’s content in training their language models have played a significant role in driving revenue growth. These deals, alongside a robust increase in digital advertising spending, have helped Reddit forecast even stronger revenue figures for the current quarter, positioning it as a formidable player in the digital space.

Jeremy Goldman, a senior director of briefings at Emarketer, noted the importance of these AI collaborations, likening them to “training wheels on a bike – essential for early momentum but unlikely to fuel long-term growth alone.” He suggested that while these partnerships have been crucial in solidifying Reddit’s current financial gains, the platform will need to continue innovating to maintain its edge.

Reddit’s efforts to diversify its revenue streams also include deals with sports organisations like the NBA, which are bringing more sports content onto the platform and attracting a broader advertiser base. Huffman and his team are optimistic that Reddit’s evolving features and partnerships will sustain momentum and transform it into a profitable and globally influential platform.

The rise in user numbers, combined with strategic collaborations and advanced AI-driven features, seems to have struck a chord with investors and analysts alike. With strong revenue projections for the upcoming quarter, Reddit’s historic achievement underscores the potential of community-driven platforms that leverage AI to enhance user experience and broaden market appeal.