Reddit revealed on Thursday that its net loss had decreased to £90.8 million, with revenue growth standing at approximately 21% in 2023.
This disclosure came as the social media company unveiled its IPO filing ahead of its much-anticipated debut on the U.S. stock market in March.
The IPO filing marks a significant milestone for Reddit, almost two decades after its inception.
It presents a crucial test for the platform, which still trails behind social media giants like Facebook and Twitter in terms of commercial success.
According to Reddit’s disclosures, it had an average of 73.1 million daily active users and 267.5 million weekly active users in the final three months of 2023.
The platform boasted over 100,000 active communities and a cumulative total of 1 billion posts.
In its IPO filing, Reddit reported a reduced net loss of £90.8 million for the year ending December 31, accompanied by a revenue surge to £804 million from £666.7 million the previous year.
Reports from Reuters on Wednesday, citing sources, indicated that Reddit, headquartered in San Francisco, had struck a deal worth around £60 million annually with Alphabet’s Google to make its content accessible for training the search engine giant’s artificial intelligence models.
While Reddit was valued at £10 billion in a funding round in 2021, its anticipated valuation for the upcoming share sale remains uncertain.
Reuters previously reported that the company is expected to offer nearly 10% of its shares in the IPO.
The IPO filing revealed that CEO Steven Huffman holds Class B common stock contingent upon Reddit achieving a £5 billion market capitalization valuation post-offering, a target the company is reportedly poised to meet from the outset.
Despite being launched around the same time as Meta (formerly Facebook) and Twitter, Reddit’s user base and growth numbers significantly lag behind its counterparts.
The company has faced challenges in monetizing its platform effectively and has encountered scrutiny over its content moderation policies, which have deterred some advertisers.
Competition for advertising revenue from platforms like TikTok and Facebook further intensifies Reddit’s challenges.
Nonetheless, Reddit has cultivated a dedicated user base, powering notable stock rallies through its message boards, notably in 2021 with meme-stock phenomena involving companies like GameStop and AMC Entertainment Holdings.
Established in 2005 by web developer Steve Huffman and entrepreneur Alexis Ohanian, Reddit has garnered support from prominent investors such as venture capital firm Andreessen Horowitz and Chinese tech giant Tencent Holdings.
Celebrity investor Snoop Dogg is also among its backers.
Having become renowned for its niche discussion groups and voting system, Reddit has endeavored to appeal to younger users through acquisitions like Dubsmash in 2020.
While primarily reliant on advertising for revenue, the company has yet to achieve profitability, as indicated by Huffman in a Reddit post last June.
Reddit confidentially filed for its U.S. IPO in late 2021 but faced delays due to economic conditions and the underperformance of listed technology stocks.
Morgan Stanley and Goldman Sachs are leading the underwriting efforts for Reddit’s IPO, alongside over a dozen other banks.