Reddit goes mainstream and reports first profitable quarter

Shares of Reddit (RDDT) are rising after third-quarter results beat analysts' estimates and showed the company had achieved profitability. Yahoo Finance Editor-in-Chief Brian Sozzi sits down with Reddit CEO Steve Huffman to discuss the results.

“The story with Reddit is pretty simple. Yes, we're very proud of the quarter we just reported, but ultimately our strategy over the last few years has been to make Reddit better, faster, more secure and easier to use, and that's driving growth. And then growth means more reach for advertisers,” Huffman tells Yahoo Finance.

The CEO says: “One of the most important things to understand about Reddit is that it is a simple platform. Communities and conversations. It’s a simple business model…We connect companies with their customers in an environment where they are likely to talk about relevant products and decisions.”

“What's unique about Reddit is it's really the most human place on the internet, beyond the consumer product, which I think is unique, but what's unique about the business is that it's very easy to do with such high gross margins and our ability to grow that .” Business with moderate cost growth.”

Huffman says Reddit as a platform has entered an “era of mainstream” by improving the product's usability. He notes: “One of our focuses next year will be search, which is a nice opportunity because it's one of the few ways that can both improve the experience for new users and help them find their home on Reddit more efficiently “But it's also fun.” The core experience for core users gets even better… And in the long run it's also a monetization opportunity.”

Reddit has signed deals with ChatGPT maker OpenAI and Alphabet's (GOOG, GOOGL) Google to license its content for training artificial intelligence (AI) models. Huffman says, “Ultimately, Reddit's content is what online consumers and large endowment companies want.” He explains that Reddit's willingness to do commercial deals reflects its belief in openness.

As AI technology advances, so does the discussion about regulation. Huffman says: “The first thing I want to establish in this discussion is that this technology is incredibly important to humanity and will create a tremendous amount of opportunity and eventual prosperity for everyone… Then it goes to the regulations that we have “We would work for transparency.”

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This post was written by Naomi Buchanan.