Reddit CEO on first earnings report: A lot of things are 'starting to click'

[Music] reddit's first results as a public company surprised a lot of people the company hit profitability for the first time exec teased new products on the way and you got the sense that Reddit the platform is growing up very very fast Steve Huffman Reddit co-founder in CEO joins me now Steve good to see you again it feels like it was just yesterday with the comp with your IPO let's start on growing up fast you know I read the earnings release several times the earnings call and I really came away this is a lot different platform than I think in investors have come to think about it as hey bran good morning um look I think a lot of things are starting to click right now so like in the first quarter we grew Revenue 48% users 37% all-time highs and and as you mentioned uh profitable and because Reddit is such a simple business high margin if you combine that with uh discipline on costs you can see how quickly we can get the profitability and so it's it's I think not just a fun platform but it's a it's a a simple and scalable business as well yeah we have a lot to get to in here Steve but real quick are you spending enough your capex was so low and we hear about you know meta out there spending billions of dollars are you are you investing enough in the platform to support some of the growth we saw in that quarter you know I the number was so small Steve I I I told my team I was like you you know the econom is getting better when uh when people start asking us to spend more again um look at at the moment uh we're trying to do a couple of things there's a lot of stuff uh that I'm very excited about building so beyond the core product we've got our user economy we've got developer platform we've got search a lot of uh I think interesting and fun stuff coming but we're also working towards uh profitability so right now we're there on an uh adjusted evida basis uh the next milestone for us is Gap profitability and so I think we're in a good spot we're basically building everything that I'm very excited about building but also uh getting closer and closer to those business Milestones is just given the strength of the the first quarter Steve is Gap profitability this year look hard to say um we grew Revenue uh five times faster than costs uh in this past quarter the commitment we've made as a management team is about uh Revenue twice as fast as cost so it's just a matter of time right a high margin so 88% in q1 and uh cost discipline that's the path the profitability um the ex timing we'll see but uh I think we're on the right track and then the advertising business uh was strong how sustainable is that and how you know why is that growth happening look uh I think the the thing about Reddit is it's communities and those communities represent every interest and hobby and passion imaginable which means in addition to being fun for users basically every company's customers are on Reddit somewhere and our ads technology is getting better and better and so if you're a company trying to reach your customers and know that 30% of uh our users are not on Instagram or Facebook or Tik Tok other big advertising platforms uh you can find as a company you can find your customers uniquely on Reddit uh often in a moment where they're talking about your product or brand or vertical and so I think that creates pretty incredible opportunities earlier this week uh Steve I caught up with a Pinterest coo Bill ready and a lot of conversation about making that platform shopable now that's a number that's a word you mentioned on your call do you want to make it where I'm directly buying things from Reddit well uh I I think in many cases well one of the things I joke about but it's not really a joke the most fun part about picking up a new hobby is buying all the new gear and so every hobby every purchasing decision whatever you're into or going through is on Reddit and so I think it's only natural to uh to be able to connect the dots like that so uh you know first step is is is get the right customers on Reddit um uh advertising customers and then we just continue to chip away at our road map of making it easier and easier to find what you're looking for or even transact like you suggest what could you tell us about the new user interface coming this year so one of the most important things we've been doing and I think what's really driving the user growth that we've been seeing is we've just been focused on making Reddit easier to use I've long said everybody has a home on Reddit that is your home what you're interested in is on Reddit the challenge to us from a product point of view is are we helping users be successful in finding that home and over the last year we've gotten much better at that and as we look forward uh our day-to-day work is really making ready easier to use easier on their eyes more effective at at finding your home on Reddit so if you've been using Reddit a long time I think you should be excited at all of the think quality of life improvements that are coming is there another Google like deal for for AI for Reddit to be had and just in terms of I guess notoriety and dollar amount I think the potential is there so uh reddit's public content is really valuable and we are uh in a situation right now where we're basically the only platform that is still open everybody else has closed off and we believe in an open and interconnected internet um but we also need to be considered about where our content goes and what it's used for but Reddit uh has two decades of human conversation about pretty much any interest and topic imaginable and it's up to date and it's relevant and so I think if you are in the search business or you are in the AI business which I think of as like search 2.0 then you I think basically can't be competitive without uh access to Reddit content lastly Steve I like how you ran the earnings call you took some uh look like user questions but tell me if I have this right you did eight practice earnings calls before you went public I me it seems like you're just a really well-prepared management team even though this was your first quarter as a public company you know that was one of those things that that worked out so we thought we were going to go public way back in 22 uh almost two years to the day from when we actually went out and so we did one practice earnings call with the analysts from our like Syndicate Banks uh and then we just delayed our IPO for two years and so we ended up doing eight calls and did the whole um kind of public company cycle right board meeting close the books board meeting earnings follow-ups all of that uh and that was really great practice uh and and so I'm actually really thankful for how that worked out and my suggestion would be for any company that's thinking about going out try to get ahead of these processes or get a few reps under your belt sooner rather than later because I think it really helped us you know you and I Steve we both look I don't know let's say early 30s but the bottom line is this uh we're Veterans of the battles despite what we look like on cameras uh Steve Huffman Reddit co-founder and Co always good to see you we'll talk to you soon Brian thank you be well everybody you bet you

Channel: Yahoo Finance

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Id: 6qhS9muLFNY

Length: 7min 21sec (441 seconds)

Published: Thu May 09 2024