RDDT | Earnings Review — Q2 2026
Verdict: DECELERATING on revenue growth, ACCELERATING on profitability. Q2 2026 is a clean commercial double beat and an eighth consecutive quarter above 60% revenue growth — but the second derivative has turned negative, and management’s own Q3 guide (~+48% YoY) ends the ≥60% streak on a guided basis.
Print: Revenue $804.9M (+61.1% YoY vs $499.6M; +10.1% vs FMP street $731.0M; +11.0% above prior guide high $725M). Advertising $761.6M (+63.9% YoY). Adj. EBITDA $342.8M at 42.6% margin (+920 bps YoY vs 33.4%). GAAP diluted EPS $1.25 (+178% YoY vs $0.45; +31.7% vs FMP $0.949). Net income $252.8M.
Guidance: Q3 revenue $860–870M mid $865M (+47–49% YoY vs Q3'25 $584.9M); adj. EBITDA $385–395M mid $390M (~45% margin). Guide mid sits ~+4.4% above pre-print FMP quarterly cons $828.4M. No company FY revenue/EPS guide; SBC % of rev cut to low-to-mid teens (from high teens); dilution targeted at lower end of 1–3%.
Tone: Commercially bullish (ads/Max/ARPU, Cannes demand, 50% long-term adj. EBITDA margin goal) and more defensive on users (product DAU gains offset by search-referral decline; late-quarter volatility; ending logged-in/out DAU split after Q2).
Contradictions (4 material): Search framed as non-core yet fully offsets product DAU gains; Q1 minimized algorithm noise then Q2 made it the user bridge; login split dropped while quality = app/direct; “product working” vs sequential U.S. DAU tick-down.
Forward catalysts: Q3 execution vs $860–870M; search-referral / U.S. DAU quality; Google/OpenAI AI-license renegotiation; Max → SMB primary onboarding; shopping listing ads GA.
| Revenue | $804.9M (+61% YoY, +10.1% beat) | Advertising | $761.6M (+64% YoY, 94.6% of rev) |
| GAAP dil. EPS | $1.25 (+178% YoY, +31.7% beat) | Adj. EBITDA | $342.8M (42.6% margin, +920 bps YoY) |
| Global DAUq | 130.3M (+18% YoY); U.S. 53.2M (−0.6% QoQ) | U.S. ARPU | $11.85 (+51% YoY) |
| Q3 rev guide mid | $865M (~+48% YoY) | Q3 AEBITDA guide mid | $390M (~45% margin) |
| vs Q2 guide high | Rev +11% / AEBITDA +16% | L4 beat rate | 100% rev / 75% EPS |
| L8 beat rate | 100% rev / 88% EPS | Growth trajectory | High-plateau fade (−798 bps into Q2) |
Consolidated quarterly trend
| Metric | Q3'23 | Q4'23 | Q1'24 | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26 | |---|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:| | Revenue ($M) | 207.5 | 249.8 | 243.0 | 281.2 | 348.4 | 427.7 | 392.4 | 499.6 | 584.9 | 725.6 | 663.4 | 804.9 | | Rev YoY % | — | — | +48.4 | +53.6 | +67.9 | +71.3 | +61.5 | +77.7 | +67.9 | +69.7 | +69.1 | +61.1 | | GAAP GM % | 87.3 | 88.4 | 88.6 | 89.5 | 90.1 | 92.6 | 90.5 | 90.8 | 91.0 | 91.9 | 91.5 | 91.3 | | Adj. EBITDA ($M) | -6.9 | 23.2 | 10.0 | 39.5 | 94.1 | 154.3 | 115.3 | 166.7 | 236.0 | 327.0 | 266.0 | 342.8 | | EBITDA mgn % | -3.3 | 9.3 | 4.1 | 14.0 | 27.0 | 36.1 | 29.4 | 33.4 | 40.3 | 45.1 | 40.1 | 42.6 | | EBITDA mgn YoY (bps) | — | — | — | — | +3033 | +2679 | +2527 | +1932 | +1334 | +899 | +1071 | +922 | | GAAP dil. EPS ($) | — | — | -8.19 | -0.06 | 0.16 | 0.36 | 0.13 | 0.45 | 0.80 | 1.24 | 1.01 | 1.25 | | GAAP NI ($M) | -7.4 | 18.5 | -575.1 | -10.1 | 29.9 | 71.0 | 26.2 | 89.3 | 162.7 | 251.6 | 204.0 | 252.8 |
Absolute revenue — 12 quarters ($M)
Revenue YoY growth — 8 quarters
Advertising vs Other + engagement KPIs
| Driver | Q3'23 | Q4'23 | Q1'24 | Q2'24 | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26 | |---|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:|---:| | Advertising ($M) | 202.4 | 246.8 | 222.7 | 253.1 | 315.1 | 394.5 | 358.6 | 464.8 | 549.3 | 689.7 | 624.7 | 761.6 | | Ads YoY % | — | — | +39.1 | +41.0 | +55.7 | +59.8 | +61.0 | +83.6 | +74.3 | +74.8 | +74.2 | +63.9 | | Other rev ($M) | 5.1 | 2.9 | 20.3 | 28.1 | 33.2 | 33.2 | 33.7 | 34.8 | 35.6 | 35.9 | 38.7 | 43.3 | | U.S. rev ($M) | — | — | 199.8 | 228.1 | 288.0 | 347.7 | 313.9 | 408.8 | 479.6 | 583.3 | 525.6 | 638.1 | | U.S. YoY % | — | — | — | — | — | — | +57.1 | +79.2 | +66.5 | +67.8 | +67.4 | +56.1 | | Intl rev ($M) | — | — | 43.2 | 53.1 | 60.4 | 80.0 | 78.5 | 90.8 | 105.3 | 142.3 | 137.9 | 166.8 | | Intl YoY % | — | — | — | — | — | — | +81.7 | +71.0 | +74.3 | +77.9 | +75.6 | +83.7 | | U.S. DAUq (M) | — | — | — | — | — | — | — | 50.3 | 51.6 | 52.5 | 53.5 | 53.2 | | Intl DAUq (M) | — | — | — | — | — | — | — | 60.1 | 64.4 | 68.9 | 73.3 | 77.1 | | U.S. ARPU ($) | 5.27 | 5.51 | 4.77 | 4.94 | 5.88 | 7.04 | 6.27 | 7.87 | 9.04 | 10.79 | 9.63 | 11.85 | | U.S. ARPU YoY % | — | — | — | — | +11.6 | +27.8 | +31.4 | +59.3 | +53.7 | +53.3 | +53.6 | +50.6 | | Intl ARPU ($) | 1.14 | 1.34 | 1.10 | 1.24 | 1.32 | 1.67 | 1.34 | 1.73 | 1.84 | 2.31 | 2.02 | 2.26 |
Driver read: Ads are still ~94.6% of revenue and grew +63.9% YoY to $761.6M. Growth mix is ARPU > DAU: global DAU ~130.3M (+18% YoY) while global ARPU ~$6.18 (+36%). U.S. ARPU hit $11.85 (+51% YoY); international revenue +84% YoY on DAU scale. U.S. DAU is essentially flat sequentially (53.5 → 53.2) — monetization, not user adds, is carrying U.S. dollars.
Annual trend + forward
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026E (FMP) | |---|---:|---:|---:|---:|---:|---:| | Revenue ($M) | 484.9 | 666.7 | 804.0 | 1,300.2 | 2,202.5 | 3,230 | | Rev YoY % | — | +37.5 | +20.6 | +61.7 | +69.4 | ~+47 | | Advertising ($M) | 471.8 | 652.6 | 788.8 | 1,185.5 | 2,062.5 | — | | Adj. EBITDA ($M) | 30.0 | −108.4 | −69.3 | 298.0 | 845.1 | — | | EBITDA mgn % | 6.2 | −16.3 | −8.6 | 22.9 | 38.4 | — | | GAAP dil. EPS ($) | −2.47 | −2.77 | −1.54 | −3.33 | 2.62 | 4.96 |
Three trends jump off the table:
- Revenue growth is decelerating from the peak but still exceptional. Same-quarter YoY path last eight prints: +67.9% → +71.3% → +61.5% → +77.7% → +67.9% → +69.7% → +69.1% → +61.1%. Q2'26 is the 8th consecutive quarter above 60% but ~800 bps below the recent mid-60s/low-70s plateau.
- Gross margin stable-to-slightly-up at elite levels. GAAP GM 91.3% vs 90.8% in Q2'25 (~+45 bps YoY). Structural 90%+ GM intact.
- Profitability is still accelerating hard. Adj. EBITDA 342.8 (+106% YoY); margin +920 bps YoY to 42.6%. GAAP EPS +178% YoY. Rule-of-40+ style score (rev growth + adj. EBITDA margin) still >100 for the 5th straight quarter.
Q2 2026 was a double beat of large magnitude. Revenue +$73.9M / +10.1% vs FMP; GAAP diluted EPS +$0.30 / +31.7%. Also crushed company guide high end: rev +11.0%, adj. EBITDA +16.2%. Pattern remains Consistent beater on revenue (L8 100%, L4 100%); near-consistent on EPS (L4 75% after sole Q3'25 miss).
Heatmap (last 8 quarters)
| Metric | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | ★Q2'26★ |
|---|---|---|---|---|---|---|---|---|
| Revenue vs cons. | B +11.1% | B +5.4% | B +6.2% | B +17.4% | B +7.0% | B +9.0% | B +9.1% | B +10.1% |
| EPS vs cons. | B | B | B | B | M −23% | B +32% | B +78% | B +32% |
| Rev actual ($M) | 348 | 428 | 392 | 500 | 585 | 726 | 663 | 805 |
| Rev YoY | +68% | +71% | +61% | +78% | +68% | +70% | +69% | +61% |
Green = beat. Red = miss. ★ THIS quarter double beat (rev +10.1%, EPS +32%). Perfect L8 revenue track record; sole L4 EPS miss was Q3'25.
This quarter vs consensus and company guide
| | Consensus (FMP) | Actual | Variance | Result | |--|-----------------|--------|----------|--------| | Revenue | $731.0M | $804.9M | +$73.9M / +10.1% | BEAT | | GAAP dil. EPS | $0.949 | $1.25 | +$0.30 / +31.7% | BEAT | | Rev vs guide high | $715–725M | $804.9M | +11.0% vs high | Beat high | | AEBITDA vs guide high | $285–295M | $342.8M | +16.2% vs high | Beat high |
| Window | EPS beat rate | Revenue beat rate | Notes | |--------|---------------|-------------------|-------| | L4 | 3/4 = 75% | 4/4 = 100% | Sole L4 EPS miss: Q3'25 | | L8 | 7/8 = 88% | 8/8 = 100% | Perfect L8 revenue | | Post-IPO proxy (n=10) | 9/10 = 90% | 9/10 = 90% | Only rev miss: early Q2'24 |
Magnitude: Revenue beat magnitude stable-to-slightly improving in the high-single to low-double-digit range. EPS still a large beat (+32%) but normalizing vs Q1'26’s +78% blowout as consensus base catches up. Vs guide magnitude stays large — no evidence management is “catching” their own guides.
Management variance story: Ads engine (pricing + impressions), Max automation, scaled channel doubled, active advertisers >70% YoY — explicitly decoupled from search-referral volatility. Direct/app users “worth multiples” of drive-by traffic.
Headline: Q3 guide is a strong absolute step-up (rev mid $865M, adj. EBITDA mid $390M / ~45% margin) and sits above pre-print street, but guided YoY growth decelerates into the high-40%s after eight straight quarters of ≥60% actuals. Chronic ~8–12% revenue guide beats remain the pattern.
New Q3'26 guidance
| Metric | Guide low | Guide high | Mid | Implied YoY | |--------|-----------|------------|-----|-------------| | Revenue ($M) | 860 | 870 | 865 | +47% to +49% vs Q3'25 $584.9M | | Adj. EBITDA ($M) | 385 | 395 | 390 | +63% to +67% vs $236.0M | | Adj. EBITDA mgn | ~44.8% | ~45.4% | ~45% | ~+470 bps YoY vs 40.3% | | GAAP EPS | Not guided | — | — | FMP Q3 cons ~$1.25–1.27 | | SBC + taxes (Q3) | $140M | $155M | $147.5M | Elevated QoQ (vesting + refresh) | | FY SBC % of rev | Low to mid-teens | — | — | Lowered from high teens | | FY dilution | Lower end of 1–3% | — | — | Before buybacks |
Waterfall — revenue framing
| Step | Revenue ($M) | Δ vs prior step |
|---|---|---|
| Q2 prior guide mid (issued Q1) | 720 | — |
| Q2 actual | 805 | +85 |
| Q3 FMP consensus (pre-print) | 828 | +23 vs Q2 actual |
| Q3 new guide mid | 865 | +37 vs cons / +60 vs Q2 |
| Q3'25 actual (YoY base) | 585 | Guide mid +280 YoY |
Guide credibility — multi-quarter track record
| Issued in | Guide for | Rev mid | Actual rev | Beat vs mid | Beat % | |-----------|-----------|---------|------------|-------------|--------| | Q2'26 | Q3'26 | 865 | TBD | — | — | | Q1'26 | Q2'26 | 720 | 804.9 | +84.9 | +11.8% | | Q4'25 | Q1'26 | 600 | 663.4 | +63.4 | +10.6% | | Q3'25 | Q4'25 | 660 | 725.6 | +65.6 | +9.9% | | Q2'25 | Q3'25 | 540 | 584.9 | +44.9 | +8.3% | | Q1'25 | Q2'25 | 420 | 499.6 | +79.6 | +19.0% |
Adj. EBITDA beats are larger in % terms (Q2'26 +18% vs mid; prior quarters +17–24%). Operating leverage on upside revenue is real.
Trajectory — reported vs guided YoY
| Period | Rev YoY | Type | Adj. EBITDA mgn | Type | |--------|---------|------|-----------------|------| | Q1'26 | +69% | Reported | 40.1% (+1,070 bps) | Reported | | Q2'26 | +61% | Reported | 42.6% (+920 bps) | Reported | | Q3'26 | +47–49% | Guided | ~45% (~+470 bps) | Guided |
Guided revenue growth steps down ~1,300 bps from Q2 actual (+61% → +48%). First guide into the 40s after a long ≥60% actual streak. If history of ~10% guide beats repeats, realized Q3 YoY could land closer to mid/high-50%s — still a deceleration vs 60%+, but less severe than the guide headline.
Tone shift: Commercially stable-to-up; user narrative more defensive (search-referral vocabulary new vs Q1). SBC/dilution messaging more shareholder-friendly. ~$235M buybacks in Q2; ~$760M auth remaining.
Window: Q3'24 → Q2'26. Accel (bps QoQ) = current-quarter YoY rate minus prior-quarter YoY rate.
| Metric | Q3'24 | Q4'24 | Q1'25 | Q2'25 | Q3'25 | Q4'25 | Q1'26 | Q2'26 | |---|---:|---:|---:|---:|---:|---:|---:|---:| | Revenue YoY % | +67.9 | +71.3 | +61.5 | +77.7 | +67.9 | +69.7 | +69.1 | +61.1 | | Rev Accel (bps) | +1,424 | +338 | −976 | +1,620 | −978 | +174 | −57 | −798 | | EPS YoY % | n.m. | n.m. | n.m. | n.m. | +400 | +244 | +677 | +178 | | Revenue ($M) | 348.4 | 427.7 | 392.4 | 499.6 | 584.9 | 725.6 | 663.4 | 804.9 | | GAAP dil. EPS | 0.16 | 0.36 | 0.13 | 0.45 | 0.80 | 1.24 | 1.01 | 1.25 |
Inflection points
- ① Q2'25 — cycle-high revenue growth (+77.7% YoY, +1,620 bps accel). Peak of the post-IPO reacceleration; absolute revenue crossed ~$500M.
- ② Q1'25 — softest print before the peak (−976 bps to +61.5%). Sequential pause, not a demand break.
- ③ Q2'26 — clearest deceleration of the recent run (−798 bps to +61.1%). Still 8th consecutive quarter of >60% growth, but YoY has rolled off the +69% plateau. Q3 guide of 47–49% YoY implies the streak ends on a guided basis.
- ④ Q1'26 EPS YoY spike (+677%) then Q2 cool to +178%. Easy-base artifact; absolute EPS still rose QoQ ($1.01 → $1.25) and more than doubled YoY.
Plain-English read: Durable high-growth plateau with late-window deceleration — not a demand cliff. Shape is a high plateau with two peaks (Q4'24 +71%, Q2'25 +78%) and two soft spots still above 60% (Q1'25, Q2'26). Trajectory over absolutes: the second derivative has turned negative, and management’s own guide confirms further step-down. Tougher-comp / scale story, not ad-demand failure.
| Rank | Catalyst | Timing | Directional impact if favorable | Horizon | |-----:|----------|--------|----------------------------------|---------| | 1 | Search referral path + U.S. DAU quality | Ongoing / Q3 print | Multiple re-expansion if product-driven direct/app DAUs offset search | Q3 / ongoing | | 2 | Q3 guide delivery ($860–870M rev / ~45% AEBITDA) | ~2026-10-29 | Confirms commercial machine independent of DAU noise | Near-term | | 3 | Google / OpenAI (and other) AI license restructure | YE26–1H27 | Other revenue step-up + strategic validation | Medium | | 4 | Max → SMB primary + shopping GA | 2H26–2027 | Sustains ARPU / ads growth into tougher comps | Multi-quarter | | 5 | Feed / retention product milestones | Multi-year | Credible path to 100M U.S. / 1B global DAU | Long-dated |
Commercial catalysts already working and above prior Street: Max advertisers >60% QoQ, Max revenue >150% QoQ; DPA / app install each >2× YoY; conversions >100% YoY; active advertisers >70% YoY; scaled channel doubled; intl rev +84% YoY.
Stock hinges on: search-referral / U.S. DAU quality and AI-licensing renegotiation — the catalysts management stresses that Street still disputes or under-credits. Disclosure change (no logged-in/out DAU split starting Q3) reduces visibility into the exact pain point.
Risks that reverse catalysts: AI Overview / zero-click intensifies; licensing stalemate; U.S. DAU stagnation; disclosure fog; competitive ad-cycle de-rating.
Scorecard: 10 sell-side analysts; 19 discrete sub-questions; 15 well answered (~79%); 4 deflected (~21%) — all on search-referral magnitude and data-licensing renewals / timing.
| Theme | Quality | Example | |-------|---------|---------| | Ads drivers / Max / SMB / ARPU headroom | Well answered | Champion, Post, Boone — multi-factor commercial color with stats | | Product / feed / retention | Well answered | Josey, Beck — candid “feed behind SOTA”; retention +50% relative unpack | | Marketing ROI / incremental margins | Well answered | Vollero — CAC/retention gate; long-term 50% AEBITDA goal | | Search-referral magnitude | Deflected | Mahaney: “I won’t comment on the magnitude” | | Google/OpenAI licensing continuity & timing | Deflected | Josey, Greenfield, Mahaney — strategy restated, no renewal path |
Pattern for the review: Commercial Qs → high answer quality (supports monetization thesis). User KPI dispute acknowledged, not quantified. Data licensing is the call’s blind spot (three analysts, three non-answers). Sentiment inversion candidate: management asserts product + direct users make the business resilient to search; Street treats U.S. DAU tick-down as existential.
Analyst roster (order): Champion (Piper), Josey (Citi), Greenfield (LightShed), Mahaney (Evercore), Post (BofA), Colantuoni (Jefferies), Beck (Raymond James), Boone (Citizens), Black (DB), Helfstein (Oppenheimer).
transcripts/RDDT_FY2026Q2.txt).Four material management inconsistencies (2 high, 2 medium). Monetization narrative is consistent; search / user-scorecard framing is not.
Huffman: not building for drive-by traffic; direct/app users “worth multiples more”; “that’s not where our business lives.” Same call: product DAU adds were offset by a decline in search referrals, and sequential U.S. DAU softness (~−300k Street figure, unchallenged) became the user problem of a print that also delivered $805M rev / 43% AEBITDA margin. Mix can reconcile economics; it does not reconcile “search is non-core” with “search zeroed out product DAU progress.”
Q1 (Post on Google algorithm): “business as usual… almost never stand out on our traffic long term… nothing further to comment.” Q2 prepared + Q&A: search referrals “choppy… more volatile later in the quarter,” product adds offset by search decline, AI Overviews “yet to make a similar level of positive impact.” Contradiction is in materiality / disclosure weight, not in denying that algorithms move. No bridge that “this time is different in magnitude” when magnitude was requested.
Q4’25 Vollero: logged-in vs logged-out “less of a management focus”; stop reporting after Q2’26. Q2’26 Huffman: business lives with direct/app users; pain is “particularly logged-out web.” Dropping the split right as logged-out search pressure is the market’s core worry reduces auditability of the “mix improving even if total DAU is flat/down” thesis.
Q1: product changes “started to drive growth,” expect “improvements immediately”; DAU is “primary focus,” especially U.S. (50M → 100M). Q2: “product work is working” (retention +50% relative) while U.S. DAU ticked down sequentially. Leading indicators (retention, weeklies >500M) improved; the prioritized headline KPI did not. Core management-quality test into Q3: U.S. DAU inflection while revenue growth decelerates toward the guide.
Bottom line: Internally consistent on monetization and profitability; inconsistent on how much search/logged-out traffic matters relative to the DAU scorecard still called top priority. Highest credibility risk is C-1 + C-2, not the revenue beat.
Macro / ad market
- Advertiser demand healthy, not macro-defensive: 11 of 15 verticals >50% YoY; active advertisers +70% YoY; scaled (mid-market + SMB) doubled; retail and travel particularly strong. No guide language about ad recession or category pullbacks.
- Q1 carry-forward: Partners on shorter (month-to-month) planning cycles under geopolitics, but “no material change in their commitments” — visibility compressed, not spend destroyed.
- Binding macro is distribution: AI-mediated search is volatile and a headwind to referral DAUs industry-wide (publishers/retailers); human-recommendation inventory and performance automation continue to take share of ad budgets.
Named entities
| Entity | Role | Read-through | |--------|------|--------------| | Google | Search distribution, AI Overviews, data licensing | Mixed: still strategic partner; AI Overviews “not yet win-win” for Reddit and publishers/retailers; licensing renewal optionality into 2027 | | OpenAI | Licensing counterparty | Expanding multi-buyer market; not existential to P&L (ads dominate); pricing power may reprice at renewal | | Shopify | SMB commerce integration (catalog + CAPI) | >500 accounts post-GA; bullish for performance shopping ads and RDDT SMB funnel | | Lenovo / DocMorris | Max case studies | 40% higher purchase value (Lenovo); 20% lower CPI (DocMorris) — Max product-market fit | | Other social / PMax / Advantage+ | Competitive automation | Max earlier on S-curve; third-party ROAS studies (Attain/Circana, TransUnion) support share gains |
Synthesis beyond RDDT
- AI Overviews ≠ free lunch for the open web — rare large public platform saying so on an earnings call.
- Ad market healthy at the performance edge (SMB doubling, retail/travel strength).
- Planning cycles shortened (Q1 color), not budgets cut.
- Commerce OS partners (Shopify/Woo) are the SMB acquisition pipe for next-wave performance platforms.
- Data licensing becoming multi-buyer — relevant for any content pure-play negotiating 2026–27 renewals.
| Dimension | Call | |-----------|------| | Print quality | Unambiguous double beat vs street and guide; quality-weighted (growth + leverage) | | Trajectory | Revenue decelerating (−798 bps); profitability still accelerating; Q3 guide embeds further growth step-down | | Management DNA | Consistent sandbag-and-beat on numbers; mixed on user/search disclosure credibility | | What Street disputes | Search/DAU composition durability — not the ads flywheel | | What to watch into Q3 | Guide hit/beat; U.S. DAU stabilize; search volatility; first print without login split; any licensing color |
HOLD reflects trajectory-first judgment: commercial engine remains elite and still beats, but the high-plateau fade is real, the guide confirms it, and management’s user narrative has open contradictions just as the audit trail narrows. Re-rate path is U.S. DAU / direct-mix proof — not another ads beat the Street already models.
Data sourced from Daloopa