Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


			Page
Report of Independent Registered Public Accounting Firm (KPMG LLP, San Francisco, CA, Auditor Firm ID: 185)			69
Consolidated Balance Sheets			71
Consolidated Statements of Operations			72
Consolidated Statements of Comprehensive Income (Loss)			73
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)			74
Consolidated Statements of Cash Flows			75
Notes to the Consolidated Financial Statements			76

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors

Reddit, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Reddit, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive income (loss), convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of the delivery quantity of ad impressions

As discussed in Note 2 to the consolidated financial statements, the Company generated $1,300 million of revenue for the year ended December 31, 2024. The Company generates the majority of its revenues by delivering ads on the Company’s website and mobile applications. Revenue is recognized after transferring control of the promised goods or services to customers, which occurs when a user clicks on an ad contracted on a cost per click basis, views an ad contracted on a cost per thousand impressions basis, views a video ad contracted on a cost per view basis, or on a fixed fee basis, based on ad delivery over the service period.

We identified the evaluation of the sufficiency of audit evidence over advertising revenue as a critical audit matter. Complex auditor judgment was required in evaluating the sufficiency of audit evidence over advertising revenue due to the proprietary IT system used to capture and track ad delivery used in revenue recognition. Specialized skills and knowledge were needed to test the IT system used for the processing and recording of advertising revenue.

The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over advertising revenue. We involved IT professionals

with specialized skills and knowledge, who assisted in evaluating the design and testing the operating effectiveness of a manual internal control over the Company’s advertising revenue process. We tested the capture and tracking of ad delivery within the Company’s revenue systems by comparing known instances of ads viewed to system information for ads delivered. We performed a software-assisted data analysis to test relationships among certain revenue transactions. For a selection of advertising revenue transactions, we assessed the recorded revenue by comparing the amounts recognized for consistency with underlying documentation, including contract terms, ads delivered, accounts receivables, and subsequent cash received, if applicable. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and extent of the audit effort.

/s/ KPMG LLP

We have served as the Company’s auditor since 2019.

San Francisco, California

February 12, 2025

Reddit, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)


	December 31,
	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	562,092	$	401,176
Marketable securities	1,278,717		811,946
Accounts receivable, net	349,534		245,279
Prepaid expenses and other current assets	33,058		21,286
Total current assets	2,223,401		1,479,687
Property and equipment, net	12,652		14,946
Operating lease right-of-use assets, net	23,249		24,008
Intangible assets, net	25,424		32,147
Goodwill	42,174		26,299
Other noncurrent assets	9,695		19,380
Total assets	$	2,336,595	$	1,596,467
LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	45,423	$	46,514
Operating lease liabilities	6,137		3,707
Accrued expenses and other current liabilities	124,464		83,349
Total current liabilities	176,024		133,570
Operating lease liabilities, noncurrent	20,565		22,040
Other noncurrent liabilities	9,257		287
Total liabilities	205,846		155,897
Commitments and contingencies (Note 11)
Convertible preferred stock, par value $0.0001 per share; no and 86,864,781 shares authorized as of December 31, 2024 and 2023, respectively; no and 73,021,449 shares issued and outstanding as of December 31, 2024 and 2023, respectively; aggregate liquidation preference of $0 and $1,847,993 as of December 31, 2024 and 2023, respectively	—		1,853,492
Stockholders’ equity (deficit):
Preferred stock, par value $0.0001 per share; 100,000,000 and no shares authorized as of December 31, 2024 and 2023, respectively; no shares issued and outstanding as of December 31, 2024 and 2023	—		—
Class A common stock, par value $0.0001 per share; 2,000,000,000 and 189,000,000 shares authorized as of December 31, 2024 and 2023, respectively; 125,001,880 and 7,099,700 shares issued and outstanding as of December 31, 2024 and 2023, respectively	12		—
Class B common stock, par value $0.0001 per share; 140,000,000 and 142,000,000 shares authorized as of December 31, 2024 and 2023, respectively; 55,314,099 and 53,904,204 shares issued and outstanding as of December 31, 2024 and 2023, respectively	5		6
Class C common stock, par value $0.0001 per share; 100,000,000 and no shares authorized as of December 31, 2024 and 2023, respectively; no shares issued and outstanding as of December 31, 2024 and 2023	—		—
Additional paid-in capital	3,331,546		302,820
Accumulated other comprehensive income (loss)	24		814
Accumulated deficit	(1,200,838)		(716,562)
Total stockholders’ equity (deficit)	2,130,749		(412,922)
Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)	$	2,336,595	$	1,596,467

The accompanying notes are an integral part of these financial statements.

Reddit, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)


	Year ended December 31,
	2024		2023		2022
Revenue	$	1,300,205	$	804,029	$	666,701
Costs and expenses:
Cost of revenue	123,595		111,011		104,799
Research and development	935,152		438,346		365,164
Sales and marketing	350,579		230,175		225,078
General and administrative	451,447		164,658		143,822
Total costs and expenses	1,860,773		944,190		838,863
Income (loss) from operations	(560,568)		(140,161)		(172,162)
Other income (expense), net	75,361		53,138		14,234
Income (loss) before income taxes	(485,207)		(87,023)		(157,928)
Income tax expense (benefit)	(931)		3,801		622
Net income (loss)	$	(484,276)	$	(90,824)	$	(158,550)
Net income (loss) per share attributable to Class A and Class B common stock, basic and diluted (Note 4)	$	(3.33)	$	(1.54)	$	(2.77)
Weighted-average shares of Class A and Class B common stock used to compute net income (loss) per share attributable to common stockholders, basic and diluted	145,472,389		59,138,086		57,251,112

The accompanying notes are an integral part of these financial statements.

Reddit, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)


	Year ended December 31,
	2024		2023		2022
Net income (loss)	$	(484,276)	$	(90,824)	$	(158,550)
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) on marketable securities	258		4,606		(3,554)
Change in foreign currency translation adjustment	(1,048)		—		—
Net comprehensive income (loss)	$	(485,066)	$	(86,218)	$	(162,104)

The accompanying notes are an integral part of these financial statements.

Reddit, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share amounts)


	Total Convertible Preferred Stock			Common Stock							Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Deficit
		Class A			Class B
	Shares	Amount		Shares		Amount		Shares	Amount
Balance as of December 31, 2021	73,021,449	$	1,853,492	5,166,855		$	—	51,212,674	$	6	$	181,407	$	(238)	$	(467,188)	$	(286,013)
Issuance of common stock upon exercise of stock options, net	—	—		976,178		—		197,437	—		7,034		—		—		7,034
Issuance of restricted stock awards	—	—		174,056		—		—	—		—		—		—		—
Issuance of common stock upon settlement of restricted stock units, net	—	—		2,786		—		—	—		(105)		—		—		(105)
Issuance of Class A common stock in connection with acquisitions	—	—		62,061		—		—	—		4,522		—		—		4,522
Stock-based compensation expense	—	—		—		—		—	—		55,310		—		—		55,310
Vesting of early exercised stock options	—	—		—		—		—	—		2,292		—		—		2,292
Net income (loss)	—	—						—	—		—		—		(158,550)		(158,550)
Change in other comprehensive income (loss)	—	—		—		—		—	—		—		(3,554)		—		(3,554)
Balance as of December 31, 2022	73,021,449	$	1,853,492	6,381,936		$	—	51,410,111	$	6	$	250,460	$	(3,792)	$	(625,738)	$	(379,064)
Issuance of common stock upon exercise of stock options, net	—	—		489,959		—		2,494,093	—		8,390		—		—		8,390
Issuance of common stock upon settlement of restricted stock units, net	—	—		227,805		—		—	—		(4,320)		—		—		(4,320)
Stock-based compensation expense	—	—		—		—		—	—		47,598		—		—		47,598
Vesting of early exercised stock options	—	—		—		—		—	—		692		—		—		692
Net income (loss)	—	—		—		—		—	—		—		—		(90,824)		(90,824)
Change in other comprehensive income (loss)	—	—		—		—		—	—		—		4,606		—		4,606
Balance as of December 31, 2023	73,021,449	$	1,853,492	7,099,700		$	—	53,904,204	$	6	$	302,820	$	814	$	(716,562)	$	(412,922)
Issuance of common stock upon exercise of stock options, net	—	—		10,979,938		—		4,038,255	—		88,972		—		—		88,972
Issuance of common stock upon settlement of restricted stock units, net	—	—		11,501,630		1		1,002,455	—		(294,572)		—		—		(294,571)
Conversion of Class B common stock to Class A common stock	—	—		71,548,247		8		(71,548,247)	(8)		—		—		—		—
Conversion of redeemable convertible preferred stock to common stock in connection with initial public offering	(73,021,449)	(1,853,492)		5,104,017		1		67,917,432	7		1,853,486		—		—		1,853,494
Issuance of common stock in connection with initial public offering, net of underwriting discounts and commissions and other offering costs	—	—		18,576,527		2		—	—		576,266		—		—		576,268
Issuance of Class A common stock in connection with acquisitions	—	—		191,821		—		—	—		2,786		—		—		2,786
Stock-based compensation expense	—	—		—		—		—	—		801,646		—		—		801,646
Vesting of early exercised stock options	—	—		—		—		—	—		142		—		—		142
Net income (loss)	—	—		—		—		—	—		—		—		(484,276)		(484,276)
Change in other comprehensive income (loss)	—	—		—		—		—	—		—		(790)		—		(790)
Balance as of December 31, 2024	—	$	—	125,001,880		$	12	55,314,099	$	5	$	3,331,546	$	24	$	(1,200,838)	$	2,130,749

The accompanying notes are an integral part of these financial statements.

Reddit, Inc.

Consolidated Statements of Cash Flows

(in thousands)


	Year ended December 31,
		2024		2023		2022
Cash flows from operating activities
Net income (loss)		$	(484,276)	$	(90,824)	$	(158,550)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		15,643		13,702		8,000
Non-cash operating lease cost		4,110		11,359		10,464
Amortization of premium (accretion of discount) on marketable securities, net		(43,400)		(27,442)		(3,264)
Stock-based compensation expense		801,646		47,598		55,310
Other adjustments		(4,187)		484		4,099
Changes in operating assets and liabilities:
Accounts receivable		(104,280)		(53,318)		(30,230)
Prepaid expenses and other assets		(19,485)		3,878		(1,911)
Operating lease right-of-use assets and liabilities		(2,397)		(5,758)		(10,325)
Accounts payable		(570)		12,470		10,905
Accrued expenses and other liabilities		59,264		12,737		21,481
Net cash provided by (used in) operating activities		$	222,068	$	(75,114)	$	(94,021)
Cash flows from investing activities
Purchases of property and equipment		(6,248)		(9,724)		(6,233)
Proceeds from sale of cryptocurrency		6,869		—		—
Purchases of marketable securities		(1,996,725)		(1,259,854)		(1,430,589)
Maturities of marketable securities		1,573,602		1,273,159		674,399
Proceeds from sale of marketable securities		—		37,538		500
Cash paid for acquisitions, net of cash acquired		(17,137)		—		(42,196)
Other investing activities		(1,048)		172		(64)
Net cash provided by (used in) investing activities		$	(440,687)	$	41,291	$	(804,183)
Cash flows from financing activities
Proceeds from issuance of Class A common stock in initial public offering, net of underwriting discounts and commissions		600,022		—		—
Proceeds from exercise of employee stock options		88,972		8,428		7,034
Taxes paid related to net share settlement of restricted stock units		(294,573)		(4,320)		—
Payments of initial public offering costs		(8,775)		(1,441)		(9,796)
Payments of deferred consideration and holdbacks for acquisitions		(6,111)		(3,478)		—
Other financing activities		—		—		(1,022)
Net cash provided by (used in) financing activities		$	379,535	$	(811)	$	(3,784)
Net increase (decrease) in cash, cash equivalents, and restricted cash		160,916		(34,634)		(901,988)
Cash, cash equivalents, and restricted cash at the beginning of the period		401,226		435,860		1,337,848
Cash, cash equivalents, and restricted cash at the end of the period		$	562,142	$	401,226	$	435,860
Cash and cash equivalents		562,092		401,176		435,810
Restricted cash		50		50		50
Total cash, cash equivalents, and restricted cash		$	562,142	$	401,226	$	435,860


Supplemental disclosure of noncash financing and investing activities
Conversion of convertible preferred stock to common stock upon initial public offering		$	1,853,492	$	—	$	—

Reclassification of deferred offering costs to additional paid-in capital upon initial public offering		$	23,754	$	—	$	—

The accompanying notes are an integral part of these financial statements.

Reddit, Inc.

Notes to the Consolidated Financial Statements

1. Description of Business

Reddit, Inc. (“Reddit,” “we,” “our,” or “us”) was incorporated in the state of Delaware. Our mission is to empower communities and make their knowledge accessible to all. We built Reddit with the belief that communities unlock the power of human creativity and create a sense of belonging and empowerment for their members. We believe the world needs community more than ever, and that this represents our greatest opportunity to further enrich the lives of everyone in the world. We are headquartered in San Francisco, California, and have several offices around the world.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Our consolidated financial statements include the accounts of Reddit, Inc. and our wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Initial Public Offering

On March 20, 2024, our initial public offering (“IPO”) was declared effective and our Class A common stock began trading on the New York Stock Exchange on March 21, 2024. On March 25, 2024, we completed our IPO in which we issued and sold 18,576,527 shares of Class A common stock, including 3,300,000 shares of Class A common stock pursuant to the underwriters’ exercise in full of their over-allotment option, and excluding 6,723,473 shares of Class A common stock sold in the IPO by certain of our existing stockholders, at a public offering price of $34.00 per share. We received net proceeds of $600.0 million after deducting underwriting discounts and commissions of $31.6 million. In connection with the closing of the IPO, all shares of our then-outstanding convertible preferred stock other than Series F-1 preferred stock automatically converted into an aggregate of 67,917,432 shares of Class B common stock and all then-outstanding shares of Series F-1 preferred stock automatically converted into 5,104,017 shares of Class A common stock. Following the IPO, we have three classes of authorized common stock — Class A common stock, Class B common stock, and Class C common stock.

Certain of our restricted stock units granted to employees included both service-based and performance-based vesting conditions (“Double Trigger RSUs”). The performance condition related to these awards was satisfied upon the effectiveness of the IPO. Upon the effectiveness of the IPO, we recognized $534.7 million of stock-based compensation expense. To meet the related tax withholding requirements, we withheld 4,861,113 shares of the 10,502,390 shares of Class A common stock issued and 723,341 shares of the 1,347,456 shares of Class B common stock issued. Based on the IPO public offering price of $34.00 per share, the tax withholding obligation was $189.9 million.

In connection with our IPO, we amended and restated our certificate of incorporation (“Restated Certificate”) which authorized 2,340,000,000 shares of capital stock, consisting of 2,000,000,000 shares of Class A common stock, 140,000,000 shares of Class B common stock, 100,000,000 shares of Class C common stock, and 100,000,000 shares of undesignated preferred stock.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Management’s estimates are based on historical information available as of the date of the consolidated financial statements and various other assumptions that we believe are reasonable under the circumstances. Actual results could differ materially from those estimates.

Significant estimates relate primarily to determining the fair value of stock-based awards, the fair value of assets and liabilities assumed in business combinations, and the incremental borrowing rate used to determine operating lease right-of-use assets and lease liabilities. On an ongoing basis, management evaluates our estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

Revenue Recognition

We generate a majority of our revenue through the sale of advertising on our mobile applications and website. Other revenue consists of revenue from content licensing, Reddit Premium subscriptions, and products within our user economy.

Reddit, Inc.

Notes to the Consolidated Financial Statements

We determine revenue recognition by identifying the contract or contracts with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognizing revenue when, or as, we satisfy a performance obligation.

For customer contracts that include multiple performance obligations, we identify each distinct performance obligation and determine the transaction price, which may include an estimation of variable consideration, subject to constraint. The transaction price is allocated to each performance obligation using the stand-alone selling price, which is generally based on the observable price of each good or service.

Payments for revenue arrangements are due based on the contractually stated payment terms, usually within 30 to 60 days. Sales and other similar taxes are excluded from revenue.

Advertising Revenue

We recognize advertising revenue only after transferring control of promised goods or services to customers, which occurs when a user clicks on an ad contracted on a cost per click (“CPC”) basis, views an ad contracted on a cost per thousand impressions (“CPM”) basis, views a video ad contracted on a cost per view (“CPV”) basis, or on a fixed fee basis, based upon ad delivery over the service period, which is typically less than 30 days in duration. Generally, we recognize advertising revenue on a gross basis since we control the advertising units before being transferred to our users. In arrangements where another party is involved in providing specified services to a customer, we evaluate whether we are the principal or agent. In this evaluation, we consider if we obtain control of the specified goods or services before they are transferred to the customer. For advertising revenue arrangements where we are not the principal, we recognize revenue on a net basis. For the periods presented, revenue for arrangements where we are the agent was not material.

The transaction price in advertising arrangements is generally calculated as the number of advertising units delivered multiplied by the contractually agreed upon CPC, CPM, or CPV, or on a fixed fee basis and revenue is recognized based on the number of clicks, impressions, or views, or ratable over the service period, respectively.

Other Revenue

In our content licensing arrangements, we provide customers with the right to access content from our platform over the contractual period. The transaction price in content licensing arrangements is generally a fixed fee or usage-based fee. We recognize content licensing revenue as our content partners consume and benefit from their use of the licensed content, which is generally ratably over the license period. We recognize Reddit Premium subscription revenue ratably over the subscription period, which is generally less than one year. Products within our user economy include Reddit Gold and Collectible Avatars. Revenue from Reddit Gold and Collectible Avatars was not material for the years ended December 31, 2024, 2023, and 2022.

Cost of Revenue

Cost of revenue consists primarily of payments to third parties for the cost of hosting and supporting our mobile applications and website. In addition, cost of revenue includes expenses directly associated with the delivery of our advertising and other services, including advertising measurement services and credit card and other transaction processing fees. Cost of revenue also consists of employee-related costs, including salaries, benefits, and stock-based compensation.

Research and Development Expenses

Research and development expenses consist primarily of employee-related costs including salaries, benefits, and stock-based compensation for engineers and other employees engaged in the research, design, and development of new and existing products. Research and development expenses also include professional services and hosting costs associated with internal research and development activities, as well as allocated facilities and other supporting overhead costs.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of employee-related costs including salaries, benefits, and stock-based compensation for employees engaged in sales, sales support, business and brand development, marketing, and customer service functions. Sales commissions are expensed as incurred in sales and marketing expenses as the expected period of benefit is one year or less. Sales and marketing expenses also include costs incurred for advertising, market research, branding, professional services, marketing, and promotional expenditures, as well as allocated facilities and other supporting overhead costs.

Reddit, Inc.

Notes to the Consolidated Financial Statements

General and Administrative Expenses

General and administrative expenses consist primarily of employee-related costs including salaries, benefits, and stock-based compensation for certain executives as well as employees engaged in finance, legal, human resources, information technology, communications, and other administrative teams. General and administrative expenses also include costs incurred for professional services, as well as allocated facilities and other supporting overhead costs.

Advertising Costs

Advertising costs are expensed as incurred and were $9.2 million, $8.2 million, and $34.4 million for the years ended December 31, 2024, 2023, and 2022 respectively.

Stock-Based Compensation

We measure and recognize compensation expense for stock-based awards, including restricted stock units (“RSUs”), restricted stock awards (“RSAs”), and stock options granted to employees and non-employees based on the grant date fair value of the awards granted. Prior to the IPO, for secondary sale transactions with existing investors, we recognized stock-based compensation expense representing the excess of the purchase price over the fair value of our common stock on the date of the transaction.

Income Taxes

We account for income taxes using an asset and liability approach. Under this method, the tax provision includes taxes currently due plus the net change in deferred tax assets and liabilities. Deferred tax assets and liabilities arise from temporary differences between the tax basis of an asset or liability and its reported amount in the consolidated financial statements, as well as from net operating loss and tax credit carryforwards. Deferred tax amounts are determined by using the tax rates expected to be in effect when the taxes will be paid or refund received, as provided for under currently enacted tax law. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, a valuation allowance is recorded. Should there be a change in the ability to recover deferred tax assets, the income tax provision would increase or decrease in the period in which the assessment is changed.

We recognize the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Any interest and penalties related to unrecognized tax benefits are recognized as income tax expense in the consolidated statements of operations.

Functional Currency

Generally, the U.S. dollar is the functional currency for our subsidiaries, and therefore, foreign currency denominated monetary assets and liabilities are remeasured into U.S. dollars at exchange rates at the balance sheet date and foreign currency denominated non-monetary assets and liabilities are remeasured into U.S. dollars at historical exchange rates. Gains or losses from foreign currency remeasurement and settlements are included in other income (expense), net in the consolidated statements of operations. Net foreign exchange gains and losses were not material for the years ended December 31, 2024, 2023, and 2022.

On January 1, 2024, we changed the functional currency of our U.K. subsidiary, Reddit UK Limited, from the U.S. dollar to the British pound. The change in functional currency is due primarily to the increased exposure to the British pound as our future operating cash flows for our U.K. subsidiary are expected to be in British pounds. We translate the financial statements of the U.K. subsidiary to U.S. dollars at exchange rates at the balance sheet date for assets and liabilities and at monthly average exchange rates for revenues and expenses. Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders' equity (deficit). The change in the functional currency of Reddit UK Limited was accounted for prospectively from January 1, 2024 and did not have a material impact on our consolidated financial statements.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents consist of highly liquid investments with original maturities of 90 days or less from the date of purchase. We define restricted cash as cash that cannot be withdrawn or used for general operating activities. Restricted cash is classified as current or noncurrent assets based on the contractual or estimated term of the remaining restriction. As of

Reddit, Inc.

Notes to the Consolidated Financial Statements

December 31, 2024 and 2023, restricted cash included in other noncurrent assets in the consolidated balance sheets was not material.

Marketable Securities

We hold investments in marketable securities consisting of U.S. and non-U.S. government securities, investment-grade corporate and government agency securities, certificates of deposit, and commercial paper. We classify our marketable securities as available-for-sale investments in current assets because they represent investments available for current operations. Our available-for-sale investments are carried at fair value with any unrealized gains and losses included in accumulated other comprehensive income (loss) in stockholders’ equity (deficit). Expected losses from credit related impairment, if any, are recognized through an allowance for credit losses and adjusted each period for changes in credit risk. Gains or losses on the sale or maturities of marketable securities are determined using the specific identification method and recorded in other income (expense), net in our consolidated statements of operations.

Fair Value Measurements

Certain financial instruments are required to be recorded at fair value. Other financial instruments, including cash, cash equivalents, and restricted cash, are recorded at cost, which approximates fair value. Additionally, the carrying amounts of accounts receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities approximate fair value due to their short-term nature.

Accounts Receivable, Net

Accounts receivable are recorded at the invoiced amount, net of any allowance for doubtful accounts due to expected credit losses and potentially uncollectible receivables. We apply a “single loss” rate approach to the overall accounts receivable portfolio and also evaluate the aging, historical write-offs, and collectability of accounts receivable on a customer-by-customer basis. The allowance for doubtful accounts was immaterial as of December 31, 2024 and 2023.

Contract Assets

When revenue recognition exceeds the amounts billable on a contract, the difference is recorded as a contract asset. The current portion of contract assets included within accounts receivable, net, and the noncurrent portion of contract assets included within other noncurrent assets on the consolidated balance sheets were not material as of December 31, 2024 and 2023.

Property and Equipment, Net

Property and equipment are stated at cost, less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, which is generally three to five years for computer equipment, furniture, and fixtures. Leasehold improvements are depreciated over the shorter of the lease term or the useful life of the assets. Maintenance and repairs are expensed as incurred.

Software Development Costs

Software development costs include costs to develop software to be used to meet internal needs and applications used to deliver our services. We capitalize development costs related to these software applications once the preliminary project stage is complete, it is probable that the project will be completed, and the software will be used to perform the function intended. Due to the iterative process of our development projects, development costs meeting our capitalization criteria were not material for the periods presented.

Leases

Leases arise from contractual obligations that convey the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. We determine if a contract is, or contains, a lease at contract inception. All of our leases are operating leases and are included in operating lease right-of-use assets, net, operating lease liabilities, and operating lease liabilities, non-current on the consolidated balance sheets.

Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term discounted using our incremental borrowing rate. Operating lease right-of-use assets also include any lease payments made and exclude lease incentives. As our leases do not provide an implicit rate,

Reddit, Inc.

Notes to the Consolidated Financial Statements

the incremental borrowing rate used is estimated based on what we would have to pay on a collateralized basis over a similar term as the lease. Lease payments include fixed payments and any variable payments based on an index or rate, and are recognized as lease expense on a straight-line basis over the term of the lease.

Deferred Offering Costs

Prior to our IPO, deferred offering costs, which consisted of direct incremental legal, accounting, consulting, and other fees related to the IPO, were capitalized in other noncurrent assets on the consolidated balance sheets. After the IPO, the deferred offering costs were reclassified into additional paid-in capital as an offset against IPO proceeds. Deferred offering costs included in other noncurrent assets were $16.5 million as of December 31, 2023.

Business Combinations

We include the results of operations of the businesses that we acquire from the date of acquisition. We determine the fair value of the assets acquired and liabilities assumed based on their estimated fair values as of the respective date of acquisition. The excess purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies. Our estimates of fair value are based on assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

When we issue cash payments or grants of equity to selling stockholders in connection with an acquisition, we evaluate whether the payments or awards are compensatory. This evaluation includes whether cash payments or stock award vesting is contingent on the continued employment of the selling stockholder beyond the acquisition date. If continued employment is required for the cash to be paid or stock awards to vest, the award is treated as compensation for post-acquisition services and is recognized as compensation expense.

Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in our consolidated statements of operations.

Goodwill

Goodwill represents the excess of the aggregate purchase consideration over the fair value of net assets acquired in a business combination. We perform our annual impairment test on October 1. We also test for impairment whenever events or circumstances indicate that the fair value of goodwill has been impaired. Our impairment tests are based on a single operating segment and reporting unit structure. No impairment charges were recorded during the years ended December 31, 2024, 2023, and 2022.

Acquired Intangible Assets

Identifiable acquired intangible assets consist primarily of acquisition-related developed technology. We determine the appropriate useful life of our intangible assets by performing an analysis of expected cash flows of the acquired assets. Intangible assets are amortized on a straight-line basis over the estimated useful life of up to five years.

Cryptocurrency

We account for cryptocurrency investments, and cryptocurrency received in exchange for goods and services, as intangible assets with indefinite useful lives, which are measured at cost, net of any impairment losses incurred since acquisition, on the consolidated balance sheets. Cryptocurrency accounted for as intangible assets are not amortized, but assessed for impairment quarterly, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired.

The computation of gains or losses on the sale of cryptocurrency, or use of cryptocurrency to settle any obligations, is based on the difference between the market price quoted on our principal market for cryptocurrencies at the time of sale or settlement and the cost basis of the cryptocurrency, which is determined on a first-in, first-out basis. During the year ended December 31, 2024, we sold the majority of our cryptocurrency portfolio, which consisted primarily of Bitcoin and Ether. The net carrying value of our cryptocurrencies and all related cryptocurrency activity, including the gain recognized on sale, was immaterial for the periods presented.

Reddit, Inc.

Notes to the Consolidated Financial Statements

Impairment of Long-Lived Assets

We evaluate recoverability of our property and equipment and definite-lived intangible assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Events and changes in circumstances considered in determining whether the carrying value of long-lived assets may not be recoverable include significant changes in performance relative to expected operating results, significant changes in asset use, significant negative industry or economic trends, and changes in our business strategy. Recoverability of these assets is measured by comparison of their carrying amount to future undiscounted cash flows to be generated. If impairment is indicated based on a comparison of the assets’ carrying values and the undiscounted cash flows, the impairment loss is measured as the amount by which the carrying amount exceeds the fair value of the assets. We determined that there were no events or changes in circumstances that indicated our long-lived assets were impaired during the periods presented.

Concentration of Business Risk

We primarily use Amazon Web Services and Google Cloud Platform for our hosting requirements. A disruption or loss of service from Amazon Web Services or Google Cloud Platform could harm our ability to operate. Although we believe there are other qualified providers that can provide these services, a transition to a new provider could create a disruption to our business and negatively impact our operating results.

Concentration of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, marketable securities, and accounts receivable. We maintain cash and cash equivalents with several financial institutions. We believe that the financial institutions that hold our cash and cash equivalents are financially sound and, accordingly, minimal credit risks exist with respect to these balances. We maintain investments in U.S. and non-U.S. government securities, investment-grade corporate and government agency securities, certificates of deposit, commercial paper, and money market accounts that carry high credit ratings and accordingly, minimal credit risk exists with respect to these balances.

No customer accounted for greater than 10% of our revenues for the years ended December 31, 2024, 2023, and 2022. No customer accounted for greater than 10% of our accounts receivable as of December 31, 2024 and 2023.

Segments

We have determined that we have a single operating segment. Our Chief Executive Officer is our chief operating decision maker who evaluates performance and makes operating decisions about allocating resources based on consolidated financial data.

Emerging Growth Company Status

As of December 31, 2024, we lost our status as an emerging growth company as defined in the JOBS Act. As a result, we are no longer entitled to take advantage of specified reduced reporting requirements and relief from certain other significant requirements that are otherwise generally applicable to public companies.

As an emerging growth company, we previously elected to leverage the provision of the JOBS Act that allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies through December 31, 2022. As a result, our financial statements for the year ended December 31, 2022 may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates. Beginning January 1, 2023, we elected to irrevocably opt out of the extended transition period provided in the JOBS Act and began to comply with new or revised accounting standards at the time when adoption of such standards was required for public companies that are non-emerging growth companies.

Recently Adopted Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. All disclosure requirements of this standard are required for entities with a single reportable segment. We adopted this standard effective January 1, 2024. Adoption of this standard resulted

Reddit, Inc.

Notes to the Consolidated Financial Statements

in additional segment-related disclosures made in Note 18—Segment and Geographic Information, but did not impact our consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires an entity to disclose specific categories in the effective tax rate reconciliation as well as provide additional information for reconciling items that meet a quantitative threshold. This standard also requires certain disaggregated disclosures related to income from continuing operations, income tax expense, and income taxes paid. The standard is effective for us beginning January 1, 2025, with early adoption permitted. We are currently evaluating the impact the adoption will have on our disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires an entity to disclose disaggregated information about certain income statement expense line items. The standard is effective for us beginning January 1, 2027, with early adoption permitted. We are currently evaluating the impact the adoption will have on our disclosures.

3. Revenue

The following table represents our revenue disaggregated by source:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Advertising revenue	$	1,185,456	$	788,782	$	652,562
Other revenue	114,749		15,247		14,139
Total revenue	$	1,300,205	$	804,029	$	666,701

The following table represents our revenue disaggregated by geography based on the billing address of the customer:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
United States	$	1,063,556	$	651,378	$	548,964
Rest of world(1)	236,649		152,651		117,737
Total revenue	$	1,300,205	$	804,029	$	666,701

(1)Other than the United States, no individual country represented 10% or more of total revenue during the years ended December 31, 2024, 2023, and 2022.

Deferred revenue was $14.9 million and $7.4 million as of December 31, 2024 and December 31, 2023, respectively. For the years ended December 31, 2024, 2023, and 2022, revenue recognized from the deferred revenue balance at the beginning of each period was $7.2 million, $7.8 million, and $6.5 million, respectively.

As of December 31, 2024, the aggregate amount of remaining performance obligations in contracts with an original expected duration exceeding one year is $252.9 million. This amount consists primarily of long-term content licensing contracts and excludes deferred revenue related to short-term advertising contracts and Reddit Premium subscriptions. We expect to recognize $114.6 million in 2025, $113.2 million in 2026, and $25.1 million in 2027.

4. Net Income (Loss) per Share

We compute net income (loss) per share of Class A and Class B common stock using the two-class method required for multiple classes of common stock and participating securities. Prior to the IPO, our participating securities included Series A, Series A-1, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 convertible preferred stock, as the holders of these series of preferred stock were entitled to receive noncumulative dividends subject to certain requirements at an annual rate of 8% of the respective original issue price then in effect in the event that a dividend was paid on common stock.

Reddit, Inc.

Notes to the Consolidated Financial Statements

In connection with our IPO, our Series A, Series A-1, Series B, Series C, Series D, Series D-1, Series E, and Series F preferred stock converted on a one-to-one basis into 67,917,432 shares of Class B common stock, and our Series F-1 preferred stock converted on a one-to-one basis into 5,104,017 shares of Class A common stock. These shares are weighted in the denominator of net income (loss) per share for Class A and Class B common stock for the portion of the time outstanding subsequent to our IPO.

The holders of Series A, Series A-1, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 convertible preferred stock did not have a contractual obligation to share in our losses. As such, our net losses for the years ended December 31, 2023 and 2022 were not allocated to these participating securities.

The following table presents the calculation of basic and diluted net income (loss) per share attributable to common stock:


	Year ended December 31,
	2024				2023				2022
	Class A		Class B		Class A		Class B		Class A		Class B
	(in thousands, except share and per share data)
Numerator:
Net income (loss) attributable to common stockholders	$	(231,631)	$	(252,645)	$	(11,033)	$	(79,791)	$	(16,272)	$	(142,278)
Denominator:
Basic weighted-average common shares outstanding	69,580,048		75,892,341		7,183,723		51,954,363		5,875,656		51,375,456
Diluted weighted-average common shares outstanding	69,580,048		75,892,341		7,183,723		51,954,363		5,875,656		51,375,456
Basic and diluted income (loss) per share attributable to common stockholders	$	(3.33)	$	(3.33)	$	(1.54)	$	(1.54)	$	(2.77)	$	(2.77)

The following outstanding potentially dilutive shares, including stock options that have been exercised prior to vesting, were excluded from the computation of diluted net income (loss) per share attributable to common stock for the periods presented because the impact of including them would have been anti-dilutive.


	Year ended December 31,
	2024		2023		2022
	Class A	Class B	Class A	Class B	Class A	Class B
Stock options	11,501,771	3,185,767	22,600,876	7,213,522	16,290,463	8,228,797
Unvested RSUs and RSAs	10,746,145	598,102	24,166,383	2,720,150	12,953,243	4,362,661
Preferred shares	—	—	5,104,017	67,917,432	5,104,017	67,917,432
	22,247,916	3,783,869	51,871,276	77,851,104	34,347,723	80,508,890

5. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

Level 1: Quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs reflecting the reporting entity’s own assumptions or external inputs from inactive markets

We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. There were no transfers between levels during the periods presented.

Reddit, Inc.

Notes to the Consolidated Financial Statements

The following table sets forth our financial assets that are measured at fair value on a recurring basis:


		December 31, 2024
	Fair value hierarchy level	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
		(in thousands)
Cash equivalents:
Money market funds	Level 1	$	497,461	$	—	$	—	$	497,461
U.S. treasury securities	Level 1	5,979		2		—		5,981

Corporate bonds	Level 2	1,066		2		—		1,068
Marketable securities:
U.S. treasury securities	Level 1	817,996		1,120		(396)		818,720
U.S. agency bonds	Level 2	117,965		15		(62)		117,918

Corporate bonds	Level 2	159,424		400		(86)		159,738

Commercial paper	Level 2	182,264		99		(22)		182,341
Total		$	1,782,155	$	1,638	$	(566)	$	1,783,227


		December 31, 2023
	Fair value hierarchy level	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
		(in thousands)
Cash equivalents:
Money market funds	Level 1	$	345,555	$	—	$	—	$	345,555
Commercial paper	Level 2	9,994		—		(9)		9,985
Marketable securities:
U.S. treasury securities	Level 1	426,734		697		(188)		427,243
U.S. agency bonds	Level 2	77,535		13		(34)		77,514
Non-U.S. government securities	Level 2	21,723		10		(27)		21,706
Corporate bonds	Level 2	94,725		310		(81)		94,954
Certificates of deposit	Level 2	2,810		—		(1)		2,809
Commercial paper	Level 2	187,596		148		(24)		187,720
Total		$	1,166,672	$	1,178	$	(364)	$	1,167,486

Gross unrealized gains (losses) within accumulated other comprehensive income (loss) were immaterial as of December 31, 2024 and 2023. There were no impairment charges due to credit losses during the years ended December 31, 2024, 2023, and 2022.

As of December 31, 2024, the amortized cost of marketable securities with maturities less than one year was $989.2 million. The amortized cost of marketable securities with maturities between one and five years was $288.4 million.

Reddit, Inc.

Notes to the Consolidated Financial Statements

6. Balance Sheet Components

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


	December 31, 2024		December 31, 2023
	(in thousands)
Prepaid expenses	$	14,583	$	11,930
Other receivables	11,500		4,695
Interest receivable	4,695		3,071
Other	2,280		1,590
Total prepaid expenses and other current assets	$	33,058	$	21,286

Property and Equipment, Net

Property and equipment, net consisted of the following:


	December 31, 2024		December 31, 2023
	(in thousands)
Computer equipment, furniture, and fixtures	$	15,832	$	14,136
Leasehold improvements	8,017		7,597

Total property and equipment	23,849		21,733
Less: accumulated depreciation	(11,197)		(6,787)
Total property and equipment, net	$	12,652	$	14,946

Depreciation expense was immaterial for the years ended December 31, 2024, 2023, and 2022.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:


	December 31, 2024		December 31, 2023
	(in thousands)
Accrued compensation and benefits	$	63,441	$	37,964
Deferred revenue	14,805		7,250
Accrued expenses	31,817		26,740

Revenue share payable and other	6,939		2,549
Holdback liability from acquisitions	—		6,111
Other	7,462		2,735
Total accrued expenses and other current liabilities	$	124,464	$	83,349

7. Operating Leases

We have entered into various non-cancellable operating leases agreements, primarily for the use of office space, expiring at various dates through 2029. Our lease terms include options to extend or terminate the lease when it is reasonably certain they will be exercised. We consider these options in determining the lease term on a lease-by-lease basis. We account for lease components and non-lease components as a single lease component for all leases. None of our lease agreements contain material non-lease components, material residual value guarantees, or restrictive covenants. We have elected an accounting policy to not recognize short-term leases, which have a lease term of twelve months or less, on the consolidated balance sheets.

Reddit, Inc.

Notes to the Consolidated Financial Statements

Lease Cost

The components of lease cost were as follows:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Operating lease cost	$	7,231	$	13,062	$	11,077
Short-term lease cost	3,324		3,857		4,291
Variable lease cost	278		749		781
Total lease costs	$	10,833	$	17,668	$	16,149

Lease Term and Discount Rate

The weighted-average remaining lease term and discount rate related to the operating leases were as follows:


	December 31, 2024		December 31, 2023
Weighted-average remaining lease term (in years)	4.00		4.84
Weighted-average discount rate	6.48	%	6.65	%

Maturity of Lease Liabilities

The present value of our operating lease liabilities as of December 31, 2024 was as follows:


	(in thousands)
2025	$	7,509
2026	7,502
2027	7,414
2028	6,256
2029	1,484

Total undiscounted lease payments	30,165
Less: imputed interest	(3,463)
Present value of lease liabilities	$	26,702
Operating lease liabilities	6,137
Operating lease liabilities, noncurrent	20,565
Total	$	26,702

Other Information

Right-of-use assets obtained in exchange for lease liabilities were $4.7 million, $12.0 million, and $16.4 million for the years ended December 31, 2024, 2023, and 2022, respectively. Cash payments included in the measurement of our operating lease liabilities were $5.3 million, $8.9 million, and $9.6 million for the years ended December 31, 2024, 2023, and 2022, respectively.

8. Acquisitions

On July 15, 2024, we completed an acquisition to enhance our technology and workforce. The aggregate purchase consideration was $19.9 million, which consisted of $17.1 million of cash consideration and $2.8 million related to the fair value of equity consideration. Additional consideration with a fair value of $10.7 million was determined to relate to post-combination expenses, primarily stock-based compensation for future employment services.

Of the aggregate purchase consideration, $4.3 million was allocated to developed technology with a useful life of three years, $15.9 million was allocated to goodwill, and the remainder was allocated to other assets acquired and liabilities assumed.

Reddit, Inc.

Notes to the Consolidated Financial Statements

The goodwill amount represents synergies from utilizing the acquired technology across our business and from the assembled workforce. Goodwill recorded in connection with the acquisition is not deductible for income tax purposes.

The fair values assigned to assets acquired and liabilities assumed are based on management’s estimates and assumptions and may be subject to change as additional information is received and valuation assessments are finalized. We expect to finalize the purchase accounting within the one-year measurement period.

9. Goodwill and Intangible Assets

Goodwill

The change in the carrying amount of goodwill during the year ended December 31, 2024 was as follows:


	(in thousands)
Balance as of December 31, 2023	$	26,299
Goodwill acquired	15,875
Balance as of December 31, 2024	$	42,174

There was no change in the carrying amount of goodwill during the year ended December 31, 2023.

Acquired Intangible Assets

Acquired intangible assets consisted of the following:


	December 31, 2024
	Gross carrying value		Accumulated amortization		Net carrying value		Weighted-average remaining useful life (years)
	(in thousands, except year data)
Developed technology	$	47,460	$	22,051	$	25,409	2.6
Other intangible assets	600		600		—		—
Total acquired intangible assets	$	48,060	$	22,651	$	25,409


	December 31, 2023
	Gross carrying value		Accumulated amortization		Net carrying value		Weighted-average remaining useful life (years)
	(in thousands, except year data)
Developed technology	$	43,160	$	12,973	$	30,187	3.6
Other intangible assets	600		467		133		0.3
Total acquired intangible assets	$	43,760	$	13,440	$	30,320

Amortization expense was $9.2 million and $9.0 million for the years ended December 31, 2024 and 2023, respectively. Amortization expense was immaterial for the year ended December 31, 2022.

The estimated future amortization expense related to acquired intangible assets as of December 31, 2024 was as follows:



	(in thousands)
2025	$	9,913
2026	9,913
2027	5,583

Total	$	25,409

Reddit, Inc.

Notes to the Consolidated Financial Statements

10. Debt

Revolving Line of Credit

On October 8, 2021, we entered into a five-year, $750.0 million, revolving loan and standby letter of credit facility agreement (“Revolving Credit Facility”) of which $100.0 million can be issued as letters of credit. As of December 31, 2024, we have issued two letters of credit, one of which is denominated in a foreign currency, for an aggregate of $4.9 million, which reduced the letter of credit borrowings available under the Revolving Credit Facility to $95.1 million. The aggregate available balance under the Revolving Credit Facility was $745.1 million as of December 31, 2024.

On May 23, 2023, we amended the terms of the Revolving Credit Facility to replace LIBOR with Term SOFR as the interest rate benchmark. Under the amended terms of the Revolving Credit Facility, borrowings can be either ABR Loans, Term Benchmark Loans, or SONIA Loans. Outstanding ABR Loans bear interest at a rate equal to the greatest of (A) the Prime Rate, (B) the NYFRB Rate plus 0.5%, (C) the Adjusted Term SOFR Rate plus 1.0%, or (D) 1.0% (each as defined in the amended Revolving Credit Facility), in each case plus 0.25%. Outstanding Term Benchmark Loans bear interest at the Adjusted Term SOFR Rate, the Adjusted EURIBOR Rate, or the Adjusted AUD Rate (each as defined in the amended Revolving Credit Facility), as applicable, in each case, plus 1.25%. Outstanding SONIA Loans bear interest at a rate equal to the Adjusted Daily Simple SONIA (as such term is defined in the amended Revolving Credit Facility) plus 1.25%. We are required to pay a quarterly commitment fee that accrues at 0.15% per annum on the unused portion of the aggregate commitments under the credit facility.

The Revolving Credit Facility contains customary conditions on our borrowing, including events of default and covenants. Covenants include restrictions on our and certain of our subsidiaries’ ability to incur indebtedness, grant liens, make distributions to holders of our preferred and common stock, make investments, or engage in transactions with our affiliates, and require us to maintain a minimum liquidity. The obligations under the Revolving Credit Facility are secured by liens on substantially all of our assets, including intellectual property assets. We were in compliance with all covenants as of December 31, 2024.

11. Commitments and Contingencies

Purchase Obligations

We enter into contracts with non-cancellable purchase obligations, primarily related to third-party cloud infrastructure agreements under which we are granted access to certain cloud services. During the year ended December 31, 2024, we signed addenda to our cloud services agreements. We are committed under these arrangements to spend at least $480.0 million through September 2026, before consideration of any credits that may be earned during the term. We have met all minimum purchase commitments under these agreements during the periods presented.

As of December 31, 2024, future payments under non-cancellable purchase obligations were as follows:


	(in thousands)
2025	$	173,662
2026	147,128
2027	16,185
2028	3
Total	$	336,978

Legal Matters

From time to time, we may become involved in claims and other legal matters arising in the normal course of business. We record a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. We also disclose material contingencies when we believe a loss is not probable but reasonably possible. Accounting for contingencies requires us to use judgment related to both the likelihood of a loss and the estimate of the amount or range of loss. We are not aware of any pending matters, individually or in the aggregate, that are expected to have a material adverse impact on our results of operations, financial position, or cash flows as of December 31, 2024 and 2023. Legal fees and other expenses associated with such matters are expensed as incurred.

Reddit, Inc.

Notes to the Consolidated Financial Statements

Indemnification

In the ordinary course of business, we may provide indemnifications of varying scope and terms to customers, vendors, lessors, investors, directors, officers, employees, and other parties with respect to certain matters. Indemnification may include losses from our breach of such agreements, services we provide, or third-party intellectual property infringement claims. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. We have not incurred material costs to defend lawsuits or settle claims related to these indemnifications during the years ended December 31, 2024, 2023, and 2022. We believe the fair value of these liabilities is immaterial and accordingly have not recorded liabilities for these agreements as of December 31, 2024 and 2023.

12. Convertible Preferred Stock

Immediately prior to the completion of our IPO, all of our then-outstanding shares of convertible preferred stock were automatically converted into 5,104,017 and 67,917,432 shares of our Class A and Class B common stock, respectively.

Convertible preferred stock outstanding consisted of the following as of December 31, 2023:



	Shares authorized	Shares issued and outstanding	Original issue price per share		Aggregate liquidation preference		Net carrying value
	(in thousands, except share and per share data)
Series A	7,500,000	7,500,000	$	2.67	$	35,000	$	21,670
Series A-1	114,746	114,746	5.93		680		680
Series B	17,564,937	17,564,937	6.26		110,011		130,567
Series C	10,073,589	10,073,589	15.77		158,900		158,048
Series D	13,833,617	10,290,493	21.69		223,163		223,092
Series D-1	13,833,617	3,543,124	21.69		76,837		76,687
Series E	12,195,638	12,195,638	42.47		518,002		517,577
Series F	6,634,905	6,634,905	61.79		410,000		409,862
Series F-1	5,113,732	5,104,017	61.79		315,400		315,309
Total	86,864,781	73,021,449			$	1,847,993	$	1,853,492

Significant rights and preferences of the above convertible preferred stock prior to its conversion were as follows:

Dividends

The holders of Series A, Series A-1, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 convertible preferred stock (collectively referred to as “Preferred Stock”) were entitled to noncumulative dividends at an annual rate of 8% of the respective original issue price then in effect (approximately $0.21, $0.47, $0.50, $1.26, $1.73, $1.73, $3.40, $4.94, and $4.94 per share, respectively). Such dividends would have been payable only when, and if, declared by our board of directors. There were no dividends declared or paid through December 31, 2023.

Liquidation Preference

In the event of any (i) liquidation, dissolution or winding up of Reddit, (ii) the consummation of certain mergers or consolidations, (iii) certain change of control transactions, or (iv) other disposition of all or substantially all of our assets or intellectual property (each, a “liquidation event”), the holders of Series A, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 were entitled to receive, prior and in preference to the holders of Series A-1, Class A common stock and Class B common stock, an amount per share equal to their full preferential amounts plus any declared and unpaid dividends. If the assets available for distribution were insufficient to pay such amounts, then the available assets would be distributed ratably among the holders of Series A, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 in proportion to the full amount each holder was otherwise entitled to receive. After payment to the holders of Series A, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 of their full preferential amounts, the holders of Series A-1 were entitled to receive, prior and in preference to the holders of Class A common stock and Class B common stock, an amount per share equal to its full preferential amount plus all declared and unpaid dividends. If the remaining assets available for distribution were insufficient to pay such amounts, then the remaining assets would be distributed ratably among the holders of Series A-1 in proportion to the full amount each holder was otherwise entitled to receive. After payment to the holders of Series

Reddit, Inc.

Notes to the Consolidated Financial Statements

B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1, and Series A and Series A-1 of their full preferential amounts, our remaining assets would be distributed ratably among the holders of Class A common stock and Class B common stock in proportion to the number of shares of common stock held by each holder. The preferential amounts per share of the Series A, Series A-1, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 convertible preferred stock were approximately $4.67, $5.93, $6.26, $15.77, $21.69, $21.69, $42.47, $61.79, and $61.79 as of December 31, 2023.

Voting Rights

The holders of each share of Series A, Series A-1, Series B, Series C, Series D, Series D-1, Series E, and Series F were entitled to the number of votes equal to the number of shares of Class B common stock in which their respective shares were convertible. The holders of each share of Series F-1 were entitled to the number of votes equal to the number of shares of Class A common stock in which their respective shares were convertible. The holders of Series B convertible preferred stock, voting as a separate class on an as-converted basis, had the right to elect one director. The holders of Series A convertible preferred stock, voting as a separate class on an as-converted basis, had the right to elect three directors. The holders of Class A common stock and Class B common stock, voting together as a single class, had the right to elect one director. The holders of Series A preferred stock, Series B preferred stock, Series C preferred Stock, Series D preferred Stock, Class A common stock, and Class B common stock, voting together as a single class on an as-converted basis, had the right to elect two directors and any additional directors.

Conversion

The holders of each share of convertible preferred stock had the option to convert each share of Preferred Stock at any time into a number of shares of Class B common stock determined by dividing the original issue price per share by the then-current conversion price for such series, except for Series F-1, which was convertible 1:1 into shares of Class A common stock. The original issue prices per share for Series A, Series A-1, Series B, Series C, Series D, Series D-1, Series E, Series F, and Series F-1 convertible preferred stock were approximately $2.67, $5.93, $6.26, $15.77, $21.69, $21.69, $42.47, $61.79, and $61.79, respectively, and subject to adjustments for certain dilutive issuances, splits, combinations, and other recapitalizations or reorganizations. The conversion ratio was 1:1 for each series of convertible preferred stock into shares of Class B common stock, except for Series F-1, which was convertible into shares of Class A common stock. The holders of Series D convertible preferred stock had the option to convert each share of preferred stock into a number of shares of Series D-1 convertible preferred stock determined by the original issue price of Series D divided by the original issue price of Series D-1. The holders of Series D-1 convertible preferred stock had the option to convert each share of Preferred Stock into a number of shares of Series D convertible preferred stock determined by the original issue price of Series D-1 divided by the original issue price of Series D. The conversion ratio was 1:1 for Series D and Series D-1 preferred stock. In addition, each share of Series A and Series A-1 convertible preferred stock would automatically be converted into Class B common stock immediately upon the earlier of (i) the closing of an initial public offering that resulted in aggregate net proceeds to us of at least $100.0 million (“Qualified IPO”), (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series A, voting as a separate series, or (iii) a liquidation event in which we were valued at more than $240.0 million. Each share of Series B convertible preferred stock would automatically be converted into Class B common stock immediately upon the earlier of (i) a Qualified IPO or (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series B, voting as a separate series. Each share of Series C convertible preferred stock would automatically be converted into Class B common stock immediately upon the earlier of (i) a Qualified IPO or (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series C, voting as a separate series. Each share of Series D convertible preferred stock would automatically be converted into Class B common stock immediately upon the earlier of (i) a Qualified IPO or (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series D, voting as a separate series. Each share of Series D-1 convertible preferred stock would automatically be converted into Class B common stock immediately upon the earlier of (i) a Qualified IPO or (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series D-1, voting as a separate series. Each share of Series E convertible preferred stock would automatically be converted into Class B common stock immediately upon the earlier of (i) a Qualified IPO or (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series E, voting as a separate series. Each share of Series F convertible preferred stock would automatically be converted into Class B common stock immediately upon the earlier of (i) a Qualified IPO or (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series F, voting as a separate series. Each share of Series F-1 convertible preferred stock would automatically be converted into Class A common stock immediately upon the earlier of (i) a Qualified IPO or (ii) the affirmative election of the holders of at least a majority of the then-outstanding shares of Series F-1, voting as a separate series. Upon such automatic conversion, any declared and unpaid dividends would be paid.

Reddit, Inc.

Notes to the Consolidated Financial Statements

Redemption

The holders of convertible preferred stock had no rights to redeem shares. The convertible preferred stock was redeemable upon the occurrence of a deemed liquidation event that was not solely within the control of Reddit. Therefore, convertible preferred stock is classified as mezzanine equity on the consolidated balance sheets. The carrying values of convertible preferred stock had not been adjusted to their liquidation preferences as these events had not occurred through December 31, 2023.

13. Stockholders' Equity (Deficit)

Class A, Class B, and Class C Common Stock

We have three classes of authorized common stock — Class A, Class B, and Class C common stock. The rights of the holders of Class A and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share. Shares of Class B common stock may be converted to Class A common stock at any time at the option of the stockholder. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock (i) upon any transfer, except for certain permitted transfers set forth in the Restated Certificate, including transfers to family members, certain trusts for estate planning purposes, entities under common control with or controlled by such holder of our Class B common stock, and with respect to Advance Magazine Publishers Inc., or any Advance Entity (as defined in the Restated Certificate), or (ii) upon the first date on which the aggregate number of outstanding shares of Class B common stock ceases to represent at least 7.5% of the aggregate number of then-outstanding shares of our Class A and Class B common stock. Once converted into Class A common stock, the Class B common stock will not be reissued. In connection with our IPO, the Restated Certificate became effective, which authorized 100,000,000 shares of Class C common stock. Each holder of Class C common stock is entitled to no votes per share.

Preferred Stock

In connection with our IPO, the Restated Certificate became effective, which authorized 100,000,000 shares of undesignated preferred stock. Our board of directors has the discretion to determine the rights, preferences, privileges, and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges, and liquidation preferences, of each series of preferred stock.

Common Stock Reserved for Issuance

In February 2024, our board of directors adopted the 2024 Incentive Award Plan (the “2024 Plan”), which became effective in connection with the IPO. Under the 2024 Plan, 31,747,592 shares of our Class A common stock were reserved for issuance pursuant to a variety of stock-based compensation awards, including stock options, stock appreciation rights, restricted stock awards, RSU awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash based awards. The 2024 Plan also includes shares of our Class A common stock that remained available for grant of future awards under our 2017 Equity Incentive and Grant Plan (as amended, the "2017 Plan") at the time the 2024 Plan became effective. Following the effective date of our IPO, the number of shares reserved for issuance under the 2024 Plan will increase by an annual increase on the first day of each fiscal year beginning in 2025 and ending in 2034, equal to the lesser of (A) 5% of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding year and (B) such smaller number of shares of stock as determined by our board of directors; provided, however, that no more than 185,661,778 shares of stock may be issued upon the exercise of incentive stock options.

Reddit, Inc.

Notes to the Consolidated Financial Statements

We have reserved the following shares of common stock, on an as-converted basis, for future issuance:


	December 31, 2024	December 31, 2023
Outstanding stock options	14,687,538	29,795,909
Outstanding RSUs	11,175,380	27,627,171
Conversion of outstanding convertible preferred stock	—	73,021,449
Remaining shares reserved for future issuances under the 2017 Plan	—	7,919,000
Remaining shares reserved for future issuances under the 2024 Plan	36,711,788	—
Shares reserved for community impact initiatives and charitable activities	1,337,205	1,337,205
Total shares of common stock reserved	63,911,911	139,700,734

The remaining shares reserved for future issuance under the 2024 Plan relate to Class A and Class B common stock.

14. Stock-Based Compensation

Equity Incentive Plans

Our board of directors adopted, and our stockholders approved, the 2024 Plan, 2017 Plan, and the 2012 Plan. Under the 2024 Plan, 2017 Plan and 2012 Plan, the board of directors may grant equity-based awards to eligible employees and directors. Subsequent to our IPO, all equity-based awards will be issued through the 2024 Plan and no further awards will be granted under the 2017 Plan and 2012 Plan.

2023 CEO/COO Equity Awards

In 2020, 2022, and 2023, we granted our Chief Executive Officer and Chief Operating Officer RSUs with a liquidity-based performance condition combined with other performance-based or market-based vesting conditions. In December 2023, certain of these awards were canceled and we concurrently granted the 2023 CEO/COO equity awards.

As part of the 2023 CEO/COO equity awards, we granted our Chief Executive Officer 2,990,511 RSUs covering 1,495,255 shares of our Class A common stock and 1,495,256 shares of our Class B common stock, and our Chief Operating Officer 1,462,028 RSUs covering shares of our Class A common stock (collectively, the “CEO/COO RSUs”). The CEO/COO RSUs have both service-based and performance-based vesting conditions. The service-based vesting condition for 50% of these awards was satisfied on the grant date. The service-based vesting condition of the remaining awards is satisfied by rendering continuous service for five years, during which time the grants will vest quarterly. The performance-based vesting condition was satisfied upon the sale of our common stock upon the consummation of a firm commitment underwritten IPO pursuant to an effective registration statement under the Securities Act or a sale event, which constitutes a change in the ownership or effective control of Reddit or in the ownership of a substantial portion of the assets of Reddit (each, a “Liquidity Event”).

Additionally, we granted our Chief Executive Officer stock options to purchase 4,485,766 shares of our Class A common stock, and 1,495,256 shares of our Class B common stock and our Chief Operating Officer a stock option to purchase 2,924,056 shares of our Class A common stock (collectively, the “CEO/COO Options”) as part of the 2023 CEO/COO equity awards. The per share exercise price for 4,452,539 of the shares underlying the CEO/COO Options is $25.29, and for the remaining 4,452,539 shares underlying the CEO/COO Options, the per share exercise price is $45.00, $60.00, and $90.00 for each one-third of the shares underlying such CEO/COO Options. The CEO/COO Options vest quarterly over five years and have a contractual term of ten years.

We accounted for the cancellation and concurrent grant of replacement awards as a modification of the terms of the canceled awards. At the time of the modification, all of the canceled awards were improbable of vesting. The 2023 CEO/COO RSUs were subject to a Liquidity Event performance-based vesting condition and were therefore improbable of vesting. The 2023 CEO/COO Options were not subject to a Liquidity Event performance-based vesting condition and were therefore probable of vesting.

Reddit, Inc.

Notes to the Consolidated Financial Statements

RSUs and RSAs

Service-based RSUs

We grant service-based RSUs to our employees, all of which relate to Class A common stock. RSUs granted under the 2017 plan generally have both service-based and performance-based vesting conditions (“Double Trigger RSUs”). Double Trigger RSUs generally expire seven years from the date of grant. The service-based vesting condition for these awards is generally satisfied by rendering continuous service, generally for three to four years, during which time the grants will vest either quarterly or with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition was satisfied upon the effectiveness of our IPO. We record stock-based compensation expense in connection with these Double Trigger RSUs based on the fair market value of our common stock on the grant date using the accelerated attribution method over the requisite service period.

We also grant RSUs with a service-based vesting condition only, covering shares of our Class A common stock (“Single Trigger RSUs”). Single Trigger RSUs generally expire seven years from the date of grant. The service-based vesting condition for these awards is generally satisfied by rendering continuous service, generally for one to three years, during which time the grants will vest either with a cliff vesting period of one year and continued vesting quarterly thereafter or quarterly from the vesting commencement date. As a result, we record stock-based compensation expense related to these awards on a straight-line basis over the requisite service period.

Service-based RSAs

We grant, in certain circumstances, RSAs with a service-based vesting condition, covering shares of our Class A common stock. The service-based vesting condition for these awards is generally satisfied by rendering continuous service, generally for three years, during which time the grants will vest with a cliff vesting period of one year and continued vesting quarterly thereafter. As a result, we record stock-based compensation expense related to these awards on a straight-line basis over the requisite service period.

The following table summarizes the RSU and RSA activity for the year ended December 31, 2024:


	Service- based RSUs	RSAs	Market and Performance- based RSUs	Total RSUs and RSAs	Weighted- average grant date fair value
Unvested as of December 31, 2023	25,406,057	87,030	1,393,446	26,886,533	$	29.17
Granted	5,170,456	153,648	86,706	5,410,810	$	56.96
Vested	(17,753,004)	(71,811)	(1,351,867)	(19,176,682)	$	31.80
Canceled/Forfeited	(1,745,625)	—	(30,789)	(1,776,414)	$	31.15
Unvested as of December 31, 2024	11,077,884	168,867	97,496	11,344,247	$	37.67

As of December 31, 2024, we had RSUs and RSAs outstanding for 11,344,247 common shares, of which 10,746,145 relate to Class A common stock and 598,102 relate to Class B common stock. The weighted-average grant date fair value of RSUs and RSAs granted during the years ended December 31, 2024, 2023, and 2022 was $56.96, $26.71, and $37.88, respectively. The total fair value of RSUs and RSAs vested during the years ended December 31, 2024, 2023, and 2022 was $766.8 million, $27.9 million, and $33.4 million, respectively. Total unrecognized stock-based compensation expense related to RSUs and RSAs was $292.2 million as of December 31, 2024 and is expected to be recognized over a weighted-average period of 1.41 years.

Stock Options

Stock option grants generally expire ten years from the date of the grant. Certain stock option grants allow for the exercise of unvested options to acquire shares. Upon termination of service, we have the right to repurchase, at the original exercise price, any unvested (but issued) common stock. The grant date fair value of stock options is estimated using a Black-Scholes option-pricing model. Calculating the fair value of stock options using the Black-Scholes model requires certain highly subjective inputs and assumptions including the fair value of the underlying common stock, the expected term of the stock option, and the expected volatility of the price of the underlying common stock. Forfeitures are accounted for as they occur. Stock options vest based on terms in the stock option agreement and generally vest over five years quarterly or four years with 25% of the award vesting one year from the vesting commencement date then ratably over the following three years. For

Reddit, Inc.

Notes to the Consolidated Financial Statements

awards that vest based only on continuous service, stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

The following table summarizes the stock option activity during the year ended December 31, 2024:


	Outstanding stock options	Weighted- average exercise price		Weighted- average remaining contractual life (years)	Aggregate intrinsic value
	(in thousands, except share, per share, and year data)
Balance as of December 31, 2023	29,795,909	$	17.83	6.00	$	500,472

Exercised	(15,018,424)	5.92
Canceled/Forfeited	(89,947)	8.89
Balance as of December 31, 2024	14,687,538	$	30.07	6.87	$	1,958,924
Vested as of December 31, 2024	7,495,598	$	15.88	4.88	$	1,106,061
Vested and expected to vest as of December 31, 2024	14,687,538	$	30.07	6.87	$	1,958,924

As of December 31, 2024 we had outstanding stock options for 14,687,538 common shares, of which 11,501,771 relate to Class A common stock and 3,185,767 relate to Class B common stock. Total unrecognized stock-based compensation expense related to stock options was $111.9 million as of December 31, 2024 and is expected to be recognized over a weighted-average period of 3.95 years.

Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of our common stock. The intrinsic value of options exercised during the years ended December 31, 2024, 2023, and 2022 was $887.3 million, $72.5 million, and $43.6 million, respectively. The weighted-average grant date fair value per share of options granted during the years ended December 31, 2023 and 2022 was $15.67 and $27.52, respectively. The total grant date fair value of options vested during the years ended December 31, 2024, 2023, and 2022 was $34.8 million, $14.0 million, and $21.9 million, respectively.

Determination of Fair Value

We estimate the fair value of stock options using the Black-Scholes option-pricing model, which is dependent upon several variables, such as the fair value of our common stock, expected term of the option, expected volatility of the stock price, risk-free interest rate, and expected dividend rate.

The assumptions used in the Black-Scholes option pricing model were determined as follows:

Fair Value of Common Stock—Prior to the completion of an IPO, the board of directors exercised reasonable judgment and considered numerous and subjective factors to determine the best estimate of the fair value of our common stock, including but not limited to the prices of recent issuances of our convertible preferred stock, third-party valuations of our common stock, the price paid by us to repurchase outstanding shares of common stock, the prices paid for our common stock in secondary market transactions, our performance and market position relative to our competitors or similar publicly traded companies, the likelihood and timing of achieving a liquidity event, the lack of marketability of our common stock, and U.S. and global capital market conditions.

Expected Term—The expected term of options represents the period that our stock-based awards are expected to be outstanding and is calculated using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.

Volatility—We determine the price volatility factor based on the historical and implied volatilities of our peer group as we do not have a sufficient trading history for our common stock. When considering which companies to include in our comparable industry peer companies, we focused on publicly-traded companies with businesses similar to ours.

Risk Free Interest Rates—These rates are based on the implied yield currently available on U.S. Treasury notes with terms approximately equal to the expected life of the option.

Expected Dividend Yield—We have not and do not expect to pay cash dividends on our common stock.

Reddit, Inc.

Notes to the Consolidated Financial Statements

The following weighted-average assumptions were used to determine the fair value of employee stock options granted during the year ended December 31, 2023:


Expected term (in years)	6.31
Expected volatility	60.66	%
Risk-free interest rate	3.83	%
Expected dividend yield	0

Secondary Sales

During the year ended December 31, 2023, certain former employees sold an aggregate of 183,677 shares of Class A common stock and 3,960,560 shares of Class B common stock to existing shareholders at purchase prices ranging from $25.00 to $31.50 per share, for an aggregate purchase price of $114.1 million. We estimated the fair value of the common stock purchased in the secondary sales based on several factors, including taking into account the amounts paid by third parties for our common stock. As the purchase price for the secondary sales paid by our existing shareholder was in excess of the fair value of such shares at the time of the transactions, we recognized immaterial stock-based compensation expense in connection with these transactions during the year ended December 31, 2023.

Stock-Based Compensation Expense

The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations for all periods presented:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Cost of revenue	$	620	$	101	$	133
Research and development	441,629		23,825		35,641
Sales and marketing	80,436		5,555		7,576
General and administrative	278,961		18,117		11,960
Stock-based compensation expense	$	801,646	$	47,598	$	55,310

15. Employee Benefit Plans

We have a defined contribution 401(k) plan (the “401(k) Plan”) for our United States-based employees. The 401(k) Plan is for all full-time employees who meet certain eligibility requirements. Eligible employees may contribute up to 100% of their annual compensation, but are limited to the maximum annual dollar amount allowable under the Internal Revenue Code of 1986, as amended (the “Code”). We match 100% of each participant’s contribution up to $3,000 and 25% of each participant’s contribution thereafter, subject to certain limitations and the IRS annual contribution limits. During the years ended December 31, 2024, 2023, and 2022, we recognized expense related to matching contributions of $11.5 million, $10.1 million, and $8.7 million, respectively.

16. Income Taxes

For the years ended December 31, 2024, 2023, and 2022, the geographical breakdown of our income (loss) before income taxes is as follows:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Domestic income (loss)	$	(493,371)	$	(92,627)	$	(162,330)
Foreign income (loss)	8,164		5,604		4,402
Income (loss) before income taxes	$	(485,207)	$	(87,023)	$	(157,928)

Reddit, Inc.

Notes to the Consolidated Financial Statements

For the years ended December 31, 2024, 2023, and 2022, income tax expense (benefit) consisted of the following:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Current income tax expense (benefit):
Federal	$	(141)	$	1,290	$	859
State	474		1,133		610
Foreign	851		1,468		1,231
Total current income tax expense (benefit)	1,184		3,891		2,700
Deferred income tax expense (benefit):
Federal	(237)		—		(1,767)

Foreign	(1,878)		(90)		(311)
Total deferred income tax expense (benefit)	(2,115)		(90)		(2,078)
Total income tax expense (benefit)	$	(931)	$	3,801	$	622

Our effective tax rate, as a percentage of pre-tax income (loss), differs from the statutory federal rate as follows:


	Year ended December 31,
	2024		2023		2022
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	5.3		1.2		2.3
Non-deductible compensation	(14.0)		—		—
Stock-based compensation	44.4		3.9		0.6
Research and development credits	14.6		13.5		14.1
Change in valuation allowance	(71.0)		(41.1)		(37.4)
Other	(0.2)		(2.9)		(1.0)
Effective tax rate	0.1	%	(4.4)	%	(0.4)	%

Deferred income taxes reflect the net tax effect of temporary differences between amounts recorded for financial reporting purposes and the amounts used for tax purposes. The major components of deferred tax assets and liabilities were as follows:


	December 31, 2024		December 31, 2023
	(in thousands)
Deferred tax assets:
Net operating loss carryforwards	$	149,735	$	56,938
Stock-based compensation	28,586		21,364
Lease liability	6,206		5,819
Capitalized research and development costs	268,232		98,267

Research and development credits	124,116		53,946
Other	13,351		4,216
Gross deferred tax assets	590,226		240,550
Valuation allowance	(572,894)		(228,001)
Total deferred tax assets, net of valuation allowance	17,332		12,549
Deferred tax liabilities:
Right-of-use asset	(5,436)		(5,426)
Acquired intangibles	(9,727)		(6,895)
Total deferred tax liabilities	(15,163)		(12,321)
Net deferred tax assets (liabilities)	$	2,169	$	228

Reddit, Inc.

Notes to the Consolidated Financial Statements

As of December 31, 2024, we had $590.4 million and $399.9 million, respectively, of gross federal and state net operating loss carryforwards available to reduce future taxable income. The federal net operating loss carryforwards are able to be carried forward indefinitely but are limited to 80% of taxable income. The state carryforwards will begin to expire in 2025.

As of December 31, 2024, we had federal research and development credit carryforwards of $123.9 million that will begin to expire in 2039 and state research and development credit carryforwards of $49.3 million that do not expire.

Utilization of the net operating loss and tax credit carryforwards may be subject to a substantial annual limitation due to the ownership change limitations provided by Section 382 of the Code and similar state tax regulations. Under Section 382 of the Code, substantial changes in our ownership and in the ownership of acquired companies may limit the amount of net operating loss and tax credit carryforwards that are available to offset taxable income. The annual limitation may result in the expiration of net operating losses and tax credits before utilization. Accordingly, our ability to utilize these carryforwards may be limited as a result of such ownership change.

We assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to use our existing federal and state deferred tax assets. Based on the weight of the available evidence, including our history of losses, we provided a full valuation allowance against our federal and state deferred tax assets as of December 31, 2024. The amount of the deferred tax asset considered realizable could be adjusted in future periods if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be given to subjective evidence such as our projections for growth.

As of December 31, 2024, we had an immaterial amount of unremitted earnings related to foreign subsidiaries. We intend to reinvest these foreign earnings indefinitely and do not expect to incur any significant taxes related to such amounts.

Uncertain Tax Positions

The following table summarizes the activity related to our gross unrecognized tax benefits during the years ended December 31, 2024, 2023, and 2022:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Beginning balance of unrecognized tax benefits	$	19,236	$	16,428	$	8,982
Increases/(decreases) related to prior year tax positions	1,444		(1,750)		1,925
Increases/(decreases) related to current year tax positions	23,181		4,558		5,521
Ending balance of unrecognized tax benefits	$	43,861	$	19,236	$	16,428

Substantially all of the unrecognized tax benefits were recorded as reductions in our gross deferred tax assets, offset by a corresponding reduction in our valuation allowance. The unrecognized tax benefits, if recognized, would not materially affect the effective tax rate due to the full valuation allowance recorded against our federal and state deferred tax assets.

Our policy is to recognize interest and penalties associated with unrecognized tax benefits as income tax expense. During the year ended December 31, 2024, we had no interest expense or penalties related to uncertain tax positions. As of December 31, 2024, we had no accrued balances of interest and penalties related to uncertain tax positions.

Due to our net operating loss carryforwards, we are subject to examination by taxing authorities in the United States for all tax years. In our foreign jurisdictions, we are subject to examination for tax years ending on or after December 31, 2019. As of December 31, 2024, we had not identified any gross unrecognized tax benefits where it was reasonably possible we would recognize a significant increase or decrease within the next 12 months.

17. Related Parties and Related-Party Transactions

Advance Magazine Publishers Inc.

As of December 31, 2024, Advance Magazine Publishers Inc. (“Advance”) held approximately 23% of our outstanding shares of Class A and Class B common stock and is a related party to Reddit as Advance holds more than 10% of the voting power of our outstanding Class A and Class B common stock. Moreover, pursuant to the terms of the Restated Certificate and that certain Governance Agreement, dated as of March 19, 2024, by and among us, Steve Huffman, our Chief Executive Officer

Reddit, Inc.

Notes to the Consolidated Financial Statements

and a member of our board of directors, and Advance, Advance has the right to designate two directors for inclusion in the slate of nominees for election as directors at an annual or special meeting of stockholders, to designate one nonvoting observer to the board of directors, and to have one of its designees sit on each committee of the board of directors (other than the audit committee), subject to certain limitations set forth in the Restated Certificate. Additionally, the affirmative vote or written consent of Advance will be required for us to take certain corporate actions. These rights will continue until the first to occur of the following events: (i) a change of control of Advance or Reddit; (ii) Advance and its permitted transferees cease to, in the aggregate, beneficially own at least 5% of the aggregate of the then-outstanding shares of our Class A and Class B common stock; and (iii) (a) Advance and its permitted transferees cease to, in the aggregate, beneficially own at least 50% of the number of outstanding shares of our equity securities held by Advance upon the closing of our IPO, and (b) the then-outstanding shares of our Class B common stock, in the aggregate, represents less than 7.5% of the aggregate of the then-outstanding shares of our Class A and Class B common stock.

We currently sublease office space in New York and Chicago from Advance. Total lease costs and other related expenses for our subleases were immaterial for the years ended December 31, 2024, 2023, and 2022.

18. Segment and Geographic Information

Segment Information

We have one reportable segment as our chief operating decision maker reviews consolidated profitability measures in managing the business. Specifically, our chief operating decision maker uses consolidated net income (loss) as the measure of segment profit or loss for evaluating performance and allocating resources through comparison of actual amounts against budgeted and prior period amounts.

The following table presents the calculation of segment net income (loss):


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Revenue	$	1,300,205	$	804,029	$	666,701
Adjusted cost of revenue(1)	122,975		110,758		103,952
Adjusted gross profit	1,177,230		693,271		562,749

Adjusted operating expenses(2)	879,223		762,546		671,143
Stock-based compensation and related taxes	842,932		49,086		55,768
Depreciation and amortization	15,643		13,702		8,000
Interest (income) expense, net	(78,121)		(53,281)		(15,681)
Income tax expense (benefit)	(931)		3,801		622
Other segment expenses(3)	2,760		8,241		1,447
Segment net income (loss)	$	(484,276)	$	(90,824)	$	(158,550)

Consolidated net income (loss)	$	(484,276)	$	(90,824)	$	(158,550)

(1)Adjusted cost of revenue is cost of revenue adjusted for stock-based compensation and related taxes and depreciation and amortization as follows:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Cost of revenue	$	123,595	$	111,011	$	104,799
Less:
Stock-based compensation and related taxes	620		101		133
Depreciation and amortization	—		152		714
Adjusted cost of revenue	$	122,975	$	110,758	$	103,952

Reddit, Inc.

Notes to the Consolidated Financial Statements

(2)Adjusted operating expenses is operating expenses (comprised of research and development, sales and marketing, and general and administrative expenses) adjusted for stock-based compensation and related taxes, depreciation and amortization, and restructuring costs as follows:


	Year ended December 31,
	2024		2023		2022
	(in thousands)
Operating expenses	$	1,737,178	$	833,179	$	734,064
Less:
Stock-based compensation and related taxes	842,312		48,985		55,635
Depreciation and amortization	15,643		13,550		7,286
Restructuring costs	—		8,098		—
Adjusted operating expenses	$	879,223	$	762,546	$	671,143

(3)Other segment expenses primarily includes restructuring costs, realized gains and losses on sales of marketable securities, and foreign currency transaction gains and losses.

Geographic Information

As of December 31, 2024 and 2023, substantially all of our long-lived assets were located within the United States.

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