Investing.com -- Shares in Reddit (NYSE:RDDT) soared in premarket trading Wednesday after the social media company reported better-than-expected first-quarter revenue and delivered upbeat revenue guidance for the current quarter, driven by strong user growth.
In the three months until the end of March, Reddit reported a loss of $8.19 a share, wider than the $1.05 loss a share a year earlier, while revenue was up 48% to $243 million. That compared with analysts estimates for a per-share loss of $8.71 on revenue of $212.8M, according to LSEG data cited by Reuters. The loss was driven by expenses related to the company's initial public offering in March, Reddit noted.
"We suspected that Reddit would come out strong out of the gates, and Reddit exceeded our bullish expectations," analysts at Bernstein said in a note to clients.
The beat on the top line was driven by a surge in user growth as daily active unique users increased 37% to 82.7 million. The acceleration in users helped attract more advertising dollars, with ad revenue rising 39%.
"It was a strong start to the year and a milestone quarter for Reddit and our communities as we debuted as a public company,” said Steve Huffman, Co-Founder and CEO of Reddit.
Looking ahead, the firm guided for revenue in a range of $240M to $255M versus Wall Street estimates for $223M.
In a post-earnings call, executives at Reddit also said that they were in the early stages in the "monetization journey" of its data licensing unit. When filing for its IPO, the company had suggested that licensing its data to help train AI models could represent a major future revenue stream.
However, analysts at Citi flagged that it remains to be seen if "demand for Reddit’s data licensing solution expands."
Yasin Ebrahim contributed to this report.