REDDIT is telling potential investors in its initial public offering (IPO) that it expects revenue in 2024 to grow by more than 20 per cent versus the previous year, according to a source familiar with the situation.
The social media company gave guidance at a roadshow event that it was set for a similar revenue trajectory to what it saw last year, the source said. Revenue in 2023 grew to US$804 million, according to its filing with the US Securities and Exchange Commission. That is 20.5 per cent above the previous year’s figure, data compiled by Bloomberg show.
Reddit is expecting to break even this year in terms of adjusted earnings before interest, taxes, depreciation and amortisation, the source said. The company posted an adjusted Ebitda loss of US$69.3 million for 2023, the filing shows.
Separately, estimates from some of the offering’s underwriters also see Reddit’s revenue increasing at similar rates to the company’s own projections, a different source said, asking not to be identified as the information is not public.
A representative for Reddit declined to comment.
The figures are being discussed as part of the marketing to potential investors of the IPO, which could raise as much as US$748 million for the company and a group of investors who are employees, according to the filing. Together they are selling 22 million shares in a US$31 to US$34 price range, the filing shows.
The projections would mark a continued turnaround for Reddit, which turned profitable in the fourth quarter of last year, Bloomberg News has reported. The company ventured beyond advertising revenue, its traditional source of income, by allowing third parties including Alphabet’s Google to license access to data on its platform for a fee. Reddit expects a minimum of US$66.4 million in revenue this year from those agreements, the filing shows.
Analysts at investment banks that underwrite a company’s offering have a model for its growth and earnings power over the next few years, based on their own assumptions and research. Those numbers often play a role in shaping investors’ thinking around the company’s valuation in the offering, though underwriters are restricted in when they can publish the research, typically for about 25 days.
The IPO is being led by Morgan Stanley, Goldman Sachs Group, JPMorgan Chase & Co and Bank of America, the filing shows. Reddit plans for its shares to trade on the New York Stock Exchange under the symbol RDDT. BLOOMBERG
