What Reddit's 10-K Said That Wall Street Ignored
By Will, Founder of Sharpread
What Reddit’s SEC Filings Said That the Market Ignored
Reddit is one of the most interesting stocks in the market right now. Not because the business is broken. Because the business looks great on the surface, and the filings tell a more complicated story underneath.
This is a teardown of both the FY2025 10-K and the Q1 2026 10-Q. Every number below comes verbatim from SEC filings. None of it is a prediction.
The Numbers That Look Genuinely Good
Start with what is working, because a lot is working.
Revenue grew 69% in FY2025 to $2.2 billion. Gross margins came in at 91.2%. Free cash flow hit $684 million. Net income was $529.7 million. Operating expenses fell year-over-year even as revenue expanded, which is the operating leverage inflection every growth investor waits for.
Q1 2026 continued the trend. Revenue of $663.4 million, up 69% year-over-year again. Gross margins of 91.5%. Net income of $204 million. ARPU grew 44% year-over-year, driven by gains in both ad volumes and pricing, which suggests broad-based demand rather than a single lever being pulled.
The cash position is $2.8 billion. The company is generating $311 million of free cash flow per quarter. There is no debt crisis here.
If you stopped reading the filing at this point, Reddit looks like one of the best businesses in the market.
The Number That Caught My Eye
I ran the filing expecting to find the secret to their 69% revenue growth. Instead, I found a table that management completely ignored on the earnings call.
Here is Reddit’s logged-in DAUq year-over-year growth, reported quarterly, going back to 2024:
31% → 27% → 27% → 23% → 17% → 14% → 10% → 7%
Nine consecutive quarters of deceleration.
Logged-in users are the ones Reddit can actually monetise. They have accounts. They see personalised ads. They generate the engagement that advertisers pay premium rates to reach. Logged-out and international users browsing without an account generate a fraction of the ARPU.
The headline DAUq number looks better because overall user growth is running at 17% year-over-year. The gap between 17% total and 7% logged-in is the story. Reddit is adding users. It is adding fewer of the users that matter to the revenue model.
The International Mix Problem
The majority of new user growth is coming from international markets. This is not inherently bad. It becomes a problem when you look at what international users are worth.
U.S. ARPU in FY2025 was $10.79. Rest of world ARPU was $7.04. That is a 35% gap. Reddit has been expanding internationally through machine translation, which automatically renders communities in local languages. The filing acknowledges that DAUq growth rates from machine translation may slow as rollout to major global languages is completed.
The mechanism driving headline user growth has a natural ceiling, and the users it adds generate meaningfully less revenue per user than the domestic base. The bull case is that international ARPU converges upward toward domestic rates as the ad product matures. That is plausible. It is also years away and depends on advertiser demand in markets where Reddit is not yet a scaled platform.
The Part the Filing Buries
Here is where it gets interesting.
Reddit announced it will discontinue reporting logged-in DAUq as a metric entirely in Q3 2026.
They are removing the metric from public disclosure at the exact moment it hits 7% growth. The precise quarter when the gap between logged-in and total DAUq is widest. The precise period when the user mix is shifting most aggressively toward lower-monetisation cohorts.
The data will still exist internally. Investors just will not be able to see it.
The filing does not explain why this metric is being removed. The Q1 10-Q simply states it will be discontinued. That is management’s right. Public companies are not required to report every internal metric indefinitely.
But the timing is notable. This is not a metric they are retiring because it stopped being informative. It is a metric that has been reporting a nine-quarter deceleration trend, and it is being retired before it hits single digits.
The Search Engine Question
One other item from the Q1 filing that deserves attention.
Management cited search engine algorithm favorability as a primary driver of recent DAUq growth. Reddit content has been surfacing more prominently in Google search results over the past two years, driving significant referral traffic.
The filing acknowledges that a reversal in search engine algorithm favorability would directly pressure DAUq with no clear internal offset.
This is an externally dependent growth driver that Reddit does not control. Google changes its algorithm regularly. The company that benefits from one update can suffer from the next.
The Bull Case Is Not Dead
To be clear about what the filing does not say.
It does not say Reddit’s advertising business is deteriorating. Revenue is growing at 69%. ARPU is expanding. The platform has 91% gross margins and is generating real cash.
The bull case is that ARPU expansion can compensate for user growth deceleration. That international monetisation eventually converges toward domestic rates. That the community moat is durable and deep enough to keep advertisers paying premium rates. All of that is plausible.
The question is the multiple. At 25 to 30 times forward earnings, you are paying for a growth trajectory that the filed metrics suggest is getting harder to sustain. The revenue growth rate has remained at 69% across multiple quarters, which is impressive. The question is what drives the next phase of that growth when logged-in user growth is at 7% and the international ARPU gap remains meaningful.
What the Filing Actually Says
The 10-K was filed February 6, 2026. The 10-Q was filed May 1, 2026. Every number in this post was pulled directly from SEC XBRL structured data.
You can verify every claim against the original EDGAR filings right now:
This post is for informational purposes only and does not constitute financial advice. All data is sourced from SEC EDGAR public filings.