Reddit says it’s looking for more acquisitions in ad tech and elsewhere

Reddit is gearing up for more mergers and acquisitions, the company told analysts on its fourth-quarter earnings call on Thursday. The online forum site is looking for companies that can either leverage Reddit’s scale — meaning their products become more impactful when spread across Reddit’s massive user base — or help grow the company’s user base, said Andrew Vollero, Reddit’s chief financial officer.

“(We) are looking to buy capabilities, technologies and companies,” he said during his opening remarks.

Clearly, investors wanted to know more — especially about what the company was thinking when it came to scaling opportunities.

In the question-and-answer portion of the call, Folero explained, “I probably wouldn’t overthink the opportunities. I would just look at it as kind of a collection of opportunities.” He reiterated that the company was looking for capabilities and technologies that could add to its business, noting that it had succeeded in doing so in the past.

“This has really been one of the secrets to our success,” he noted.

Reddit’s ad tech team in particular has been adept at “integrating” acquired technologies rather than building these things themselves, Fulero explained.

“It saves us six months to market, saves us twelve months to market, and you have a proven product,” the CFO noted, crediting these deals with helping Reddit improve its monetization capabilities as an ad-supported company.

However, Folero cautioned that while ad tech acquisitions have been what has worked in the past, the company is “not taking anything off the table.” That’s why he mentioned that Reddit may buy companies that can provide services when added to a company of this size.

The company reported a strong quarter ProfitsWith revenues of $726 million, of which $690 million came from advertising. Global daily active unique users rose 19% year-over-year to 121.4 million, and earnings per share of $1.24 beat estimates.

Reddit also said it sees a growing opportunity to generate revenue From artificial intelligence research product in the future, which raises the question of whether the company is eyeing this area for mergers and acquisitions as well.

Reddit, which has ramped up its investments in AI in recent months, including an AI search engine, has acquired startups before. In recent years, it has acquired ad technology players and AI optimization tools, including Unforgettable AI in August 2024.

The acquisition is designed to bolster Reddit’s advertising tools, and joins a host of acquisitions from 2022, including AI platform SpellsDesigned to enhance Reddit’s machine learning capabilities; SpiketrapWhich focused on improving ad targeting; oterluWhich developed machine learning supervision tools; and Meaning of cloudAnother startup was acquired to improve Reddit’s machine learning and text analysis capabilities.