Reddit Inc.

07/31/2026 | Press release | Distributed by Public on 07/31/2026 04:01

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the "Annual Report"). In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve significant risks and uncertainties. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to those differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in "Risk Factors" and "Note Regarding Forward-Looking Statements."
Overview of Second Quarter 2026 Results
User Metrics
•Daily Active Uniques ("DAUq") were 130.3 million for the three months ended June 30, 2026, an increase of 18% year-over-year
•Average revenue per unique ("ARPU") was $6.18 for the three months ended June 30, 2026, an increase of 36% year-over-year
Financial Results
•Revenue was $804.9 million for the three months ended June 30, 2026, an increase of 61% year-over-year
•Gross margin was 91.3% for the three months ended June 30, 2026, as compared to 90.8% in the three months ended June 30, 2025
•Operating expenses were $502.9 million for the three months ended June 30, 2026 as compared to $386.0 million in the three months ended June 30, 2025
•Net income was $252.8 million for the three months ended June 30, 2026, as compared to $89.3 million in the three months ended June 30, 2025
•Adjusted EBITDA was $342.8 million for the three months ended June 30, 2026, as compared to $166.7 million in the three months ended June 30, 2025
•Net cash provided by operating activities was $261.9 million for the three months ended June 30, 2026, as compared to $111.3 million in the three months ended June 30, 2025
•Free Cash Flow was $260.7 million for the three months ended June 30, 2026, as compared to $110.8 million in the three months ended June 30, 2025
•Cash, cash equivalents, and marketable securities were $2.8 billion as of June 30, 2026
Key Financial and Operating Metrics
We review a number of metrics, including the key metrics discussed below, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.
Trends in User Metrics
Daily Active Unique. We define a daily active unique ("DAUq") as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a 24-hour period. We calculate average DAUq for a particular period by adding the number of DAUq on each day of that period and dividing that sum by the number of days in that period. DAUq is shown globally and also broken out by the United States and the rest of the world because these markets have different characteristics. Most notably, we are more advanced in engagement and monetization in the United States than in the rest of the world. We measure DAUq because we believe that this metric helps management and investors understand usage of and engagement with our platform. DAUq is the primary metric by which we measure the scale of our active user base.
DAUq includes visits from those who have logged in to a registered account as well as those who have not logged in to-or do not have-a registered account. Visitors that come to Reddit from search engines are generally not logged in and originate from both desktop and mobile web. Currently, monetization of these users is mainly through conversation pages and feed ads.
During the three months ended December 31, 2023, we deployed further advances in our process used to identify and address activity by users and visitors, including web crawlers and scrapers. As we identify automated agents, we remove them from our DAUq count prospectively and do not recalculate DAUq for prior periods if we assess such impact to be immaterial. As we have continued to improve our capabilities to identify suspicious traffic, we have not seen this methodology materially impact trends in DAUq from quarter to quarter. Year-over-year and quarter-over-quarter activity can also fluctuate due to various internal and external factors.
Historically we monitored logged-in DAUq, which we define as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a 24-hour period and was logged in to a registered account. We measured logged-in DAUq because these users tend to have higher engagement and spend more time on our platform compared to users who are not logged in to a registered account. However, as our business has scaled and our product strategy has evolved, our focus has shifted to delivering immediate value for all users and enabling them to engage with content on Reddit, regardless of whether they are logged in or logged out. As a result, management primarily uses total DAUq and DAUq by geography for managing the business and for evaluating our core operating performance. Therefore, beginning in the quarter ended September 30, 2026, we will no longer report logged-in and logged-out DAUq.
Quarterly Average DAUq
(in millions)
Total DAUq YoY Growth: 47% 39% 31% 21% 19% 19% 17% 18%
Logged-in DAUq YoY Growth: 27% 27% 23% 17% 14% 10% 7% 7%
Total DAUq YoY Growth: 51% 32% 21% 11% 7% 9% 7% 6% Total DAUq YoY Growth: 44% 46% 41% 32% 31% 28% 26% 28%
Logged-in DAUq YoY Growth: 29% 24% 19% 12% 7% 5% 1% 1% Logged-in DAUq YoY Growth: 26% 29% 27% 22% 19% 14% 12% 12%
We assess both year-over-year and quarter-over-quarter growth of DAUq in each period.
In the three months ended June 30, 2026, global DAUq grew 18% compared to the prior year period, driven by 6% growth in DAUq in the United States and 28% growth in DAUq in the rest of world. Global DAUq grew 3% compared to the prior quarter period, driven by 5% growth in DAUq in the rest of world, while DAUq in the United States remained relatively flat. The change in global DAUq in the three months ended June 30, 2026, compared to the prior year period, was primarily driven by the combination of third-party search engine algorithm changes and our growth initiatives, particularly in machine translation, marketing, and product improvements. The change in global DAUq in the three months ended June 30, 2026, compared to the prior quarter period, was primarily driven by our growth initiatives, particularly in marketing and product improvements, partially offset by third-party search engine algorithm changes.
Weekly Active Unique. We define a weekly active unique ("WAUq") as a user whom we can identify with a unique identifier who has visited a page on the Reddit website, www.reddit.com, or opened a Reddit application at least once during a trailing seven-day period. We calculate average quarterly WAUq for a particular period by adding the number of WAUq on each day of that period and dividing that sum by the number of days in that period. We measure WAUq because we believe that this metric helps management and investors understand the reach of our platform.
During the three months ended December 31, 2023, we deployed further advances in our process used to identify and address activity by users and visitors, including web crawlers and scrapers. As we identify automated agents, we remove them from our WAUq count prospectively and do not recalculate WAUq for prior periods if we assess such impact to be immaterial. As we have continued to improve our capabilities to identify suspicious traffic, we have not seen this methodology materially impact trends in WAUq from quarter to quarter.
Quarterly Average WAUq
(in millions)
WAUq YoY Growth: 53% 42% 31% 22% 21% 24% 23% 24%
DAUq/WAUq: 27% 27% 27% 27% 26% 26% 26% 25%
WAUq YoY Growth:
58% 31% 18% 8% 6% 12% 10% 9%
WAUq YoY Growth:
48% 52% 44% 35% 37% 34% 33% 35%
In the three months ended June 30, 2026, global WAUq grew 24% compared to the prior year period, driven by 9% growth in WAUq in the United States and 35% growth in WAUq in the rest of world. For the three months ended June 30, 2026, the proportion of DAUq to WAUq was 25%.
Trends in Monetization Metrics
We monetize our business primarily through advertising on our mobile applications and website. In the six months ended June 30, 2026, we recorded revenue of $1.5 billion, as compared to revenue of $0.9 billion for the six months ended June 30, 2025, representing an increase of 65% compared to the prior year period.
ARPU. We define average revenue per unique ("ARPU") as quarterly revenue in a given geography divided by the average DAUq in that geography. For the purposes of calculating ARPU, advertising revenue in a given geography is based on the geographic location in which advertising impressions are delivered, as this approximates revenue based on user activity, while other revenue in a given geography is based on the billing address of the customer. This differs from the presentation of our revenue by geography in the notes to our consolidated financial statements included elsewhere in the Quarterly Report on Form 10-Q, where both advertising revenue and other revenue are based on the billing address of the customer.
We present ARPU globally and also broken out on a United States and rest of world basis because we currently monetize users in the United States and the rest of the world at different rates. We measure ARPU because we believe that this metric helps our management and investors assess the extent to which we are monetizing our DAUq. Monetization of new users is generally at a lower rate than existing users and as such, ARPU tends to grow at a lower rate than revenue in periods of strong DAUq growth. Our ARPU reflects the seasonality of our advertising revenue, with the fourth quarter typically being the strongest quarter of each year, especially in the United States, our most developed geography. United States ARPU is higher primarily due to the relative size and maturity of the U.S. digital advertising market, a dynamic we expect will continue for the foreseeable future.
Quarterly ARPU
(in dollars)
YoY Growth: 14% 23% 23% 47% 41% 42% 44% 36%
YoY Growth: 12% 28% 31% 59% 54% 53% 54% 51%
YoY Growth:
16% 25% 22% 40% 39% 38% 51% 31%
During the three months ended June 30, 2026, ARPU was $6.18, an increase of 36% compared to $4.53 for the prior year period, United States ARPU was $11.85, compared to $7.87 for the prior year period, and rest of world ARPU was $2.26, compared to $1.73 for the prior year period. The increase in global ARPU compared to the prior year period was due primarily to an increase in advertising revenue driven by an increase in pricing and an increase in ad impressions delivered. During the three months ended June 30, 2026, the price of ads increased by approximately 40% compared to the prior year period driven by improved performance across the full funnel of ad objectives and higher advertiser demand. During the three months ended June 30, 2026, ad impressions delivered increased by approximately 17% compared to the prior year period driven in part by ad load optimization and improvements, including new ad placements, and by increases in the number of users and user engagement.
Non-GAAP Financial Measures
We use certain non-GAAP financial measures to supplement our consolidated financial statements, which are presented in accordance with U.S. GAAP, to evaluate our core operating performance. These non-GAAP financial measures include Adjusted EBITDA and Free Cash Flow. We use these non-GAAP financial measures to facilitate reviews of our operational performance and as a basis for strategic planning. By excluding certain items that are non-recurring or not reflective of the performance of our normal course of business, we believe that Adjusted EBITDA and Free Cash Flow provide meaningful supplemental information regarding our performance. Accordingly, we believe these non-GAAP financial measures are useful to investors and others because they allow investors to supplement their understanding of our financial trends and evaluate our ongoing and future performance in the same manner as management. However, there are a number of limitations related to the use of non-GAAP financial measures as they reflect the exercise of judgment by our management about which expenses are included or excluded in determining these non-GAAP measures. These non-GAAP measures should be considered in addition to, not as a substitute for or in isolation from, our financial results prepared in accordance with U.S. GAAP. Other companies, including companies in our industry, may calculate these non-GAAP financial measures differently or not at all, which reduces their usefulness as comparative measures.
Adjusted EBITDA
Adjusted EBITDA is defined as net income excluding interest (income) expense, net, income tax expense (benefit), depreciation and amortization, stock-based compensation expense and related taxes, other (income) expense, net, and certain other non-recurring or non-cash items impacting net income that we do not consider indicative of our ongoing business performance. Other (income) expense, net consists primarily of realized gains and losses on sales of marketable securities, foreign currency transaction gains and losses, and other income and expense that are not indicative of our core operating performance. We consider the exclusion of certain non-recurring or non-cash items in calculating Adjusted EBITDA to provide a useful measure for investors and others to evaluate our operating results in the same manner as management.
The following table presents a reconciliation of our net income, the most directly comparable financial measure presented in accordance with U.S. GAAP, to Adjusted EBITDA:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(in thousands)
Reconciliation of Adjusted EBITDA:
Net income $ 252,848 $ 89,297 $ 456,829 $ 115,455
Add (deduct):
Interest (income) expense, net (25,027) (21,056) (48,912) (41,470)
Income tax expense (benefit) 3,987 (439) 5,734 (2,160)
Depreciation and amortization(1)
4,258 3,934 8,468 7,897
Stock-based compensation expense and related taxes(2)
106,836 95,104 185,684 202,509
Other (income) expense, net (92) (91) 977 (211)
Adjusted EBITDA $ 342,810 $ 166,749 $ 608,780 $ 282,020
________________
(1)Includes depreciation and amortization as follows:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(in thousands)
Research and development $ 2,645 $ 2,510 $ 5,284 $ 5,050
Sales and marketing 1,379 1,216 2,721 2,418
General and administrative 234 208 463 429
Depreciation and amortization $ 4,258 $ 3,934 $ 8,468 $ 7,897
(2)Includes stock-based compensation expense and related taxes as follows:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(in thousands)
Cost of revenue $ 253 $ 204 $ 398 $ 421
Research and development 69,098 59,629 118,770 124,816
Sales and marketing 13,068 11,153 20,205 25,373
General and administrative 24,417 24,118 46,311 51,899
Stock-based compensation expense and related taxes $ 106,836 $ 95,104 $ 185,684 $ 202,509
Free Cash Flow
Free Cash Flow represents net cash provided by (used in) operating activities less purchases of property and equipment. We believe that Free Cash Flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. Additionally, we believe that Free Cash Flow is an important measure since we use third-party infrastructure partners to host our services and therefore we do not incur significant capital expenditures to support revenue generating activities.
The following table presents a reconciliation of net cash provided by (used in) operating activities, the most directly comparable financial measure calculated in accordance with U.S. GAAP, to Free Cash Flow:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(in thousands)
Reconciliation of Free Cash Flow:
Net cash provided by (used in) operating activities $ 261,876 $ 111,331 $ 574,129 $ 238,909
Less:
Purchases of property and equipment (1,134) (505) (2,224) (1,484)
Free Cash Flow $ 260,742 $ 110,826 $ 571,905 $ 237,425
Results of Operations
The following table summarizes our historical consolidated statements of operations data for the periods indicated:
Three months ended June 30, Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
Revenue $ 804,905 $ 499,627 $ 305,278 61 % $ 1,468,316 $ 891,988 $ 576,328 65 %
Net income 252,848 89,297 163,551 183 % 456,829 115,455 341,374 296 %
Adjusted EBITDA(1)
342,810 166,749 176,061 106 % 608,780 282,020 326,760 116 %
_________________
(1)See "Non-GAAP Financial Measures-Adjusted EBITDA" for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Components of Results of Operations
Revenue
We generate a majority of our revenue through the sale of advertising on our mobile applications and website. We recognize 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.
We also generate revenue from content licensing and products sold directly to users. In our content licensing arrangements, we provide customers with the right to access content from our platform over the contractual period. 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. Revenue from other products sold directly to users, including Reddit Premium and Reddit Gold, was not material for the periods presented.
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 targeting and measurement services, credit card and other transaction processing fees, and payments to our content partners. 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 hosting costs associated with internal research and development activities, as well as professional services, 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, marketing, and other promotional expenditures, as well as professional services, allocated facilities, and other supporting overhead costs.
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, and other administrative teams. General and administrative expenses also include costs incurred for professional services, non-income based taxes, insurance, allocated facilities, and other supporting overhead costs.
Other Income (Expense), Net
Other income (expense), net, consists primarily of interest income, interest expense, realized gains and losses on sales of marketable securities, and foreign currency transaction gains and losses.
Income Tax Expense (Benefit)
We are subject to income taxes in the United States and foreign jurisdictions. Our income tax provision represents the income tax expense or benefit associated with our operations based on the tax laws of the jurisdictions in which we operate. The foreign jurisdictions where we operate have different statutory tax rates than the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rates will vary depending on the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.
We have a full valuation allowance against our United States federal and state deferred tax assets and will continue to maintain it until there is sufficient evidence to support the future utilization of these assets. Given our recent history of generating net income in the United States, we believe that there is a reasonable possibility that sufficient positive evidence may become available within the next 12 months to allow us to release a significant portion of the valuation allowance in the United States. The reversal would result in a significant income tax benefit in the period when we release it. However, the exact timing and amount of the valuation allowance release are subject to change based on a number of factors, including but not limited to, the level of profitability (income before income taxes adjusted for permanent differences) that we are able to accurately forecast, as well as the amount of our tax deductible stock-based compensation, which is dependent upon our publicly traded share price, and macroeconomic conditions, among other factors.
Discussion of Results of Operations
The following table sets forth our consolidated statements of operations data for the periods indicated:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(unaudited)
(in thousands)
Consolidated Statements of Operations Data:
Revenue $ 804,905 $ 499,627 $ 1,468,316 $ 891,988
Costs and expenses:
Cost of revenue 70,308 45,900 126,575 82,989
Research and development 231,276 196,610 438,522 387,881
Sales and marketing 195,897 120,619 347,369 211,304
General and administrative 75,708 68,787 141,222 138,200
Total costs and expenses 573,189 431,916 1,053,688 820,374
Income (loss) from operations 231,716 67,711 414,628 71,614
Other income (expense), net 25,119 21,147 47,935 41,681
Income (loss) before income taxes 256,835 88,858 462,563 113,295
Income tax expense (benefit) 3,987 (439) 5,734 (2,160)
Net income $ 252,848 $ 89,297 $ 456,829 $ 115,455
Adjusted EBITDA(1)
$ 342,810 $ 166,749 $ 608,780 $ 282,020
Net cash provided by (used in) operating activities $ 261,876 $ 111,331 $ 574,129 $ 238,909
Free Cash Flow(2)
$ 260,742 $ 110,826 $ 571,905 $ 237,425
_________________
(1)See "Non-GAAP Financial Measures-Adjusted EBITDA" for more information and for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
(2)See "Non-GAAP Financial Measures-Free Cash Flow" for more information and for a reconciliation of Free Cash Flow to net cash provided by (used in) operating activities, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
The following table sets forth our consolidated statements of operations data expressed as a percentage of revenue for the periods indicated:
Three months ended June 30, Six months ended June 30,
2026 2025 2026 2025
(unaudited)
Consolidated Statements of Operations Data:
Revenue 100 % 100 % 100 % 100 %
Costs and expenses:
Cost of revenue 9 9 9 9
Research and development 29 39 30 44
Sales and marketing 24 24 24 24
General and administrative 9 14 9 15
Total costs and expenses 71 86 72 92
Income (loss) from operations 29 14 28 8
Other income (expense), net 3 4 3 5
Income (loss) before income taxes 32 18 31 13
Income tax expense (benefit) 1 0 0 0
Net income 31 % 18 % 31 % 13 %
Three and six months ended June 30, 2026 and 2025
Revenue
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
Revenue $ 804,905 $ 499,627 $ 305,278 61 % $ 1,468,316 $ 891,988 $ 576,328 65 %
Revenue for the three and six months ended June 30, 2026 increased by $305.3 million and $576.3 million, or 61% and 65%, respectively, compared to the prior year periods. The growth in revenue during the three and six month periods was due primarily to an increase in advertising revenue of $296.8 million and $562.9 million, or 64% and 68%, respectively, as compared to the prior year periods driven by an increase in pricing and an increase in impressions delivered. During the three and six months ended June 30, 2026, the price of ads increased by approximately 40% and 35%, respectively, compared to the prior year periods driven by improved performance across the full funnel of ad objectives and higher advertiser demand. During the three and six months ended June 30, 2026, ad impressions delivered increased by approximately 17% and 24%, respectively, compared to the prior year periods driven in part by ad load optimization and improvements, including new ad placements, and by increases in the number of users and user engagement. For more information regarding increases in the number of users, see "-Key Financial and Operating Metrics-Trends in User Metrics."
Revenue in the United States for the three and six months ended June 30, 2026 increased by $229.3 million and $441.0 million, or 56% and 61%, respectively, compared to the prior year periods. Revenue in the rest of world for the three and six months ended June 30, 2026 increased by $76.0 million and $135.3 million, or 84% and 80%, respectively, compared to the prior year periods. Revenue growth for both geographies was driven by the factors described above.
Cost of Revenue
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
Cost of revenue $ 70,308 $ 45,900 $ 24,408 53 % $ 126,575 $ 82,989 $ 43,586 53 %
Cost of revenue for the three and six months ended June 30, 2026 increased by $24.4 million and $43.6 million, respectively, or 53% for each period, compared to the prior year periods. The increase in cost of revenue was primarily attributable to increased hosting usage to support product enhancements and user growth on our platform, partially offset by lower hosting prices and hosting cost efficiencies.
Research and Development Expenses
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
Research and development $ 231,276 $ 196,610 $ 34,666 18 % $ 438,522 $ 387,881 $ 50,641 13 %
Research and development expenses for the three and six months ended June 30, 2026 increased by $34.7 million and $50.6 million, or 18% and 13%, respectively, compared to the prior year periods. The increase was driven primarily by an increase in hosting costs associated with internal research and development activities and an increase in employee-related costs, driven in part by an increase in headcount.
Sales and Marketing Expenses
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
Sales and marketing $ 195,897 $ 120,619 $ 75,278 62 % $ 347,369 $ 211,304 $ 136,065 64 %
Sales and marketing expenses for the three and six months ended June 30, 2026 increased by $75.3 million and $136.1 million, or 62% and 64%, respectively, compared to the prior year periods. The increase in sales and marketing expenses was driven primarily by an increase in user and brand marketing expenses and, to a lesser extent, an increase in employee-related costs, driven in part by an increase in headcount.
General and Administrative Expenses
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
General and administrative $ 75,708 $ 68,787 $ 6,921 10 % $ 141,222 $ 138,200 $ 3,022 2 %
General and administrative expenses for the three and six months ended June 30, 2026 increased by $6.9 million and $3.0 million, or 10% and 2%, respectively, compared to the prior year periods. The increase in the three months ended June 30, 2026 was driven primarily by an increase in employee-related costs.
Other Income (Expense), Net
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
Other income (expense), net $ 25,119 $ 21,147 $ 3,972 19 % $ 47,935 $ 41,681 $ 6,254 15 %
Other income (expense), net for the three and six months ended June 30, 2026 increased by $4.0 million and $6.3 million, or 19% and 15%, respectively, compared to the prior year periods. The increase was primarily due to higher interest earned on our cash and investments driven by a higher invested balance.
Income Tax Expense (Benefit)
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 $ Change % Change 2026 2025 $ Change % Change
(unaudited)
(in thousands, except percentages)
Income tax expense (benefit) $ 3,987 $ (439) $ 4,426 NM $ 5,734 $ (2,160) $ 7,894 NM
_________________
NM - Not meaningful
Income tax expense (benefit) for the three and six months ended June 30, 2026 increased by $4.4 million and $7.9 million compared to the prior year periods, respectively. The increase was primarily due to an increase in income before income taxes as compared to the prior year periods.
Liquidity and Capital Resources
We have historically financed our operations primarily through net proceeds from the sale of our stock and payments received from our customers. We began generating net positive operating cash flows in 2024. Our primary uses of cash are employee-related costs and the cost of operating our mobile applications and website.
As of June 30, 2026, we had $2.8 billion in cash, cash equivalents, and marketable securities. Our cash and cash equivalents consist of cash in bank accounts, money market accounts, time deposits, and other highly liquid investments with original maturities of 90 days or less from the date of purchase. Marketable securities consist of U.S. government securities, investment-grade corporate and government agency securities, time deposits, and commercial paper. As of June 30, 2026, approximately 2% of our cash, cash equivalents, and marketable securities was held outside of the United States.
On July 1, 2025, we entered into an Amended and Restated Credit and Guarantee Agreement, which amended and restated our prior Credit and Guarantee Agreement dated October 8, 2021 (as amended on May 23, 2023), and provides for a five-year, $500.0 million, revolving loan and standby letter of credit facility ("Revolving Credit Facility") of which $100.0 million can be issued as letters of credit and another $100.0 million of which can be borrowed in certain non-U.S. dollar currencies. As of June 30, 2026, we have issued four letters of credit, three of which are denominated in a foreign currency, for an aggregate of $5.6 million, which reduced the letter of credit borrowings available under the Revolving Credit Facility to $94.4 million. The aggregate available balance under the Revolving Credit Facility was $494.4 million as of June 30, 2026.
Under the terms of the Revolving Credit Facility, borrowings can be ABR Loans, Term Benchmark Loans, or RFR 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%, or (C) the Adjusted Term SOFR Rate plus 1.0% (each as defined in the 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, the Adjusted Term CORRA Rate, or the Adjusted AUD Rate (each as defined in the Revolving Credit Facility), as applicable, in each case plus 1.25%. Outstanding RFR Loans bear interest at a rate equal to the Adjusted Daily Simple RFR (as such term is defined in the 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 Revolving Credit Facility.
The Revolving Credit Facility contains customary conditions on our borrowings, 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 adhere to a maximum total leverage ratio. The obligations under the Revolving Credit Facility are secured by liens on substantially all of our assets, including intellectual property assets. However, the Revolving Credit Facility provides for the permanent release of guarantees and collateral upon our achievement of certain investment grade ratings. We were in compliance with all covenants as of June 30, 2026.
We believe our cash flows from operations, existing cash, cash equivalents, and marketable securities, and amounts available under our Revolving Credit Facility will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months and for the foreseeable future. We continuously evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance our future capital needs.
On February 4, 2026, our Board of Directors authorized a share repurchase program to purchase up to $1.0 billion of our Class A common stock (the "Share Repurchase Program"). Under the Share Repurchase Program, we may repurchase shares of our Class A common stock from time to time on the open market (including via pre-set trading plans), in privately negotiated transactions, or through other transactions in accordance with applicable securities laws. The Share Repurchase Program does not obligate us to acquire any particular amount of Class A common stock, has no expiration date, and may be suspended or discontinued at any time at our discretion. During the six months ended June 30, 2026, we repurchased 1,523,502 shares of our Class A common stock for $239.6 million. As of June 30, 2026, $760.4 million remained available for repurchases.
The following table summarizes our cash flows for the periods presented:
Six months ended June 30,
2026 2025
(unaudited)
(in thousands)
Net cash provided by (used in) operating activities $ 574,129 $ 238,909
Net cash provided by (used in) investing activities 219,536 (29,578)
Net cash provided by (used in) financing activities (260,396) (37,413)
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 533,269 $ 171,918
Free Cash Flow(1)
$ 571,905 $ 237,425
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(1)See "Non-GAAP Financial Measures-Free Cash Flow" for more information and for a reconciliation of Free Cash Flow to net cash provided by (used in) operating activities, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.
Operating Activities
Net cash provided by operating activities was $574.1 million in the six months ended June 30, 2026, resulting primarily from net income of $456.8 million in the six months ended June 30, 2026, adjustments for non-cash items, primarily related to stock-based compensation expense of $169.3 million, and an increase in accounts payable and accrued expenses and other current liabilities of $42.7 million. These amounts were partially offset by an increase in accounts receivable of $59.3 million due to the timing of cash collections and an increase in prepaid expenses and other assets of $36.2 million. Net cash provided by operating activities was $238.9 million in the six months ended June 30, 2025, resulting primarily from net income of $115.5 million in the six months ended June 30, 2025, adjustments for non-cash items, primarily related to stock-based compensation expense of $174.5 million, and an increase in accounts payable and accrued expenses and other current liabilities of $41.2 million due to the timing of payments. These amounts were partially offset by an increase in accounts receivable of $57.8 million due to the timing of cash collections and an increase in prepaid expenses and other assets of $26.4 million.
Investing Activities
Net cash provided by investing activities was $219.5 million in the six months ended June 30, 2026, primarily due to maturities and proceeds from the sale of marketable securities of $901.7 million, partially offset by additional purchases of marketable securities of $676.9 million. Net cash used in investing activities was $(29.6) million in the six months ended June 30, 2025, primarily due to additional purchases of marketable securities of $1.1 billion, partially offset by maturities and proceeds from the sale of marketable securities of $1.0 billion.
Financing Activities
Net cash used in financing activities was $(260.4) million in the six months ended June 30, 2026 and consisted primarily of repurchases of Class A common stock of $239.6 million and cash payments for taxes related to net share settlement of restricted stock units of $30.7 million. Net cash used in financing activities was $(37.4) million in the six months ended June 30, 2025 and consisted primarily of cash payments for taxes related to net share settlement of restricted stock units of $51.9 million, partially offset by proceeds from exercises of employee stock options of $14.5 million.
Free Cash Flow
Free Cash Flow was $571.9 million and $237.4 million for the six months ended June 30, 2026 and 2025, respectively, and was composed of net cash provided by operating activities, resulting primarily from net income, adjustments for non-cash items, and changes in working capital. Free Cash Flow also included purchases of property and equipment of $2.2 million and $1.5 million for the six months ended June 30, 2026 and 2025, respectively. For the six months ended June 30, 2026, the increase in Free Cash Flow as compared to the prior year period was driven primarily by the increase in net income.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Contractual Obligations and Commitments
We have non-cancellable contractual obligations and commitments primarily related to third-party cloud infrastructure agreements under which we are granted access to certain cloud services as well as operating lease agreements. During the six months ended June 30, 2026, there were no material changes outside the normal course of business to the purchase obligations as disclosed in the audited consolidated financial statements as of and for the year ended December 31, 2025 included in the Annual Report. In June 2026, we signed an addendum to extend our cloud services agreement with AWS through 2029. We committed under this agreement to spend an aggregate of $880.0 million between July 2026 and June 2029.
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP. Preparing these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and
related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ significantly from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, results of operations, financial condition, and cash flows will be affected.
Other than as described below, there have been no material changes to our critical accounting policies and estimates as described in our Annual Report.
Income Taxes
We account for income taxes using the asset and liability method. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting and tax bases of assets and liabilities using the enacted statutory tax rates in effect for the years in which we expect the differences to reverse. We establish valuation allowances to reduce the total deferred tax assets to the amount we believe is more likely than not to be realized. In assessing the need for a valuation allowance, we consider all available evidence, both positive and negative, including past operating results and estimates of future taxable income. Our judgment regarding the timing and amount of the valuation allowance release is subject to change based on a number of factors, including but not limited to, the level of profitability (income before income taxes adjusted for permanent differences) that we are able to accurately forecast, as well as the amount of our tax deductible stock-based compensation, which is dependent upon our publicly traded share price, and macroeconomic conditions, among other factors. In the event that we change our determination as to the amount of deferred tax assets that can be realized, we will adjust our valuation allowance with a corresponding impact to the provision for (benefit from) income taxes in the period in which such determination is made.
Recent Accounting Pronouncements
See Note 2-Basis of Presentation and Significant Accounting Policies of the notes to our consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for any recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.
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