Reddit is actively pursuing an aggressive mergers and acquisitions (M&A) strategy, signaling its intent to acquire new capabilities, technologies, and companies. This strategic push was highlighted by CFO Andrew Vollero during the company's fourth-quarter earnings call on Thursday, emphasizing a focus on strengthening its platform, particularly in adtech and artificial intelligence.

Vollero explained that Reddit is looking for businesses that can either significantly benefit from Reddit’s massive user base—meaning their products become more impactful when deployed across the platform—or directly contribute to expanding the company’s user base.

“We’re looking to buy capabilities, technologies, and companies,” he said during his introductory remarks.

When pressed by investors for more details on these “scaled opportunities,” Vollero clarified,

“I probably wouldn’t overthink the scaled opportunities. I would just look at it as sort of a spectrum of opportunities.”
He reiterated the company’s interest in acquiring capabilities and technologies that complement its existing business, noting a history of success with this approach.

“It’s really been one of the secrets of our success,” he pointed out.

Reddit’s adtech team, in particular, has demonstrated a strong aptitude for integrating acquired technologies rather than developing everything in-house. Vollero highlighted the efficiency of this strategy, stating,

“Saves us six months to market, saves us twelve months to market, and you have a proven product.”
He credited these acquisitions with significantly boosting Reddit’s monetization capabilities as an ad-supported business.

While adtech acquisitions have proven successful, Vollero cautioned that Reddit is

“not ruling anything off the table,”
indicating a broader scope for M&A. This openness extends to companies that can deliver substantial value when integrated into a platform of Reddit’s size.

The company reported robust financial results for the quarter, with total revenue reaching $726 million, of which $690 million was generated from advertising. Global daily active unique users surged by 19% year-over-year to 121.4 million, and earnings per share of $1.24 comfortably beat analyst estimates.

Looking ahead, Reddit also sees a growing opportunity to generate revenue from its AI search product, raising questions about potential M&A in this rapidly evolving sector. The company has been increasing its AI investments, including the development of an AI search engine, and has a track record of acquiring startups in this space.

Recent acquisitions underscore this strategy, including Memorable AI in August 2024, a creative intelligence platform designed to enhance advertiser performance. Other notable acquisitions from 2022 include:

  • Spell: An AI platform aimed at boosting Reddit’s machine learning capabilities.
  • Spiketrap: Focused on improving ad targeting through contextualization.
  • Oterlu: Developed machine-learning moderation tools.
  • MeaningCloud: Acquired to enhance Reddit’s machine learning and text analytics capabilities.