Investors give Reddit a big upvote after its latest earnings report

Reddit shares surged over 12% in after-hours trading after the internet’s Thunderdome reported its second-quarter earnings on Thursday.

The social media company posted earnings of $0.45 per share, below expectations of $0.69 (yes, we see it) per analysts polled by FactSet. Revenue spiked to $500 million, well above Wall Street’s $426 million consensus and up 78% from last year. In May, Reddit forecast second-quarter revenue of between $410 million and $430 million.

The company’s advertising business continued to make up the vast majority of its top line, bringing in $465 million, up 84% from last year. In the second quarter, advertising made up 93% of Reddit’s revenue. Some analysts believe Reddit’s value as a potential dataset for AI could expand in the quarters to come, which could pump the company’s “other revenue” category higher.

Daily active users rose to 110.4 million, better than expected and up 21% from last year’s 91.2 million. Lurkers made up more than half of that total, growing 24%, compared to 17% growth in logged-in visitors. Reddit has previously blamed Google’s algorithm for swings in its unique visit totals.

Looking ahead, Reddit sees sales climbing to a range of between $535 million and $545 million in the third quarter, well above analysts’ expectations of $473 million.