Reddit Inc (NYSE:RDDT) went public in March 2024 with shares priced at $34 and a valuation of around $6 billion. Two years later the company is worth six times that and shares are up significantly. The company’s chief financial officer shares lessons learned from before and after the IPO in an exclusive interview with Benzinga.
Reddit IPO Lessons
Reddit Chief Financial Officer Drew Vollero is looking ahead to future user growth for the company and new AI deals that could have the company continuing to beat analyst financial estimates.
Vollero also can’t help but look back at lessons learned from waiting to go public.
"Patience matters. It’s best to go public when your company is ready," Vollero tells Benzinga. "We originally wanted to go public in 2022, but market conditions weren’t great, so we waited."
Vollero said that during the quiet period, the company focused on business execution. This included being prepared and acting like a public company.
"We held eight mock earnings calls, which included real dress rehearsals, releases, scripts and analyst questions. The only difference was that analysts didn’t publish results. In many ways, Reddit acted like a public company before we were public."
Vollero said Reddit also learned during the IPO process how important people are.
"We’re in the people business, and raising the bar on talent is critical to scaling. Bringing in additional headcount when there’s a strong ROI behind it should be considered a sound investment."
Consistent Earnings Beats
Since going public, Reddit has beaten analyst estimates for revenue and earnings per share in each quarter.
"We’ve always been disciplined and focused on balancing profitability and growth," Vollero tells Benzinga. "So once we became public, it wasn’t an enormous change."
Vollero says the public markets can be "unforgiving" to companies that miss estimates, making Reddit "mindful" as it scales the business.
"Credibility matters for companies, especially young ones, and we’ve worked hard to establish a track record of delivering on our forecasts."
Vollero tells Benzinga the company is taking a long-term view on its financial performance. The company’s keys are growing its users, growing revenue and growing cash flow.
"We also have a goal of delivering a top-quartile total shareholder return, and since our IPO in March 2024, we have delivered over 90% annualized return to our shareholders."
Photo: Ink Drop / Shutterstock
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