Although Reddit’s core business relies on online advertising, the company is looking to generate revenue in other ways and is currently in the “early stages” of “data licensing efforts,” the filing states. There is.
“This opportunity is consistent with our values and the rights of Reddit users,” Reddit said, referring to users and forum moderators.
The 19-year-old company has filed to sell its IPO shares at prices between $31 and $34, which would value the business at nearly $6.5 billion. Reddit is entering the public market at a time when technology company IPOs are at a historic low. There hasn’t been a notable venture-backed technology debut since Instacart and Klaviyo in September. And before that, the market had been mostly closed since the end of 2021.
Reddit’s revenue increased 20% last year to $804 million. Approximately 98% of sales came from advertising. His remaining 2% includes data licenses.
“These programs may expose us to evolving approaches to the regulation of this data and imply complex and evolving data privacy and data protection, misappropriation, and intellectual property laws, rules, and regulations. ,” Reddit said in its latest filing.
An FTC spokesperson declined to comment.
Reddit said it entered into a partial data licensing agreement in January, with a total value of $203 million over two to three years. We expect to recognize at least $66.4 million from these agreements in 2024.
The same week that Reddit filed for IPO, Google announced an expanded partnership with the company, giving the search giant access to data for uses such as training AI models.
“We believe our growing platform data will become a key element in training leading large-scale language models (“LLMs”) and serve as an additional monetization channel for Reddit,” the company said in its prospectus. Says.
Reddit said that given the “novelty of these technologies and commercial agreements,” it is “not surprising that the FTC has expressed interest in this issue.”
“We do not believe we have engaged in any unfair or deceptive trade practices,” Reddit said in a statement. “The letter indicated that FTC staff was interested in meeting with us to learn more about our plans and intended to request information and documents from us as the FTC continues its investigation. .”
Reddit said that dealings with regulators could be “long and unpredictable,” could result in “significant costs” and other investigations and product changes, and could result in “changes in policies and practices.” “We may need to make changes or divert management or other resources from our operations.” Otherwise, our business, results of operations, financial condition and prospects could be adversely affected. ”
clock: The impact of Reddit IO on capital markets
