Free cash flow margin expanded to 32.4% in 2026Q2, with cumulative operating cash flow of $1.49B exceeding net income, while buybacks of $234.6M in 2026Q2 signal capital return initiation.
Reddit, Inc. (RDDT) cash flow statement — 6-year operating, investing & financing cash flows
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 |
|---|
| Cash from Operations | 1.03B | 690.88M | 222.07M | -75.11M | -94.02M | -130.19M | -61.84M |
| Operating CF Margin % | - | 31.37% | 17.08% | -9.34% | -14.1% | -26.85% | -27.02% |
| Operating CF Growth % | 634.96% | 211.11% | 395.64% | 20.11% | 27.78% | -110.51% | - |
| Net Income | 871.1M | 529.72M | -484.28M | -90.82M | -158.55M | -127.9M | -59.17M |
| Depreciation & Amortization | 16.52M | 15.95M | 15.64M | 13.7M | 8M | 2.81M | 1.93M |
| Stock-Based Compensation | 337.98M | 343.18M | 801.65M | 47.6M | 55.31M | 149.87M | 21.25M |
| Deferred Taxes | 0 | 0 | 0 | 0 | -25.08M | -74.87M | 22.04M |
| Other Non-Cash Items | -12.82M | -21.17M | -43.48M | -15.6M | 36.38M | -16.36M | -12.33M |
| Working Capital Changes | -186.69M | -176.81M | -67.47M | -29.99M | -10.08M | -63.74M | -35.56M |
| Change in Receivables | -242.87M | -241.36M | -104.28M | -53.32M | -30.23M | -74.99M | -43.28M |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Change in Payables | 25.26M | 18.17M | -570K | 12.47M | 10.9M | 11.73M | 2.69M |
| Cash from Investing | 30.23M | -218.89M | -440.69M | 41.29M | -804.18M | 170.68M | 81.18M |
| Capital Expenditures | -7.45M | -6.71M | -6.25M | -9.72M | -6.23M | -2.3M | -3.05M |
| CapEx % of Revenue | 0.27% | 0.3% | 0.48% | 1.21% | 0.93% | 0.47% | 1.33% |
| Acquisitions | 0 | 0 | -17.14M | 0 | -42.2M | -177.98M | -84.23M |
| Investments | - | - | - | - | - | - | - |
| Other Investing | -3.27M | 3.01M | 5.82M | 172K | -64K | 172.98M | 84.23M |
| Cash from Financing | -303.54M | -80.56M | 379.54M | -811K | -3.78M | 1.18B | 8.33M |
| Debt Issued (Net) | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Equity Issued (Net) | -219.07M | 25.07M | 680.22M | 6.99M | -2.76M | 1.15B | 8.33M |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -239.59M | 0 | 0 | 0 | 0 | -95.19M | 0 |
| Other Financing | -84.48M | -105.63M | -300.68M | -7.8M | -1.02M | 34.63M | 0 |
| Net Change in Cash | 752.78M | 391.43M | 160.92M | -34.63M | -901.99M | 1.22B | 27.67M |
| Free Cash Flow | 1.02B | 684.17M | 215.82M | -84.84M | -100.25M | -132.49M | -64.89M |
| FCF Margin % | 36.66% | 31.06% | 16.6% | -10.55% | -15.04% | -27.32% | -28.35% |
| FCF Growth % | 156.68% | 217.01% | 354.39% | 15.38% | 24.33% | -104.16% | - |
| FCF per Share | 5.04 | 3.39 | 1.20 | -0.52 | -0.61 | -0.81 | -0.40 |
| FCF Conversion (FCF/Net Income) | 1.17x | 1.30x | -0.46x | 0.83x | 0.59x | 1.02x | 1.05x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 0 | 0 | 745K | 164K | 5K |
Quick answers to the most common questions about buying RDDT stock.
Reddit, Inc. (RDDT) generated $690.9M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Reddit, Inc. (RDDT) generated $684.2M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Reddit, Inc. (RDDT) spent $6.7M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
Key Metrics
Top Statement Risk
SBC dilution and revenue concentration
Metrics are mathematically derived from official filings.
Cash Conversion Outpaces Reported Earnings
Reddit's operating cash flow exceeded net income in every profitable quarter, with OCF/NI reaching 1.53 in 2026Q1, per recent financial statements, indicating high earnings quality despite significant stock-based compensation.
The consistent OCF/NI ratio above 1.0, except for the loss-making 2024Q1, suggests that reported net income is backed by actual cash generation. The gap between net income and operating cash flow is largely attributable to non-cash charges like SBC and D&A, which are added back, while working capital changes have been modest. This implies that earnings are not being inflated by aggressive accruals, and the company's profitability is translating into cash.
Free Cash Flow Margin Expansion Accelerates
Reddit's FCF margin surged from 9.7% in 2024Q2 to 32.4% in 2026Q2, as reported in quarterly filings, reflecting rapid scaling and operating leverage, with FCF growing over 10x from $27.2M to $260.7M.
The FCF trajectory shows a dramatic inflection from near-breakeven in early 2024 to robust positive cash flow, driven by revenue growth and cost discipline. The FCF margin now exceeds that of peers like Pinterest (34.9%) and is well above Snap's 11.1%, indicating Reddit's asset-light model is highly cash-generative. This trend suggests that the company is not only growing but also converting that growth into shareholder cash flow at an increasing rate.
Minimal Capital Intensity Belies Scalability
Capital expenditures have remained below $3.2M per quarter, representing less than 0.5% of revenue, per SEC filings, underscoring Reddit's asset-light model and enabling nearly all operating cash flow to convert to free cash flow.
With CapEx/Revenue consistently under 0.5%, Reddit's capital requirements are negligible, allowing it to reinvest minimally while still growing. This low capital intensity is typical of digital platforms and suggests that maintenance capex is minimal, with most spending likely growth-oriented. The implication is that the company can sustain high FCF margins without heavy reinvestment, though investors should monitor whether future investments in AI or infrastructure could alter this dynamic.
Working Capital Swings Reflect Ad Seasonality
Working capital changes have been volatile, ranging from -$95.2M in 2026Q2 to +$39.0M in 2026Q1, as per financial data, indicating timing effects from advertising collections and payments rather than structural inefficiencies.
The negative working capital changes in most quarters suggest that Reddit is collecting cash from advertisers faster than it pays vendors, a common trait in digital advertising. The positive changes in 2026Q1 and 2025Q1 may reflect seasonal prepayments or deferred revenue. Overall, the working capital impact on cash flow is modest relative to operating cash flow, implying that the company's cash conversion is not heavily dependent on balance sheet management, which is a positive sign for sustainability.
Buybacks Emerge as Primary Capital Return
Reddit initiated share repurchases in 2026, with $234.6M in 2026Q2 and $5.0M in 2026Q1, per reported cash flow statements, while paying no dividends, signaling a shift toward returning capital to shareholders.
The sudden buyback activity in 2026Q2, which consumed nearly all of that quarter's FCF, suggests management confidence in the stock's value and a commitment to offsetting dilution from SBC. Given the heavy SBC ($101.0M in 2026Q2), buybacks may be partly aimed at mitigating share count growth. Investors should monitor whether buybacks continue at this pace, as they could limit cash reserves for other uses, but they also indicate a mature capital allocation strategy.
Cumulative Cash Generation Outstrips Net Income
Over the past ten quarters, Reddit's cumulative operating cash flow of $1.49B exceeds cumulative net income of $1.09B, based on reported figures, highlighting the cash-generative nature of its business model.
The cumulative OCF exceeding net income by roughly $400M is primarily due to large non-cash charges like SBC and D&A, which are added back in OCF. This divergence indicates that reported earnings understate the company's cash generation, a positive signal for valuation. However, the heavy reliance on SBC means that a portion of this cash flow is effectively used to compensate employees, and investors should consider the dilutive impact when assessing per-share value.
What Could Invalidate the Base Case
Despite robust cash flow, Reddit's heavy reliance on stock-based compensation, which reached $101.0M in 2026Q2, may obscure true cash earnings and could pressure future cash flow if dilution accelerates.
The cash flow statement obscures the economic cost of SBC, as it is added back to operating cash flow, potentially overstating the cash available to shareholders. While SBC is non-cash, it dilutes existing shareholders, and the company's buybacks in 2026Q2 may be an attempt to offset this dilution. Additionally, the negative working capital changes in several quarters could indicate aggressive collection practices or timing shifts that may not be sustainable. Investors should monitor whether SBC as a percentage of revenue remains elevated, as it could signal that reported cash flow is not fully available for other uses.