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Social media company Reddit filed its IPO prospectus with the Securities and Exchange Commission on Thursday after a yearslong run-up. The company plans to trade on the New York Stock Exchange under the ticker symbol “RDDT.”

Its market debut, expected in March, will be the first major tech initial public offering of the year. It’s the first social media IPO since Pinterest went public in 2019.

Reddit said it had $804 million in annual sales for 2023, up 20% from the $666.7 million it brought in the previous year, according to the filing. The social networking company’s core business is reliant on online advertising sales stemming from its website and mobile app.

The company, founded in 2005 by technology entrepreneurs Alexis Ohanian and Steve Huffman, said it has incurred net losses since its inception. It reported a net loss of $90.8 million for the year ended Dec. 31, 2023, compared with a net loss of $158.6 million the year prior.

Reddit is one of the most-visited websites in the U.S., according to analytics firm Semrush, but it has struggled to build an online advertising business comparable to those of tech giants such as Facebook parent Meta and Google parent Alphabet.

Reddit has more than 100,000 communities, 73 million average daily active uniques, or DAUq, and 267 million average weekly active uniques, according to the filing. As of the fourth quarter of 2023, Reddit’s U.S. average revenue per user, or ARPU, was $5.51, down from $5.92 from the previous year. The company’s global ARPU was $3.42, which was a 2% year-over-year decline from $3.49.

Reddit said that by 2027 it estimates the “total addressable market globally from advertising, excluding China and Russia, to be $1.4 trillion.” Reddit said the current addressable advertising market is $1.0 trillion, sans China and Russia.

The company is building on its search capabilities and plans to “more fully address the $750 billion opportunity in search advertising that S&P Global Market Intelligence estimates the market to be in 2027.”

Reddit said it plans to use artificial intelligence to improve its ad business and that it expects to open new revenue channels by offering tools and incentives to “drive continued creation, improvements, and commerce.”

It’s also in the early stages of developing and monetizing a data-licensing business in which third parties would be allowed to access and search data on its platform.

For example, Google on Thursday announced an expanded partnership with Reddit that will give the search giant access to the company’s data to, among other uses, train its AI models.

In June, several prominent Reddit moderators locked subreddits as part of a blackout to protest the company’s decision to increase the price some third-party developers pay to use its application programming interface, or API, depending on their usage. At the time, Reddit said the pricing change was necessary because many big tech companies were using data to train large language models.

“In January 2024, we entered into certain data licensing arrangements with an aggregate contract value of $203.0 million and terms ranging from two to three years,” Reddit said, regarding its data-licensing business. “We expect a minimum of $66.4 million of revenue to be recognized during the year ending December 31, 2024 and the remaining thereafter.”

Reddit appears to be investigating a business strategy akin to that of Roblox, which derives the bulk of its revenue from digital sales on its social gaming platform, and online retailer eBay. The company wants to introduce more features to create a user economy that could include games, according to the filing. Reddit said there are currently informal exchanges of physical and digital goods and services that may create another line of revenue.

Reddit will offer three classes of stock with different voting shares. Class A stock will come with one vote per share. Class B shares will come with 10 votes per share and can be converted at any time into one share of Class A stock. Class C shares have no voting rights.

Reddit said that its non-employed moderators, known as Redditors, can participate in the company’s IPO offering through its “directed share program.” Because of this, Reddit said there’s a possibility of “individual investors, retail or otherwise constituting a larger proportion of the investors participating in this offering than is typical for an initial public offering.” Reddit said it had an average of more than 60,000 daily active moderators in December 2023.

“These factors could cause volatility in the market price of our Class A common stock,” the company warned.

Regarding risks, Reddit said its daily active unique figures “may fluctuate or decrease in one or more markets from time to time due to various factors.”

“For example, although we saw increased growth in our user base during the COVID-19 pandemic, we experienced lower levels of DAUq growth and declining DAUq as the effects of the COVID-19 pandemic subsided,” the filing said. “DAUq has also declined in the past in periods following usage peaks surrounding certain worldwide events, such as the onset of the conflict between Russia and Ukraine in the three months ended March 31, 2022, and cultural trends, including video game releases, such as Elden Ring in the three months ended March 31, 2022, and traffic related to r/wallstreetbets in the three months ended March 31, 2021.”

Reddit first filed a confidential draft of its public offering prospectus with the Securities and Exchange Commission in December 2021. The company has an employee headcount of 2,013 as of December 31, 2023, which was up from 1,942 during the previous year.

Reddit has raised about $1.3 billion in funding and has a post valuation of $10 billion, according to deal-tracking service PitchBook. Publishing giant Condé Nast bought Reddit in 2006. Reddit spun out of Conde Nast’s parent company, Advance Magazine Publishers, in 2011.

Advance now owns 34% of voting power. Other notable shareholders include Tencent and Sam Altman, CEO of startup OpenAI.

Watch: Reddit is a litmus test for investor appetite for non-AI things.

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