Reddit paid $4m of tax on $257m of pre-tax profit (1.6%) — and says it may book a 'significant income tax benefit' in one go within 12 months
Q2 2026 10-Q: revenue $805m (+61%), net income $253m (a year earlier $89m). The full valuation allowance ($779m) on $794m of U.S. deferred tax assets has a 'reasonable possibility' of being largely released within 12 months, producing a large one-off tax benefit in that quarter. Stock-based compensation $101m (12.5% of revenue); buybacks begin at $235m
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Reddit Form 10-Q for Q2 2026: statement of operations (income tax), income-tax note (possible valuation-allowance release), revenue by type (advertising, other), stock-based compensation, share repurchase program, MD&A key metrics (DAUq, ARPU, gross margin); valuation-allowance amounts from the 2025 Form 10-K
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Reddit (RDDT) reported revenue of $804.9m for the second quarter of 2026, up 61%, and net income of $252.8m. The income-tax note of the 10-Q filed on July 31 contains a sentence that will swing net income in coming quarters — about the write-down sitting on its U.S. deferred tax assets.
What happened
Reddit (RDDT) is a community platform earning revenue from advertising and data licensing.
Its Q2 2026 quarterly report (10-Q) shows revenue of $804.9m, up 61% from $499.6m a year earlier — advertising $761.6m, other (data licensing and similar) $43.3m. Gross margin was 91.3%, operating income $231.7m and net income $252.8m ($89.3m a year earlier). On pre-tax income of $256.8m, income tax was $4.02m — an effective rate of 1.6%.
The income-tax note reads: "We have a full valuation allowance against our United States federal and state deferred tax assets … Given our recent history of generating net income in the United States, we believe that there is a reasonable possibility that sufficient positive evidence may become available within the next 12 months to allow us to release a significant portion of the valuation allowance … The reversal would result in a significant income tax benefit in the period when we release it." Per the 2025 10-K, U.S. deferred tax assets were $794.3m gross with a $779.0m allowance.
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It reflects the accounting judgment that the company will keep earning profits, and net income in the release quarter rises sharply. But no cash comes in and it happens once. The company says the timing and amount depend on factors including the level of profitability it can forecast. What happens to the tax rate afterwards is explained in the subscriber section.
Why is the tax rate 1.6% now?
NOL carryforwards and stock-compensation deductions offset U.S. taxable income; the $4.02m of Q2 tax is mostly foreign. Once the deferred tax assets are restored, an accounting tax rate in the twenties applies from the following quarters.
What about stock compensation and buybacks?
Q2 stock-based compensation was $101.0m, 12.5% of revenue. The board authorized a $1.0bn repurchase program in February 2026, and $234.6m of shares were bought and retired in Q2.
Where can I verify these numbers?
On SEC EDGAR: Reddit's Q2 2026 Form 10-Q (accession 0001713445-26-000100) — statement of operations, income-tax note, revenue table, equity note (repurchases), MD&A key metrics — and the income-tax note of the 2025 Form 10-K for the valuation-allowance amounts.
How aiSwingX™ wrote this
We read the filing on SEC EDGAR in full — statements, notes, MD&A. Press releases and news are not used as sources.
Every figure is reconciled to its location in the filing and to XBRL data. One mismatch means no publication.
An editor reviews before publication; any later change is recorded in the revision history.
Reddit Form 10-Q for Q2 2026: statement of operations (income tax), income-tax note (possible valuation-allowance release), revenue by type (advertising, other), stock-based compensation, share repurchase program, MD&A key metrics (DAUq, ARPU, gross margin); valuation-allowance amounts from the 2025 Form 10-K · SEC EDGAR · This article is not investment advice. Disclaimer
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aiSwingX™ analyzes US filings and reports them as news investors can read.
