Reddit forecasts strong revenue on AI-driven ad strength

July 31 (Reuters) - Reddit RDDT.N forecast third-quarter revenue above Wall Street estimates on Thursday, betting on growing digital advertising driven by its artificial intelligence-powered marketing tools.

The forecast follows bigger rival Meta's upbeat second-quarter results and strong revenue outlook on Wednesday, lifted by the Facebook and Instagram parent's core ad business.

Advertisers are increasingly turning to platforms such as Reddit, Meta META.O, and TikTok, which offer advanced AI-powered tools for automated ad creation, precise audience targeting and access to fast-growing user bases.

Reddit offers marketers various ad formats, including conversation placement ads, which allows brands to advertise directly within discussion threads in its interest-based communities known as subreddits.

The San Francisco, California-based company last month launched two new AI-powered ad features designed to help brands drive engagement by tapping into user conversations on the platform.

Reddit expects third-quarter revenue of $535 million to $545 million, well above analysts’ average estimate of $473 million, according to data compiled by LSEG.

Second quarter revenue rose 78% to $500 million, beating estimates of $426 million.

Daily active unique visitors increased 21% to 110.4 million in the quarter ended June 30, while global average revenue per user jumped 47% to $4.53, the company said.