Reddit, Inc.RDDT
Reddit, Inc. Stock Compensation Disclosure
13. Stock-Based Compensation
RSUs and RSAs
Service-based RSUs
We grant service-based RSUs to our employees, all of which relate to Class A common stock. RSUs granted under the 2017 Plan generally have both service-based and performance-based vesting conditions (“Double Trigger RSUs”). Double Trigger RSUs generally expire seven years from the date of grant. The service-based vesting condition for these awards is generally satisfied by rendering continuous service, generally for to four years, during which time the grants will vest either quarterly or with a cliff vesting period of one year and continued vesting quarterly thereafter. The performance-based vesting condition was satisfied upon the effectiveness of our IPO. We record stock-based compensation expense in connection with these Double Trigger RSUs based on the fair market value of our common stock on the grant date using the accelerated attribution method over the requisite service period.
We also grant RSUs with a service-based vesting condition only, covering shares of our Class A common stock (“Single Trigger RSUs”). Single Trigger RSUs generally expire seven years from the date of grant. The service-based vesting condition for these awards is generally satisfied by rendering continuous service, generally for to three years, during which time the grants will vest either with a cliff vesting period of one year and continued vesting quarterly thereafter or quarterly from the vesting commencement date. As a result, we record stock-based compensation expense related to these awards on a straight-line basis over the requisite service period.
Service-based RSAs
We grant, in certain circumstances, RSAs with a service-based vesting condition, covering shares of our Class A common stock. The service-based vesting condition for these awards is generally satisfied by rendering continuous service, generally for three years, during which time the grants will vest with a cliff vesting period of one year and continued vesting quarterly thereafter. As a result, we record stock-based compensation expense related to these awards on a straight-line basis over the requisite service period.
The following table summarizes the RSU and RSA activity for the year ended December 31, 2025:
| Total RSUs and RSAs | Weighted- average grant date fair value | ||||||||||
| Unvested as of December 31, 2024 | 11,344,247 | $ | 37.67 | ||||||||
| Granted | 1,593,019 | $ | 140.43 | ||||||||
Vested | (7,405,968) | $ | 49.43 | ||||||||
Canceled/Forfeited | (1,070,447) | $ | 47.44 | ||||||||
| Unvested as of December 31, 2025 | 4,460,851 | $ | 58.71 | ||||||||
As of December 31, 2025, we had RSUs and RSAs outstanding for 4,460,851 common shares, of which 4,012,274 relate to Class A common stock and 448,577 relate to Class B common stock. The weighted-average grant date fair value of RSUs and RSAs granted during the years ended December 31, 2025, 2024, and 2023 was $140.43, $56.96, and $26.71, respectively. The total fair value of RSUs and RSAs vested during the years ended December 31, 2025, 2024, and 2023 was $315.4 million,
$766.8 million, and $27.9 million, respectively. Total unrecognized stock-based compensation expense related to RSUs and RSAs was $152.5 million as of December 31, 2025 and is expected to be recognized over a weighted-average period of 0.91 years.
Stock Options
Stock option grants generally expire ten years from the date of the grant. Certain stock option grants allow for the exercise of unvested options to acquire shares. Upon termination of service, we have the right to repurchase, at the original exercise price, any unvested (but issued) common stock. The grant date fair value of stock options is estimated using a Black-Scholes option-pricing model. Calculating the fair value of stock options using the Black-Scholes model requires certain highly subjective inputs and assumptions including the fair value of the underlying common stock, the expected term of the stock option, and the expected volatility of the price of the underlying common stock. Forfeitures are accounted for as they occur. Stock options vest based on terms in the stock option agreement and generally vest over five years quarterly or four years with 25% of the award vesting one year from the vesting commencement date then ratably over the following three years. For awards that vest based only on continuous service, stock-based compensation expense is recognized on a straight-line basis over the requisite service period.
The following table summarizes the stock option activity during the year ended December 31, 2025:
| Outstanding stock options | Weighted- average exercise price | Weighted- average remaining contractual life (years) | Aggregate intrinsic value | ||||||||||||||||||||
| (in thousands, except share, per share, and year data) | |||||||||||||||||||||||
| Balance as of December 31, 2024 | 14,687,538 | $ | 30.07 | 6.87 | $ | 1,958,924 | |||||||||||||||||
Exercised | (3,833,276) | 6.54 | |||||||||||||||||||||
Canceled/Forfeited | (2,131) | 34.34 | |||||||||||||||||||||
| Balance as of December 31, 2025 | 10,852,131 | $ | 38.38 | 7.14 | $ | 2,078,120 | |||||||||||||||||
| Vested as of December 31, 2025 | 5,509,084 | $ | 31.81 | 6.33 | $ | 1,091,126 | |||||||||||||||||
| Vested and expected to vest as of December 31, 2025 | 10,852,131 | $ | 38.38 | 7.14 | $ | 2,078,120 | |||||||||||||||||
As of December 31, 2025, we had outstanding stock options for 10,852,131 common shares, of which 9,320,333 relate to Class A common stock and 1,531,798 relate to Class B common stock. Total unrecognized stock-based compensation expense related to stock options was $83.1 million as of December 31, 2025 and is expected to be recognized over a weighted-average period of 2.98 years.
Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of our common stock. The intrinsic value of options exercised during the years ended December 31, 2025, 2024, and 2023 was $611.6 million, $887.3 million, and $72.5 million, respectively. The weighted-average grant date fair value per share of options granted during the year ended December 31, 2023 was $15.67. There were no options granted during the years ended December 31, 2025 and 2024. The total grant date fair value of options vested during the years ended December 31, 2025, 2024, and 2023 was $28.8 million, $34.8 million, and $14.0 million, respectively.
Determination of Fair Value
We estimate the fair value of stock options using the Black-Scholes option-pricing model, which is dependent upon several variables, such as the fair value of our common stock, expected term of the option, expected volatility of the stock price, risk-free interest rate, and expected dividend rate.
The assumptions used in the Black-Scholes option pricing model were determined as follows:
Fair Value of Common Stock—Prior to the completion of an IPO, the Board of Directors exercised reasonable judgment and considered numerous and subjective factors to determine the best estimate of the fair value of our common stock, including but not limited to the prices of recent issuances of our convertible preferred stock, third-party valuations of our common stock, the price paid by us to repurchase outstanding shares of common stock, the prices paid for our common stock in secondary market transactions, our performance and market position relative to our competitors or similar publicly traded companies, the
likelihood and timing of achieving a liquidity event, the lack of marketability of our common stock, and U.S. and global capital market conditions.
Expected Term—The expected term of options represents the period that our stock-based awards are expected to be outstanding and is calculated using the simplified method. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options.
Volatility—We determine the price volatility factor based on the historical and implied volatilities of our peer group as we do not have a sufficient trading history for our common stock. When considering which companies to include in our comparable industry peer companies, we focused on publicly-traded companies with businesses similar to ours.
Risk Free Interest Rates—These rates are based on the implied yield currently available on U.S. Treasury notes with terms approximately equal to the expected life of the option.
Expected Dividend Yield—We have not and do not expect to pay cash dividends on our common stock.
Stock-Based Compensation Expense
The following table summarizes the components of stock-based compensation expense recognized in the consolidated statements of operations for all periods presented:
| Year ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Cost of revenue | $ | 875 | $ | 620 | $ | 101 | |||||||||||
| Research and development | $ | 213,515 | 441,629 | 23,825 | |||||||||||||
| Sales and marketing | $ | 42,103 | 80,436 | 5,555 | |||||||||||||
| General and administrative | $ | 86,687 | 278,961 | 18,117 | |||||||||||||
Stock-based compensation expense | $ | 343,180 | $ | 801,646 | $ | 47,598 | |||||||||||
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.