- 3Q26 earnings in line with our expectations. Revenue growth slowed to 53% YoY to US$895mn (3Q25: +68%), driven by lower search traffic, while PATMI grew 3.8% YoY to US$283mn. 9M26 revenue/PATMI were at 72%/75% of our FY26e forecasts.
- Ad segment grew 54% YoY to US$847mn, supported by improved ad performance and ad load optimisation. Other revenue rose 35% YoY to US$48mn, including content licensing deals. Global ARPU grew 36% YoY to US$6.87, with US ARPU growing 53% YoY to US$13.82, the sixth consecutive quarter of growth over 50%.
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We maintained our BUY rating but lowered our target price to US$140 (prev. US$230). We kept FY26e revenue unchanged but cut FY27e revenue by 5%, as we expect app adoption and logged-in user conversion initiatives to take time to offset the decline in US active users. We also trimmed FY26e/FY27e PATMI by 2%/8%, respectively, to reflect higher upfront Customer Acquisition Costs (CAC) for app downloads and headwinds from declining organic web search traffic. We remain slightly cautious about RDDT’s data licensing agreement renewals with Google and OpenAI. Longer term, we remain positive on international expansion, as the ARPU gap points to further monetisation potential.
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