Reddit Inc (NYSE:RDDT) reported better-than-expected third-quarter results and provided strong guidance, sending its shares soaring more than 22% in premarket trading Wednesday.

The social media platform posted adjusted earnings per share of $0.16, significantly beating analyst estimates of a $0.23 loss. Revenue for the quarter jumped 68% YoY to $348.4 million, surpassing the $312.8 million reported in the same quarter last year and analyst expectations.

Third-quarter advertising revenue jumped 55% year-over-year to $315 million, topping the $275 million estimated by analysts.

This marks a fourth consecutive acceleration in Reddit's ad revenue growth. This, according to Jefferies analysts, highlights "a nascent monetization opportunity and supporting our outlook for attractive growth even if user growth slows."

The investment bank raised the price target on Reddit stock from $100 to $120.

Reddit's daily active unique users (DAUs) in Q3 increased 47% YoY to 97.2 million. The company achieved GAAP profitability with a net income of $29.9 million, compared to a net loss of $7.4 million in the prior year. Adjusted EBITDA came in at $94.1 million, a substantial improvement from negative $6.9 million a year ago.

"It was another strong quarter for Reddit and our communities as we achieved important milestones, including new levels of user traffic, revenue growth, and profitability," said Steve Huffman, Co-Founder and CEO of Reddit.

Looking ahead, Reddit provided upbeat guidance for the fourth quarter, projecting revenue between $385 million and $400 million, above the consensus estimate of $357.9 million.

The company's gross margin improved to 90.1%, up 280 basis points from the previous year. Reddit also reported positive operating cash flow of $71.6 million and free cash flow of $70.3 million for the quarter.

Commenting on the report, Bank of America analysts said this was another quarter for Reddit that points to "strong execution in the ad business" and a robust growth outlook.

Still, the bank reiterated a Neutral rating on the stock due to "premium valuation that factors near-term growth and margin upside," possible user and revenue growth volatility, and more challenging revenue comps in Q1 "that should slow growth and limit further multiple expansion."

BofA also lifted the target price on RDDT shares to $99 from $84.

Senad Karaahmetovic contributed to this report.

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