Reddit shifts to a logged-in experience as search traffic declines
Social platform Reddit said in its third-quarter earnings report that it is moving to a primarily logged-in experience. The company cites falling search traffic and a wish to protect its data from AI scraping.
Reddit, the US social network and discussion site, announced on Thursday with its third-quarter financial results that it will gradually move to a primarily logged-in user experience. The company links the decision to shrinking search traffic as more people turn to AI-powered search. The change would help protect Reddit's data from AI scraping and allow it to sign lucrative licensing deals with AI model providers.
User numbers fall in the US
Global daily active users were flat quarter-over-quarter at 130.3 million. In the US, its largest market, the figure fell from 53.2 million in the second quarter to 50.7 million in the third, and is down 2% year-over-year. Reddit said search referrals dropped by more than 1 million per week on average in October. If the trend continues, daily active users could fall by a low-double-digit percentage by next quarter.
Revenue keeps rising
At the same time, revenue grew 53% year-over-year to $895 million, above Wall Street expectations of about $875 million. Net income rose 74% to $283 million. Advertising revenue climbed 54% to $847 million, while non-advertising revenue, which includes AI data licensing, grew 35% to $48 million. In the US, average revenue per daily active user rose 53% to $13.82; globally it increased 36% to $6.87.
Logged-in users are typically worth more to advertisers because they provide more signals about their interests and behavior, enabling better ad targeting and personalization. Reddit recently also announced a new algorithmic "For You" feed.
A gradual transition
Co-founder and CEO Steve Huffman wrote in a post on Reddit that the change is big for him personally, but that he believes it is the right decision for the platform and the business. Tests will begin in select markets outside the US in the fourth quarter, and there is no timeline yet for a worldwide rollout. Reddit says being logged in does not mean giving up anonymity, and its incognito mode, which is being rebuilt, will remain available.
