Reddit is preparing to change how people reach and use its site. As search engines send fewer visitors to websites, the company says it will move toward a primarily logged-in experience, a shift that could affect its audience, advertising and relationship with the open internet.
Search is sending fewer visitors
Reddit has long drawn users from Google. Some people even add “Reddit” to their searches when looking for answers. But the company says referrals from search have fallen as AI-powered search offers answers directly and pushes website links further down the page.
On its third-quarter earnings call, Reddit co-founder and CEO Steve Huffman described AI-powered search as a change in how Google relates to the rest of the internet. The company said its search traffic referrals dropped by more than 1 million referrals on average per week in October.
Reddit’s global daily active users were flat quarter-over-quarter in Q3 at 130.3 million. In the U.S., daily active users fell from 53.2 million in Q2 to 50.7 million in Q3, down 2% year-over-year. Reddit warned that if the trend continues, daily active users could decline to a low-double-digit percentage by next quarter.
Revenue is growing as U.S. users decline
Fewer search referrals make audience growth less predictable, but Reddit’s reported revenue continued to rise. Revenue increased 53% year-over-year to $895 million, ahead of Wall Street’s expectations of about $875 million. Net income rose 74% to $283 million.
Advertising revenue grew 54% to $847 million. Non-advertising revenue, which includes the company’s AI data-licensing business, grew 35% year-over-year to $48 million.
Revenue per daily active user also increased. In the U.S., average revenue per daily active user rose 53% to $13.82 despite the year-over-year decline in U.S. daily users. Globally, it increased 36% year-over-year to $6.87.
A larger share of logged-in users could help Reddit sell more targeted advertising. Logged-in users provide signals about their interests and behavior, which can help the company personalize ads. Those signals can also inform users’ feeds and recommendations, including suggestions to explore communities and participate.
A different experience, with anonymity still available
The plan is not an overnight switch. Reddit said it will first run tests in select markets outside the U.S. in the fourth quarter, and it has not set a timeline for a worldwide rollout. The company also acknowledged that access to a logged-out front page matters.
Logging in will not require users to give up anonymity, Reddit said. The company plans to retain anonymous browsing through its “incognito mode” experience, which is being rebuilt. How the site will divide features between logged-in and logged-out visitors remains an open question.
What the change could mean for the open web
Reddit’s move reflects a business choice with wider implications: websites that once relied on search to bring in visitors may look for ways to build more direct relationships with their audiences. For Reddit, a logged-in experience could make personalization and advertising more valuable while reducing reliance on traffic from Google.
It also marks a change for people who discover Reddit without an account. Huffman said the company recognizes the significance of the shift, and Reddit described the decision as an evolution it is not taking lightly. The tests and eventual rollout will help define how much of the site remains open to visitors who arrive without logging in.