Reddit announced a transition to a primarily "logged-in experience" in its third-quarter earnings call, a move intended to protect its data from AI scraping and facilitate lucrative licensing deals with model providers. The company reported that global daily active users were flat quarter-over-quarter in Q3, reaching 130.3 million, though U.S. daily active users declined from 53.2 million in Q2 to 50.7 million in Q3, marking a 2% year-over-year drop. Search traffic referrals alone dropped by more than 1 million referrals on average per week in October, leading the company to warn that continued decline could push daily active users to a low-double-digit percentage by the next quarter.
Despite the decline in traffic, Reddit reported revenue increased 53% year-over-year to $895 million, surpassing Wall Street's expectation of about $875 million. Net income rose 74% to $283 million, and advertising revenue grew 54% to $847 million. Non-advertising revenue, which includes the AI data-licensing business, grew 35% year-over-year to $48 million. Furthermore, average revenue per daily active user in the U.S. rose 53% to $13.82, while globally, this metric increased 36% year-over-year to $6.87.
The shift to a logged-in environment is designed to boost these metrics because logged-in users provide more behavioral signals for ad targeting and personalization. The company noted that this change will not be immediate, with initial tests scheduled for select markets outside the U.S. during the fourth quarter, though a timeline for a worldwide rollout remains unstated. Reddit also confirmed that being logged in will not eliminate anonymity, as the option to browse anonymously through its "incognito mode" experience will remain available.
