Reddit’s weekly search referrals fell by more than 1 million on average in October. The company laid out its response on Thursday: Reddit will become a primarily “logged-in experience.”
Google traffic built Reddit. For years, people have added “Reddit” to the end of a search so they could read answers from real users instead of SEO filler. AI summaries now answer many of those questions right on the results page, so fewer people click through. Reddit’s answer is to step back from the open web.
Reddit warns its user count could keep falling
The plan came alongside Reddit’s third-quarter earnings, and its user figures show why it’s happening now. Global daily active users held flat from the previous quarter at 130.3 million. Daily actives in the U.S., Reddit’s biggest market, dropped from 53.2 million in Q2 to 50.7 million in Q3, a 2% decline year-over-year.
Reddit said that if the search trend holds, daily active users could fall by a low-double-digit percentage next quarter. A drop of 10% to 12% from 130.3 million would put the company at about 115 million to 117 million daily actives.
Plenty of other sites face the same squeeze. Most websites and publishers are seeing fewer click-throughs as AI summaries answer queries without sending anyone to a page, and Google’s classic “ten blue links” carry less weight. Google’s own earnings showed the shift is now affecting its results as well. Reddit’s problem is size: a small percentage at its scale means millions of people.
Fewer users, bigger revenue
Reddit’s revenue is climbing even as user growth stalls. Revenue was up 53% year-over-year to $895 million, ahead of the roughly $875 million Wall Street expected. Net income rose 74% to $283 million.
Ad revenue increased 54% to $847 million. Non-advertising revenue, which covers Reddit’s AI data-licensing business, was up 35% year-over-year at $48 million.
Revenue per user outpaced the user count. In the U.S., average revenue per daily active user jumped 53% to $13.82, despite a 2% fall in U.S. daily users. The global figure was $6.87, up 36% year-over-year.
How a login screen pays off
Logged-in users usually command higher ad prices. A visitor who lands from a search result without signing in gives Reddit very little information. Signed-in users leave signals about what they like and how they behave, and Reddit uses those signals to target ads and personalize the site more precisely.
That same data shapes what users see: personalized feeds, suggested communities and prompts to vote, comment and take part. It also feeds recommendations for Reddit’s new algorithmic “For You” feed, announced the day before earnings, which blends posts from a user’s communities with other picks based on their interests.
Putting content behind a login also keeps it away from AI scrapers. If crawlers can’t freely collect it, Reddit can license it to model providers in lucrative deals.
Huffman says the decision isn’t easy for him
Steve Huffman, Reddit’s co-founder and CEO, explained the decision in a post on the site.
“I don’t know about you, but as someone whose life has been defined by the open internet, it’s a big change for me,” Huffman said. “But I’ve come to the conclusion that this is the right decision for our platform and the right decision for our business.”
He admitted some details are still open. “There are still plenty of questions that are unanswered, particularly around where the boundaries should be between logged-in and logged-out experiences,” Huffman said. “This is a big evolution for Reddit, and not one we’re taking lightly. But I believe it’s the right next step for the platform and for our future.”
Timing and what stays the same
The switch won’t happen overnight. In the fourth quarter, Reddit will test the logged-in experience in select markets outside the U.S., and it has no timeline yet for a global rollout. The company also said keeping a logged-out front page available is important.
According to Reddit, signing in won’t cost users their anonymity. Its “incognito mode” for anonymous browsing is staying and is being rebuilt.
Still, one of the internet’s biggest collections of human-written answers is shutting out anonymous visitors. Other sites that rely on search traffic could copy the move if it works for Reddit.