Reddit reports Q3 revenue up 53% YoY to $895M, vs. $878M est., DAUq up 12% to 130.3M, below est., forecasts Q4 revenue below est.; RDDT drops 9%+ after hours

Reddit will require you to log in to view content, impacting how you can browse the site.

Reddit reported its third-quarter earnings, surpassing analyst expectations with a revenue of $895 million, a 53% increase year-over-year, against an estimate of $878 million. However, the company's daily active unique users (DAUq) grew 12% to 130.3 million, falling short of projections. In response to declining referral traffic from Google search, largely due to the search giant's AI initiatives, Reddit announced plans to test a mandatory login requirement for accessing its platform. This marks a significant shift for Reddit, which has historically allowed users to browse content without an account. The company also provided a fourth-quarter revenue forecast that was below Wall Street's expectations. Shares of Reddit (RDDT) saw a decline of over 9% in after-hours trading following the announcement.

The decision to mandate logins directly addresses the impact of Google's AI-driven search changes, which have reduced traffic referrals to Reddit. This pivot signals a broader trend of platforms seeking to reclaim direct user engagement and monetize their audiences more effectively, especially as search engines integrate more generative AI features that answer queries without sending users to external sites. Reddit's move to a logged-in experience is aimed at improving ad targeting and user monetization, as registered users are more valuable to advertisers.

This strategic shift by Reddit could influence other platforms reliant on search traffic, potentially leading to more account-gated content across the web. While Reddit aims to boost its revenue through better monetization of logged-in users, the company also faces the challenge of maintaining user growth and engagement with this new requirement. The success of this transition will be closely watched, particularly as it involves complex implementation and potential user friction.