Reddit reported strong second-quarter results, with total revenue reaching $805 million, up 61% year-over-year, and net income of $253 million, up 183%, both exceeding Wall Street expectations. The company also guided next quarter’s revenue to between $860 million and $870 million, ahead of analyst forecasts.
Despite the beat, Reddit’s stock fell more than 10% in after-hours trading after CEO Steve Huffman warned in a shareholder letter that search referral traffic had grown choppy and more volatile later in the quarter, even as he maintained the underlying commercial business remained strong. The reaction reflects growing investor concern that AI-powered search tools are reducing Reddit’s traditional traffic sources.
Reddit signed a 2024 agreement to supply content to Google for AI training, but Google’s AI-generated search summaries appear to be diverting audience away from Reddit, and the company has signaled uncertainty about renewing that partnership. Reddit’s U.S. daily active users also slipped slightly to 53.2 million from 53.5 million in the prior quarter, even as global user numbers grew.
