Reddit Revenue Jumps 61%, but Search Changes Create New Traffic Risk
Reddit's second-quarter revenue rose 61% to $805 million and its advertiser count increased 70%, while management said search-algorithm changes and SEO headwinds reduced user acquisition.
Why it matters: Reddit provides a live test of whether content platforms can monetize AI-powered advertising faster than search-platform changes weaken their referral traffic.
Reddit reported another quarter of rapid advertising growth while warning that changes in search traffic are making user acquisition less predictable.
Second-quarter revenue increased 61% from the previous year to $805 million, exceeding market expectations. Reddit said its advertiser count grew 70%, with particularly strong adoption among smaller businesses, mid-market companies and international marketers.
The company expects third-quarter revenue of between $860 million and $870 million. Its projected adjusted EBITDA of $385 million to $395 million also exceeded analyst expectations.
Reddit is using artificial intelligence to improve campaign creation, targeting and measurement. Its tools can generate platform-specific advertising copy, identify patterns from successful campaigns and target users through interests and individual subreddit communities.
Search distribution remains a risk. Global daily active unique users increased 18% to 130.3 million, but U.S. growth slowed. Management said search referrals were choppy and that SEO headwinds caused by algorithm changes more than offset some user-acquisition improvements during the quarter.
The company did not attribute the slowdown solely to AI-generated search answers, so the traffic pressure should be understood as a broader search-platform and ranking risk. Reddit's commercial business remains strong, but the results show how content platforms can benefit from AI advertising while becoming more vulnerable to changes in the systems that distribute their content.