Reddit Shifts to Logged-In Experience Due to Drop in Search Traffic

During its third-quarter earnings call, Reddit announced that it will transition its platform to a predominantly logged-in user experience due to a decrease in open web search traffic and a drop in daily active users in the U.S., driven by the proliferation of AI search tools.

Although Reddit has managed to attract millions of users to its site via Google, the rise of AI-powered search engines has led to a decline in search traffic. According to data released by the company, search traffic referrals decreased by an average of over 1 million weekly in October. It was warned that if this trend continues, the daily active user growth rate could slow to low double-digit percentages in the upcoming quarter.

While global daily active users remained flat at 130.3 million in the third quarter, the number of daily active users in the U.S. fell from 53.2 million in the second quarter to 50.7 million in the third quarter, dropping 2% year-over-year. Despite this, the company's total revenue increased by 53% year-over-year to reach $895 million, beating Wall Street expectations, while net income rose 74% to $283 million.

Initial tests for the login requirement shift will begin in select markets outside the U.S. in the fourth quarter. Company CEO Steve Huffman stated that, as someone loyal to the open nature of the internet, this change is a significant step for him as well, but he concluded that it is the right decision for the future of the platform and the business. Reddit emphasized that anonymity will not completely disappear during this process and that a restructured incognito mode option will be preserved.