Reddit announces shift to logged-in experience as search traffic declines

Reddit announced on Thursday that it is moving toward a primarily logged-in experience as search traffic declines. The company said the change is meant to protect its data from AI scraping and could help increase revenue even as U.S. daily active users fall. Reddit reported flat global daily active users of 130.3 million in the third quarter.

Search traffic and user trends

Reddit said search traffic referrals dropped by more than 1 million referrals on average per week in October. Global daily active users were flat quarter over quarter at 130.3 million, while U.S. daily active users fell from 53.2 million in the second quarter to 50.7 million in the third quarter and were down 2 percent year over year. The company warned that if the trend continues, daily active users could decline to a low double digit percentage by next quarter. It also gave a hypothetical 10 percent to 12 percent decline that could bring daily actives to roughly 115 million to 117 million. The shift to an AI-centered web has impacted many websites and publishers, leading to fewer click-throughs as AI summaries provide answers without website visits and Google's traditional "ten blue links" have reduced relevance.

Revenue and monetization

Revenue increased 53 percent year over year to $895 million, ahead of Wall Street expectations of about $875 million. Net income rose 74 percent to $283 million. Advertising revenue grew 54 percent to $847 million, while non-advertising revenue, which includes its AI data-licensing business, grew 35 percent year over year to $48 million. Average revenue per daily active user in the U.S. rose 53 percent to $13.82, and globally it increased 36 percent year over year to $6.87.

Logged-in experience and rollout

Reddit said logged-in users are typically worth more to advertisers because they provide more signals about interests and behaviors. Those signals can help target and personalize ads, and they can also support personalized feeds, recommendations, and prompts to participate. The company said the shift will not be overnight and will first be tested in select markets outside the U.S. in the fourth quarter. It does not yet have a timeline for rolling out the change to all users worldwide. Reddit also said access to a logged-out front page remains important, that being logged in does not mean giving up anonymity, and that it is rebuilding its incognito mode.

CEO comments and new feed

Reddit co-founder and CEO Steve Huffman wrote in a post published on Reddit's site that the change is significant for someone whose life has been defined by the open internet, but that it is the right decision for the platform and business. He also said there are still unanswered questions about where the boundaries should be between logged-in and logged-out experiences. The company announced yesterday an algorithmic "For You" feed that combines posts from communities users belong to with other recommendations based on their interests.

Sources: TechCrunch · Engadget · Techmeme