Reddit says Q4 daily users could fall a low-double-digit percentage if search declines continue, and will test logged-in-only access abroad

Reddit said in its third-quarter shareholder letter on Thursday that search referral traffic was “down meaningfully” in the quarter, with the decline accelerating later. “During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week,” the letter said. It said that “if this rate of decline continues, current trends would suggest that total DAUqs could fall in Q4, by a low-double-digit percentage” from a base of about 130 million.

The letter said the biggest impact was on logged-out and web traffic, and that some flows through to logged-in and app users because search referral is a common source of re-engagement. Reddit said the declines continued into the early part of the fourth quarter. It said logged-in and app users grew sequentially and account for over 80% of monetization.

Reddit’s earnings release put daily active uniques at 130.3 million, up 12%. CNBC reported that this trailed an estimate of 133.7 million, and that U.S. daily active uniques, down 2% to 50.7 million, trailed an estimate of 53.5 million. Revenue was $895 million, up 53%. CNBC reported estimates of $878 million for revenue and $1.35 for earnings per share, against the reported $1.40. Reddit guided fourth-quarter revenue of $1.00 billion to $1.03 billion, below the $1.05 billion estimate, CNBC said. Shares fell 21% in premarket trading on Friday, CNBC reported, while Reuters put the premarket drop at 23%.

On a logged-in-only experience, the letter said: “In Q4 we’ll begin fully testing this in select markets outside the U.S.” It said the change would give Reddit more signals for ad targeting, protect access to its data and help it adapt to emerging regulations. Axios reported that the homepage and content reached through search or shared links would remain visible to logged-out visitors, that commenting and ranking would require an account, and that Reddit is relaunching an incognito mode that is read-only. CNBC reported that Huffman gave no timing for a broader change.

CNBC and Axios described Huffman’s comments on search differently. CNBC reported that he said shrinking Google referrals played a major role in the plan, and quoted him calling Google’s AI efforts “a fundamental shift in how the Google product works, from being a traffic driver to whatever’s going on now.” CNBC’s own account said that Google’s “continued push on AI overviews and related chatting features” has negatively affected referral traffic, a framing Huffman is not quoted as using. The shareholder letter does not name Google or AI Overviews; it says web search is “evolving from a gateway to the web to becoming an AI-powered destination itself.” Axios reported that Huffman said the shift is not a response to Google Search changes but is “about making the best version of Reddit.”

Separately, U.S. District Judge Amit Mehta dismissed antitrust suits by Chegg and Penske Media over Google’s AI Overviews on October 1, Reuters reported.

Reddit says Q4 daily users could fall a low-double-digit percentage if search declines continue, and will test logged-in-only access abroad

Sources