Reddit announced during its third-quarter earnings call that it is transitioning to a primarily logged-in experience as search traffic dries up due to the rise of AI-powered search. The strategic shift is designed to protect platform data from unauthorized AI scraping while enabling lucrative data licensing deals with model providers. Furthermore, the transition aims to boost monetization, as logged-in users provide richer behavioral signals that allow for better ad targeting and personalized features like the new algorithmic For You feed.
The platform reported that search traffic referrals dropped by over 1 million per week in October, contributing to a decline in U.S. daily active users to 50.7 million. Despite user declines and shifting web dynamics, Reddit's financial performance beat expectations, with revenue rising 53% year-over-year to $895 million and net income climbing 74% to $283 million. Nonadvertising revenue, including AI data licensing, grew 35% to $48 million, while average revenue per daily active user increased significantly both in the U.S. and globally.
CEO Steve Huffman acknowledged the gravity of the decision, noting that it marks a major change for a platform defined by the open internet, but concluded it is the right move for the business. Reddit will begin testing the logged-out access changes in select international markets during the fourth quarter, though a complete global rollout timeline has not yet been established. This shift highlights how publishers and platforms are aggressively adapting their architectures to survive and monetize in the new AI-dominated web ecosystem.