Reddit announced on Thursday that it is transitioning to a primarily logged-in experience as search traffic dries up due to the shift toward AI-powered search.
The company reported global daily active users stood flat at 130.3 million in the third quarter. U.S. daily active users fell from 53.2 million in the second quarter to 50.7 million in the third quarter, representing a 2% year-over-year drop.
Reddit said search traffic referrals dropped by more than 1 million per week on average in October. The company warned that if this trend continues, daily active users could fall to a low double-digit percentage of their peak by next quarter. A hypothetical 10% to 12% decline would bring daily actives to roughly 115 million to 117 million, down from 130.3 million in the third quarter.
Despite the user decline, revenue increased 53% year-over-year to $895 million, ahead of Wall Street expectations of about $875 million. Net income rose 74% to $283 million. Advertising revenue grew 54% to $847 million. Non-advertising revenue, which includes its AI data-licensing business, grew 35% year-over-year to $48 million.
Average revenue per daily active user in the U.S. rose 53% to $13.82. Globally, average revenue per daily active user increased 36% year-over-year to $6.87.
Shifting to a logged-in experience could boost those numbers further because logged-in users provide more signals about their interests and behaviors. This data helps target and personalise ads. The same signals allow Reddit to offer a more personalised experience, including tailored feeds and recommendations for new communities.
This approach also supports Reddit’s new algorithmic “For You” feed, announced yesterday, which combines posts from communities users belong to with other recommendations based on their interests.
Reddit noted that the shift will not happen overnight. The company plans to run tests in select markets outside the U.S. in the fourth quarter. It does not yet have a timeline for a worldwide rollout. Access to a logged-out front page remains important, as does anonymity. Reddit confirmed that being logged in does not require users to give up anonymity and that its “incognito mode” experience is being rebuilt.
Steve Huffman, Reddit co-founder and CEO, wrote in a post on the site: “I don’t know about you, but as someone whose life has been defined by the open internet, it’s a big change for me. But I’ve come to the conclusion that this is the right decision for our platform and the right decision for our business.” Huffman added that the boundaries between logged-in and logged-out experiences remain unclear and that the move is a big evolution the company is not taking lightly.
What it means
For users, the immediate change is limited to test markets outside the U.S. Anonymity remains available through incognito mode, but future access to the site without logging in may become restricted. For creators, the shift aims to protect content from AI scraping while improving ad targeting through better data on user behaviour.
