Reddit announced a shift to a primarily logged-in experience during its Q3 earnings report to protect platform data from AI scraping and enable model licensing deals, while reporting a drop in search traffic referrals and varying active user metrics.
The company said the move was to protect data from automatic text collection by artificial intelligence systems and to secure lucrative licensing deals with companies that build such models. At the same time, search engine traffic fell by more than a million visits per week in October.
User journey and revenue
Global daily active users remained stable at 130,3 million compared to the previous quarter. However, in the United States, daily users decreased from 53,2 million in the previous quarter to 50,7 million, a 2% decline compared to the same period last year.
The company warned that if this trend continues, daily users could decline by a low double-digit percentage by the next quarter.
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Despite a decline in U.S. users, total revenue rose 53% year-over-year to $895 million, beating Wall Street estimates of $875 million. Net income was $283 million, up 74% for the quarter. Advertising revenue rose 54% to $847 million, while non-advertising revenue rose 35% to $48 million.
What will happen next?
The company's CEO, Steve Hoffman, acknowledged the importance of this change for the open web in a post on the platform.
Reddit will begin testing the new login experience in select markets outside the United States during the fourth quarter. There is currently no definitive timeline for when the change will be rolled out globally.
The company said that being online does not mean losing your anonymity, and added that it is rebuilding the incognito browsing feature.
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