Reddit reports a solid quarter but shows signs of AI’s impact
TechCrunch Lucas Ropek ● Covered by 2 sources
Reddit crushed earnings but its stock dropped 10% anyway. Investors are spooked that Google's AI search summaries are quietly stealing Reddit's traffic.
Based on reporting by TechCrunch, Lucas Ropek — read the original for the full story.
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Reddit just posted numbers most companies would kill for: $805 million in revenue, up 61% year-over-year, and net income of $253 million, nearly triple what it was a year ago. Guidance for next quarter came in above expectations too. And yet the stock cratered more than 10% in after-hours trading, which tells you something interesting is happening beneath the surface metrics.
The trigger was a single phrase buried in CEO Steve Huffman's shareholder letter: search referral traffic was "choppy" in the second quarter. That's corporate-speak for something Wall Street has been nervously watching for a year now — Google's AI Overviews are increasingly answering search queries directly, using summarized Reddit content, without sending users to Reddit itself. The company signed a deal in 2024 to license its posts to Google for AI training, a partnership that looked like free money at the time. Now it looks more complicated.
The user numbers backed up the worry. Reddit's global daily active users grew, but in the U.S. — its most valuable market for advertisers — daily uniques actually slipped, from 53.5 million to 53.2 million quarter over quarter. On the earnings call, one analyst didn't bother softening the question, telling Huffman bluntly that investors think Reddit has "a user problem," especially domestically, and asked point blank whether Reddit might walk away from licensing data to Google or OpenAI altogether.
Huffman's answer leaned on Reddit's oldest asset: people talking to other people. He argued that no AI summary replicates actual community and conversation, and that Reddit still has untapped audiences in the U.S. it hasn't fully activated yet. On the Google relationship specifically, he was noticeably less committal, noting the partnership predates any formal licensing arrangement and insisting there's no "binary outcome" — corporate language for we're still figuring out if this is worth it.
What's notable here isn't that Reddit had a bad quarter, because it didn't. It's that even a beat-and-raise quarter can't calm investors once they start pricing in a future where AI answers questions instead of routing traffic to the sites that hold the answers.
My take — AI-written commentary, not fact-checked reporting
This is the first earnings call where a company's own AI licensing deal got treated as a liability instead of a win, and it won't be the last. Every publisher who cashed a check from an AI company for training data is now watching the same trade play out — you sell the content, then the AI eats the traffic that used to come find it. Reddit's bet is that community beats content, and it's a reasonable bet, but betting your U.S. growth on nostalgia for forums is a hell of a hedge against a $200 billion search shift.
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