Reddit is getting ready to shift to a login-only experience, CEO and Co-Founder Steve Huffman told investors on the company’s Q3 earnings call on Thursday.
Starting in Q4, Reddit will test logged-in-only mode in “select markets outside the US,” Huffman said, calling it the first step toward bringing Reddit in line with how every other social media platform operates.
Logged-in users already account for more than 80% of Reddit’s monetization, Huffman said, so going logged-in only doubles down on that strength.
But making users sign in to read Reddit isn’t just about driving engagement, he said. It also strengthens ad targeting and first-party data collection, and it protects Reddit’s content from being scraped by AI crawlers.
Plus, it puts Reddit on firmer footing for complying with global regulation, Huffman said, alluding to the worldwide push for tighter age verification on social media.
Google grief
The shift is also a response to the internet-wide drop in search traffic, which has largely been attributed to the rise of AI search. Google is one of the biggest culprits, increasingly pushing searchers to AI Overviews and its Gemini chatbot.
In October, Reddit’s search traffic dropped by 1 million referrals per week, Huffman said.
Google’s search algorithm changes this year also appear to have downranked machine-translated content, Huffman noted. Reddit has been touting AI translation as a way to reach more users internationally, where its brand is less well-known than in the US and growth potential is greatest. That strategy has quickly become a liability thanks to Google.
But in the US, at least, “Reddit” still ranks among the most-searched terms on Google, Huffman said. That shows user demand for Reddit content hasn’t changed; Google is just sending less of that traffic to Reddit.
Meanwhile, “Google is crawling us as hard as ever,” Huffman said, so Google AI’s demand for Reddit’s content hasn’t changed either.
However, he said, “The reality is, AI Mode does not drive traffic, not for us and not for anybody, as far as I know. And so that’s just a fundamental shift in how Google works. It used to be a traffic driver. Now it’s not.”
But search traffic isn’t Reddit’s main priority, Huffman said.
Going forward, Reddit is focused on building and retaining its logged-in user base, he said, the goal being to “make Reddit a direct daily habit for more people.”
Part of that strategy is pushing users to download the Reddit app, where there’s potential for deeper engagement. In fact, the percentage of new app users who return to Reddit in the first week after downloading its app increased by double digits in Q3 compared to Q2, and by 50% YOY.
Ironically, Google’s attempts to keep users locked into its search ecosystem actually help Reddit’s strategy of getting more users to come to its platform directly, Huffman said. Users are still searching for Reddit, but Google doesn’t want to send them there, which is training them to go straight to Reddit instead.
Ad revenue still growing
Despite its referral traffic woes, Reddit’s ad business continues to grow rapidly.
Q3 revenue was up 53% year over year, a growth rate few companies are achieving these days, Huffman noted.
Ad revenue, meanwhile, grew 54% YOY in Q3 to $847 million, thanks to growth in both impressions and pricing, said Jen Wong, Reddit’s chief operating officer.
Reddit joined the S&P 500 in Q3, which Huffman attributed to its strong growth since going public in 2024.
Reddit also passed $3 billion in revenue over the past 12 months, he said, and is now targeting $5 billion in annual revenue.
And ad performance is also up, Wong said. Click volume grew 50% YOY and conversion volume tripled, helping lower-funnel performance revenue (shopping and app-install campaigns) grow more than 95%.
Part of what’s driving performance is Reddit’s investment in AI ad optimization, Wong said. Its machine learning platform, Reddit Max, entered public beta in Q3, and a new Max feature lets advertisers manage multiple product lines or creative themes within a single campaign.
Reddit is also seeing strong adoption among mid-market advertisers, a segment that grew 50% YOY.
Video-based campaign revenue from upper-funnel advertisers doubled in Q3, and Reddit also introduced a new 15-second engaged video view objective in public beta to “help advertisers optimize for people more likely to engage with longer-form video,” Wong said.
For lower-funnel advertisers, Reddit improved its shopping campaign platform, which can now support up to 20 million products.
For B2B brands, Reddit introduced “in-market audience targeting tools,” Wong said, which have improved “average cost per action” by 7% compared to other first-party targeting options.
On the ad tech side, Wong said revenue from advertisers using Reddit’s ads API grew 45% compared to Q2. She also announced Reddit’s first third-party API integration for Max campaign management, with ad optimization platform Smartly.
Wong also pointed to measurement integrations with Innovid and Skai, which Reddit announced in August, and touted a beta integration with HubSpot.
On top of that, she highlighted Reddit’s Shopify integration for lower-funnel campaigns, which became generally available in May. Ethnotek, a backpack and accessories brand, saw a 4x improvement in ROAS and a 40% improvement in CPA from testing it, she said.
All of these ad stack improvements contributed to a 36% increase in average revenue per user (ARPU) to $6.87.
Next up: seeing how much higher ARPU can climb with a larger logged-in user base.
