Reddit Pivots to Login-First Model as AI Search Slashes Traffic
Reddit will test a login-first model as AI search cuts referrals, while Q3 revenue jumps 53% and U.S. daily users fall to 50.7 million in its biggest market.
Summary
Reddit said in third-quarter earnings on October 29, 2026, that it will transition toward a primarily logged-in experience as AI search summaries reduce Google click-throughs. Search referrals fell by a weekly average exceeding 1 million in October. Global daily active users were flat from Q2 at 130.3 million, while U.S. users fell from 53.2 million to 50.7 million and declined 2% year over year. Reddit warned that continued weakness could produce a low double digit percentage decline next quarter. A hypothetical 10% to 12% slide would leave roughly 115 million to 117 million daily users.
Revenue nevertheless rose 53% year over year to $895 million, beating Wall Street’s roughly $875 million expectation. Net income increased 74% to $283 million, advertising revenue grew 54% to $847 million, and non-advertising revenue, including AI data licensing, rose 35% to $48 million. U.S. revenue per daily active user climbed 53% to $13.82, while the global figure rose 36% to $6.87. Logins give Reddit more behavioral signals for advertising, personalized feeds, community recommendations and its new For You feed, while restricting AI scraping and supporting licensing deals. Tests begin in selected markets outside the U.S. during Q4, with no worldwide rollout date. Co-founder and CEO Steve Huffman said anonymity and logged-out front-page access will remain important, while Reddit rebuilds incognito mode and determines the boundaries between both experiences.
Positives
- Q3 revenue rose 53% year over year to $895 million, exceeding Wall Street’s approximately $875 million expectation.
- Net income increased 74% to $283 million, despite weakening audience growth.
- Advertising revenue grew 54% to $847 million, while AI licensing and other non-advertising revenue rose 35% to $48 million.
- U.S. revenue per daily active user jumped 53% to $13.82, while the global figure increased 36% to $6.87.
- Q4 testing outside the U.S. gives Reddit time to evaluate the login-first model before any worldwide rollout.
Risks & concerns
- U.S. daily active users fell from 53.2 million in Q2 to 50.7 million in Q3 and declined 2% year over year.
- October search referrals dropped by a weekly average of more than 1 million as AI summaries reduced website visits.
- Continued traffic weakness could cause a low double digit percentage user decline next quarter, potentially leaving 115 million to 117 million daily users.
- No worldwide rollout timetable exists, and Reddit has not resolved the boundaries between logged-in and logged-out access.
- A primarily logged-in Reddit could further weaken open-web access, even if anonymity and incognito browsing remain available.