As search traffic dries up, Reddit announces it's shifting to a logged-in experience

Key Points:

• Reddit is shifting to a primarily logged-in user experience to protect its data from AI scraping and to enable lucrative licensing deals with AI model providers, amid declining search traffic driven by AI-powered search engines.
• The company reported flat global daily active users at 130.3 million in Q3, but U.S. daily active users declined by 2% year-over-year to 50.7 million, with search referrals dropping by over 1 million per week in October.
• Despite user declines, Reddit’s revenue grew 53% year-over-year to $895 million, driven by a 54% increase in advertising revenue and a 35% rise in nonadvertising revenue, including AI data licensing.
• Average revenue per daily active user increased significantly, with U.S. users generating $13.82 on average, up 53%, and global users generating $6.87, up 36%, with the logged-in shift expected to further enhance monetization through better ad targeting.
• The logged-in transition will be gradual, starting with tests in select markets outside the U.S., maintaining user anonymity options like incognito mode; Reddit CEO Steve Huffman acknowledges the change as a major evolution necessary for the platform’s future.