Reddit's AI-Powered Growth Strategy Drives Record Quarterly Performance

Reddit's Human-Centered A.I. Strategy Is Fueling Its Success

Reddit embraces A.I. for search and moderation while keeping the platform "for humans, by humans" amid record quarterly gains. Reddit is thriving in the A.I. era, even as fast, synthetic content floods nearly every corner of the internet. The community-driven discussion site is the third most visited website in the U.S., behind Google and YouTube (and ahead of Amazon and Facebook), the company said yesterday (Oct. 30) on its third-quarter earnings call, citing Semrush's October 2025 data. Reddit's leaders said they're doubling down on the platform's identity as "for humans, by humans," even as they use A.I. to help spark more authentic conversations. Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters Between July and September, Reddit brought in $585 million in revenue, up 68 percent from the same period last year. Net income surged more than fivefold year-over-year to $163 million. The site had 116 million daily active users at the end of September. "As Google and other search engines grapple with issues of trust and authenticity, Reddit possesses what most A.I. companies are after: authenticated, nuanced, community-driven content," Baruch Labunski, CEO at digital marketing company Rank Secure, told Observer. Co-founder and CEO Steve Huffman told analysts yesterday Reddit is doubling down on making the platform "a true search destination." To that end, the company announced it's "redesigning the Reddit experience," focusing on a modern interface with advanced search capabilities. It will continue to roll out its generative A.I. tool, Reddit Answers, and new A.I. features will help users interpret rules unique to each subreddit and bring post insights to the top. Reddit said 75 million users utilized Reddit's search functionalities each week in the third quarter, with that number expected to grow. "Reddit Answers provides users with curated, community-powered insights that are often more helpful than traditional web results," Huffman said. "Our aim is to have a single, great search experience." "Smart move toward a more 'search-forward' experience, but it's still a tightrope walk," Labunski said. "The winning strategy is to enable Reddit's self-discovery and IP moderation with A.I., while leaving the chaotic human interactions intact." Reddit continues to incorporate more A.I., specifically in moderation, translation, video and interactive features. Reddit has launched A.I.-supported moderator tools in more than 3,000 communities, with a broader rollout on the horizon. For example, moderators can use A.I. to view a summary of a user's profile. "We're using A.I. to make it easier for those user-written rules or moderator-written rules to be enforced automatically to make moderation more fun and efficient," Huffman added. Meanwhile, Reddit's A.I. translation now handles 30 languages, and the company is planning to expand this to drive more international growth. The platform recently hosted its first video AMA (ask me anything) with NASA and plans to continue expanding video in its more than 100,000 subreddit communities. Video comment replies are also expanding. Reddit's advertising platform continues to see updates, and the team is currently developing interactive ads. Huffman said ads remain their "core business" and they're continuing to roll out their machine-learning-enabled dynamic product ads, which use user intent data to inform who to show ads to. Reddit's hyper-focus on search and A.I. proves the company has moved well beyond a forum site. This is "Reddit telling the market it wants to be the place where human context gets found and not just the place LLMs crawl," Martin Jeffrey, founder of digital marketing agency Harton Works, told Observer.

Reddit's holiday-quarter forecast shows AI ad strategy paying off

(Reuters) -Reddit forecast fourth-quarter revenue above Wall Street estimates on Thursday, thanks to its artificial intelligence-powered advertising tools that are boosting marketing spending on the social media platform. Shares of the company rose about 8% in extended trading. The company's AI-optimized ad platform helps advertisers to place targeted ads directly within relevant discussion threads across its interest-based communities, known as subreddits. The approach allows marketers to harness user-driven conversations for better targeting. Reddit's vast content library is one of its valuable assets at a time when AI companies are looking for data to train their large language modes, a technology behind chatbots such as ChatGPT, Gemini and Grok. The company already licenses its data to Alphabet's Google and Microsoft-backed OpenAI. It sued Perplexity AI and other three data scraping companies last week, alleging them of illegally collecting Reddit's data. Reddit operates in a crowded social media market, where dominant platforms such as TikTok and Meta are aggressively vying for new advertisers with their massive user-bases and AI-powered ad tools. Facebook-parent Meta reported upbeat third-quarter revenue on Wednesday. Reddit expects fourth-quarter revenue to be between $655 million and $665 million, compared with analysts' average estimate of $637.9 million, according to data compiled by LSEG. The company forecast fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization to be between $275 million and $285 million, compared with estimates of $258.8 million. Daily active unique visitors rose 19% to 116 million in the third quarter ended September 30, while its average revenue per user increased by 41%. The company said its machine translation feature now supported 30 languages, helping fuel user growth across markets outside the United States. Third-quarter revenue rose 68% to $585 million, beating estimates of $545.7 million. (Reporting by Jaspreet Singh in Bengaluru; Editing by Maju Samuel)