Reddit’s latest financial results have revealed the growing impact of Google’s AI-powered search features on the platform, with search referrals declining by more than one million visits a week, roughly a 10-12 per cent decline in Q4 user traffic.
The platform released its Q3 2026 financial results on Thursday, reporting revenue of US$895 million (A$1.37 billion), up 53 per cent year-on-year, driven by strong demand across its primary sales channels.
Advertising revenue also continued to climb, reaching US$847 million (A$1.3 billion), representing 54 per cent growth year-on-year and accounting for 95 per cent of Reddit’s total revenue.
However, despite the strong financial performance, the company is facing a growing challenge from changes to Google Search, with AI-powered features increasingly reducing the need for users to click through to external websites.
Search referral traffic declined by an average of more than one million referrals per week in October 2026, which Reddit attributed to changes in search engine AI features. Speaking during the earnings call, Reddit co-founder and CEO Steve Huffman said the decline accelerated towards the end of the third quarter and continued into October, pointing to Google’s expanding AI Overviews and AI Mode as the biggest factors.
Huffman said the features, which provide users with AI-generated answers directly within search results, are increasingly becoming the full search experience rather than simply an additional feature.
“On the change from Google, our hypothesis is twofold. The biggest one is the AI Overviews or AI Mode. Both have evolved a lot. And particularly recently, they appear to be expanding them quite aggressively both in the US and outside,” he said.
“So what started as a feature is now the full search experience. And at the minimum, it pushes everyone down the search page. And then on top of that, the experiences themselves are not traffic drivers.
“And so these things combined with the rollout, this means Google has really shifted in their relationship with the rest of the internet.”
Huffman also pointed to a second contributing factor, suggesting Reddit’s machine-translated content may be receiving lower rankings in search results, particularly affecting traffic outside the US.
However, he said the decline was unlikely to be a traditional Google algorithm change, which can fluctuate over time, and instead appeared to reflect the broader rollout of AI Mode and potential changes to how translated content is treated.
“The reality is the AI Mode does not drive traffic, not for us and not to anybody as far as I know. So it’s just a fundamental shift in how Google works. It used to be a traffic driver. Now it’s not.”
The CEO also distinguished the decline in search referrals from any drop in consumer interest in Reddit itself.
Huffman said Reddit remained one of the most searched terms on Google, while the search engine continued crawling the platform’s content at the same rate.
“Let me tell you what didn’t change. The word Reddit is still among the most searched words on Google. So this says the demand for Reddit hasn’t changed from the internet consumer. Also, Google is crawling us as hard as ever. So the demand hasn’t changed from their point of view either.”
He added that the shift was not necessarily at odds with Reddit’s longer-term strategy to build itself into a direct destination for users, rather than relying on external platforms to drive traffic.
“Given our strategy is to make Reddit a direct destination, this is actually in line with our strategy because Google is teaching people that if you want to come to Reddit, you need to come to Reddit.”
The comments come amid Reddit’s existing AI data-licensing and partnership agreement with Google, which was announced in February, 2024.
Under the agreement, Google gained access to Reddit’s Data API, providing real-time access to public posts and content to help train its artificial intelligence models and improve how Reddit content is displayed and indexed across Google Search and its AI features.
Reddit’s results also follow just days after Google shared its own Q3 financial results, with the tech giant facing scrutiny over the ballooning costs of its AI investments.
As reported by B&T, Google saw more than US$500 billion in market value wiped out amid concerns surrounding the scale of its AI spending.
Google’s SVP and chief business officer Philipp Schindler said Search missed expectations due to some extenuating circumstances and Google’s belief that AI mode is the future.
