Reddit has smashed its Q2 sales forecast and predicts another quarter above expectations, but its share price has tumbled by 11 per cent due to a “choppy” search forecast.
Reddit’s revenue increased 61 per cent and advertising sales grew 64 per cent to $762 million.
Its Daily Active Uniques increased 18 per cent year-over-year to 130.3 million, largely driven by its expansion into international markets.
The social media platform expects its third quarter revenue to rise to $860 million, well above its last Q3 sales of $828 million.
“In an increasingly automated web, the value of real human perspective has never been higher. Reddit’s commercial momentum reflects that,” founder and CEO Steve Huffman said.
“Crossing $1 million in revenue per employee and maintaining eight consecutive quarters of over 60 per cent revenue growth shows the strength of our community model and the value we deliver to advertisers.”
Nonetheless, its forecast in the medium to long term is not as rosy.
A lot of Reddit’s remarkable growth is down to a $60 million a year data-licensing agreement with Google that allows the search giant to scour its content to train its AI engine Gemini.
Reddit has listed much higher in Google search since the deal began in 2024, but now Google’s AI overviews are using its content to answer questions, which bypasses traffic to the social media platform.
In an investor letter, the company said “search referrals were choppy”, and Reddit has previously flagged it may walk away from the arrangement.
Industry analysts have speculated that Reddit may secure deals with other AI companies if its reliance on Google search isn’t paying dividends.
