Reddit reported another quarter of strong revenue and profit growth but warned that artificial intelligence is beginning to reshape how users discover content online.
The social media company posted second-quarter revenue of $805 million, a 61% increase from a year earlier, while net income surged 183% to $253 million. Earnings and revenue both exceeded Wall Street expectations, and Reddit projected third-quarter revenue of between $860 million and $870 million, also ahead of analyst forecasts.
Despite the strong financial performance, Reddit shares fell after management highlighted growing volatility in traffic from search engines.
Chief Executive Steve Huffman told investors that search referrals had become “choppy” during the quarter, reflecting broader changes in how people find information online as AI-powered search tools become more prevalent. The company said its core business remained healthy but acknowledged that the evolving search landscape has introduced new uncertainty.
For years, Reddit has benefited from users arriving through traditional Google Search results. However, the rise of AI-generated search summaries is reducing the need for users to click through to websites, raising concerns that platforms dependent on search traffic could see slower audience growth over time.
The company’s user growth reflected that shift. Global daily active users increased 18% year over year to 130.3 million, supported by strong international expansion. However, growth in the United States slowed, with domestic daily active users edging down slightly from the previous quarter.
At the same time, Reddit continues to benefit from AI in other parts of its business. The company has rolled out AI-powered advertising tools that help marketers create campaigns and improve targeting, contributing to continued growth in advertising revenue. AI licensing agreements with technology companies have also created an additional source of income, although questions remain over how those partnerships will evolve as the AI industry matures.
The quarter underscored a growing challenge facing internet companies. While AI is creating new revenue opportunities through advertising and data licensing, it is also changing how people access information online. For Reddit, the financial results demonstrated that the business remains resilient, but investors are increasingly focused on whether the platform can maintain user growth as AI transforms the web.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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