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On Thursday afternoon, Reddit told investors it had just had one of its best quarters. Sales were up 53%. Profit was up by more than half. Then its chief executive, Steve Huffman, told them something else: Google is sending Reddit fewer and fewer visitors, and the drop is speeding up. On Friday, the first trading day after the results, Reddit's shares fell 29.2%, while the S&P 500 fund fell 1.8%.
Reddit "topped analyst estimates, but shares sank sharply" after it gave a weaker revenue outlook and "warned of accelerating declines in search referral traffic," Investing.com reported. Proactive Investors reported the fall in early trading on Friday, "as investors reacted to weaker fourth-quarter guidance and slowing user growth." Stocktwits reported that the stock was on track for its worst day since it began trading in March 2024.
The story is about one number Reddit can't control. A large part of its audience arrives from Google searches, people looking for an answer who land on a Reddit thread. Google now answers more of those questions itself, with AI-written summaries at the top of the page. Reddit's quarterly report, the 10-Q filed on Friday, says changes to search engines "have adversely affected our DAUq growth in the current quarter." This is Reddit's side of a shift that Alphabet, Google's parent, reported from the other end a day earlier.
A strong quarter
Revenue was $895.0 million in the three months to September, the 10-Q says. Net income was $283.3 million, against $162.7 million a year earlier, and diluted earnings were $1.40 a share, up 75%. The business brought in $364 million of cash from operations. Huffman pointed to a milestone in the release: "Surpassing $3B of revenue over the last 12 months shows Reddit’s strength as a destination and the differentiated value of our platform."
Almost all of that money comes from ads, and the growth came mostly from charging more for them. The price of ads rose about 34% from a year earlier, "driven by improved performance across the full funnel of ad objectives and higher advertiser demand," the 10-Q says, while the number of ads shown rose about 15%. Average revenue per user, Reddit's measure of how much it earns from each daily visitor, was $6.87, up 36%. In the United States it was $13.82, against $9.04 a year earlier.
Reddit ended the quarter with $3.03 billion in cash and investments and bought back $100 million of its own shares. Two years ago it was losing money: in 2024 it lost $484.3 million, its annual report shows, and in 2025 it earned $529.7 million on revenue of $2.2 billion.
Source: SEC EDGAR XBRL data
Fewer visitors from Google
The trouble is in the user numbers. Reddit counts daily active uniques, or DAUq: the people who visit at least once a day, logged in or not. Worldwide, that number grew 12% from a year earlier, "driven by 24% growth in DAUq in the rest of world, partially offset by a 2% decline in DAUq in the United States," the 10-Q says. Compared with the three months before, the global count was flat, with a 5% decline in the United States. Invezz reported that the yearly fall in US users is the first since Reddit went public in 2024.
The company says why. The flat quarter came as gains from marketing and product changes "were offset predominantly by third-party search engine changes," the filing says. Reddit spent more to find users instead: its sales and marketing costs rose $80.7 million, or 63%, driven mainly by "user and brand marketing expenses."
On the call with analysts, Huffman said "our search referral traffic was down meaningfully in Q3 with the decline accelerating later in the quarter," according to a transcript published by The Motley Fool. Then came the warning most news reports led with:
"During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week. If this rate of decline continues, current trends would suggest that total DAUqs could fall in Q4 by a low double-digit percentage from our current base of 130 million DAUqs." Steve Huffman, on the earnings call
Invezz reported the same figure for October's weekly decline. Huffman blamed Google's AI Overviews and AI Mode, which put an AI-written answer above the links. "So what started as a feature is now the full search experience. And at the minimum, it pushes everyone down the search page," he said. "It's just Google is not sending them to Reddit the way they used to." He added that "Google is crawling us as hard as ever," meaning its software still reads Reddit's pages.
Analysts made the same link. Reddit's strong growth in revenue and profit "was overshadowed by worsening U.S. DAU declines, as increased prevalence of AI Overview negatively impacted referral traffic," Jefferies analyst John Colantuoni said, Investing.com reported. Stocktwits reported "a wave of analyst downgrades and price-target cuts" after the results.
The plan: make people log in
Reddit's answer is to depend less on strangers arriving from search. It plans to make most of the site available only to people who log in. "In Q4, we'll begin fully testing this in select markets outside the U.S.," Huffman said, and the 10-Q says Reddit intends "to implement some form of logged-in restrictions globally, including in the United States." Proactive Investors reported the same plan.
The company's case is that those users are where the money is. Chief operating officer Jen Wong said "over 80% of our monetization sits on the shoulders of logged-in and app users." Huffman was open about the cost: "So we will likely be trading reach for engagement."
The outlook, from the earnings release, is for fourth-quarter revenue "in the range of $1,000 million to $1,030 million." On the call, finance chief Andrew Vollero said that would be "38% to 42% year-over-year growth." That is still fast, but slower than the 53% of this quarter, and below what analysts had expected, Investing.com and Proactive Investors reported.
The search problem is also in court. A securities class action filed in June 2025 accuses Reddit and some of its officers of making "false or misleading statements and omissions concerning the impact of Google Search and its AI Overviews feature on our business," the 10-Q says. A court dismissed the complaint in August with leave to amend, and the plaintiffs filed a new one on October 23. Reddit says "the outcome of these matters remains uncertain."
What it adds up to
This is analysis, not advice. Reddit's quarter shows a business that earns more from each visitor than ever, and a front door it doesn't own. For years Google sent Reddit a steady flow of people who never signed up. Those visitors are now being answered on Google's own page, and Reddit's filings say so in plain words.
The bet is that the people who matter will come straight to Reddit, and that a login wall will turn more casual readers into regular ones. Signs it is working would be logged-in users in the United States growing again and revenue per user rising fast enough to cover a smaller crowd. Signs of strain would be a fall in daily users as large as Huffman warned of, and marketing costs that keep climbing to replace what search used to bring for free. Reddit built itself on strangers asking each other questions. The question now is whether they will still find it.