Reddit Reports Strong Q2 Earnings Amid Concerns Over Search Traffic and AI Impact
Reddit delivered a strong second-quarter performance with revenue reaching $805 million, up 61% year-over-year. Net income also surged by 183%, surpassing Wall Street expectations. The company projected even higher earnings for the next quarter but saw its stock fall over 10% in after-hours trading due to concerns raised about declining search traffic and potential impacts from AI advancements. CEO Steve Huffman noted that while U.S. daily active users slightly declined, Reddit remains confident in its community-driven model as a destination site. However, investors are worried that Google's use of AI summaries may be reducing referrals to the platform. The company is also uncertain about renewing its data licensing agreement with Google. During an earnings call, analysts questioned whether Reddit can maintain user growth and attract logged-out users in a shifting search landscape dominated by AI.
Topics: AI impact earnings revenue growth stock price reaction user metrics