Reddit Reports Strong Q2 Earnings Amid Concerns Over AI Impact
Reddit delivered strong second-quarter financial results, with revenue rising to $805 million—a 61% increase year-over-year—and net income of $253 million, up by 183%. These figures exceeded Wall Street expectations. The company also provided optimistic guidance for the next quarter, projecting revenues between $860 million and $870 million with healthy earnings before taxes. Despite these positive numbers, Reddit's stock fell over 10% in after-hours trading due to concerns raised by CEO Steve Huffman about declining search traffic referrals. Investors are worried that AI-driven summaries from Google may be reducing user engagement on the platform. In 2024, Reddit entered a content licensing agreement with Google for AI training purposes; however, there is uncertainty around whether this partnership will continue. During an earnings call, analysts questioned how AI might affect Reddit's U.S. audience growth and its ability to convert logged-out users into registered ones. Huffman emphasized the platform’s strength in community-driven engagement but remained vague on future plans regarding Google.
Topics: AI impact on traffic Google partnership Q2 earnings Reddit