Reddit disclosed plans to require users to create official accounts to access the platform, a significant shift for the service historically known for open, logged-out access. The company announced the change during its third-quarter earnings report, which showed mixed results relative to analyst expectations.
Reddit’s third-quarter revenue grew 53% year-over-year, though this marked a slowdown from the previous eight consecutive quarters of growth exceeding 60%. The company beat profit projections but provided fourth-quarter sales guidance of $1 billion to $1.03 billion, below Wall Street estimates of $1.05 billion. Average revenue per user reached $6.87, exceeding analyst expectations of $6.50. The stock declined more than 15% following the earnings announcement.
Chief Executive Officer Steve Huffman attributed the planned registration requirement primarily to shrinking traffic referrals from Google search. He stated that while previous Google algorithm changes were temporary, the company’s expanded use of artificial intelligence and AI overviews represented a fundamental shift in how Google’s product functions, moving away from being a traffic driver. Reddit will begin testing the login requirement in the fourth quarter outside the United States, with Huffman indicating that implementation details, including what logged-out users may access, remain under development.
Reddit’s daily active unique users reached 130.3 million in the third quarter, representing 12% year-over-year growth but falling short of Wall Street estimates of 133.7 million. U.S.-specific daily active uniques declined 2% year-over-year to 50.7 million, also below analyst projections. Huffman emphasized the company’s focus on direct app users and logged-in users, who generate better advertising returns due to higher engagement and allow for more targeted ad delivery.
The company’s “other revenue” segment, which includes data licensing, increased 35% year-over-year to $48 million. Huffman noted that Reddit remains in negotiations with Google regarding its data-licensing agreement and indicated the company would only accept terms that serve its interests.
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