Reddit is moving to “a logged-in-only experience,” CEO says

Reddit CEO Steve Huffman announced on Thursday plans to make signing-in mandatory for most content as the platform faces challenges with data scraping and a decline in search referral traffic in recent months. Huffman cautioned that the total daily active unique visitors (DAUq) could decrease by a low double-digit percentage in the fourth quarter, dropping from the current 130 million visitors, if search referral traffic continues to decline.

Search engine referrals to Reddit fell by more than one million on average each week in October, he stated. In the US, Reddit's biggest market by revenue, DAUq fell by 2% to 50.7 million. The social media company, which licenses its data to AI startups like OpenAI and Alphabet's Google, has sued data scraping companies Anthropic, Perplexity AI, and three others for illegally collecting Reddit's data.

Huffman emphasized that while Reddit will continue to license its data intentionally, commercial deals come with safeguards to protect users and the business. Despite a 53% revenue growth in the quarter ending September 30, Reddit's 53% revenue growth slowed sequentially. However, the company still outperforms rivals such as Snap and Pinterest in the competitive ad market, which includes Meta.

To enhance the logged-in user experience, Reddit plans to deliver more relevant advertisements and implement product improvements, such as increased video content and better personalization. The company intends to test the logged-in-only experience in select markets outside of the US in the fourth quarter to evaluate its impact before a wider rollout.

In Q3, Reddit reported revenue of $895 million, surpassing the LSEG-compiled analysts' average estimate of $878.4 million. The company's revenue forecast for the current quarter ranges between $1 billion and $1.03 billion, aligning closely with estimates. Fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization are expected to fall between $480 million and $510 million, compared to analysts' estimate of $512.2 million.