Reddit reported second-quarter results after Thursday’s close and beat on essentially everything a company gets graded on. Revenue came in at $805 million, up 61% from a year ago against a consensus near $730 million — the eighth straight quarter of growth above 60%. Diluted earnings of $1.25 a share cleared the roughly 95 cents analysts expected. Global daily active uniques reached 130.3 million, up 18% and slightly ahead of the 129.9 million the street modeled. Management then guided third-quarter revenue to $860–$870 million against consensus near $828 million.
The stock fell about 21% on Friday, trading down as much as 23% intraday — the worst day since the company went public in March 2024.
Two lines did the damage. U.S. daily active uniques came in at 53.2 million, down from 53.5 million in the first quarter — the first quarter-over-quarter decline Reddit has reported. And the release contained no new AI data licensing agreements, which a good chunk of the shareholder base had been positioned for. The “other revenue” line that houses licensing grew 24% to $43 million, respectable and nowhere near the number that would reprice the story. Chief executive Steve Huffman described search referrals during the quarter as choppy.
Our take: Run the arithmetic and the quarter tells on itself. Revenue per daily unique went from roughly $4.53 to about $6.18 in a year — call it 36% — while the user base grew 18% globally and went backward in the market that pays the most per user. Monetization is doing all of the work. That is a fine quarter and a bad trajectory, because ad load and pricing have a ceiling and audience does not. The market did not punish the results. It repriced the assumption that the audience keeps compounding.
The Google exposure runs in two directions
Reddit’s new users have historically arrived through Google search, which makes AI Overviews — the generated summaries that answer the query on the results page — a direct tax on the top of its funnel. Reddit is not alone here; publishers across the board have watched referral traffic thin out over the past two years. But Reddit is unusually levered to it, and “choppy” is the kind of word that gets a multiple cut.
The second exposure is the contract. Reddit signed a data licensing deal with Google in February 2024 worth about $60 million a year, and it expires in the first half of 2027. Renewal talks are live. Reddit reportedly wants usage-based pricing that scales as its content gets cited more often in AI answers, and has weighed restricting Google’s access as leverage. It also licenses to OpenAI, which is the only reason it has any leverage at all.
That is the awkward part: the same counterparty is both the biggest customer of the data and the pipe that delivers the audience. Squeezing one hand risks the other. A licensing win that costs Reddit search placement is not a win.
What to watch
- U.S. daily uniques next quarter. One down quarter is noise. Two is a trend, and the entire bull case is audience growth.
- Any renewal headline on the Google contract — terms matter more than the number, specifically whether pricing becomes usage-based.
- Logged-in versus logged-out mix. The users who arrive through search and never sign in are the ones AI Overviews takes first.
- Whether the “other revenue” line reaccelerates. Growing 24% while total revenue grows 61% means licensing is shrinking as a share of the business, not expanding.
Reddit is being valued as an AI data asset and operated as an ad business. Friday was the market checking which one is actually growing.