Reddit posts strong Q2 results but investors worry about AI-driven search volatility

Reddit announced a robust second-quarter performance, with revenue climbing 61% to $805 million and net income soaring 183% to $253 million, surpassing Wall Street expectations. The company also forecast next-quarter revenue of $860-$870 million, beating guidance, but its shares dropped more than 10% in after-hours trading. CEO Steve Huffman cautioned that traffic from search engines had become volatile, hinting that AI-driven search tools might siphon users away.

Reddit’s 2024 agreement to provide content to Google for AI training is now uncertain, as Google’s AI summaries appear to be diverting audience share. While global user numbers rose, U.S. daily active uniques fell marginally to 53.2 million from 53.5 million in Q1. Analysts on the call pressed Huffman on the potential impact of AI on logged-out traffic and future data-licensing arrangements with Google and OpenAI. Huffman emphasized the platform’s community focus and said Reddit would continue to maximize its value despite the evolving search landscape.