Reddit hits 116M users as Google search traffic remains flat

Reddit delivered third quarter results on October 30, 2025, showing the platform reached 116 million daily active unique users while generating $585 million in revenue, marking a 68% year-over-year increase. CEO Steven Huffman disclosed during the earnings call that external search traffic from Google remained essentially unchanged during the quarter, contradicting assumptions that the platform's rapid growth stems primarily from search engine visibility.

"In Q3, it was a nice balance between organic and paid," Huffman stated during the call. "External search was basically flat." The comment carries particular weight given Reddit's complex relationship with Google throughout 2025, which has fluctuated between algorithm-driven visibility surges and temporary declines.

According to the earnings transcript, product-led improvements and targeted marketing campaigns emerged as the primary drivers of user acquisition rather than search referrals. Reddit's weekly search volume on the platform itself exceeded 75 million people during the third quarter, suggesting users increasingly bypass external search engines to discover content directly on the site.

Huffman positioned Reddit as the third most visited site in the United States according to Semrush data from October 2025, placing the platform between YouTube at number two and Amazon at number four. The ranking reflects what the company characterizes as a shift from destination site to starting point for information discovery.

Daily active unique users grew 19% year-over-year to reach 116 million, while weekly active unique users climbed 21% to 443.8 million. The user composition showed logged-in users expanding 14% while logged-out users grew 24%, indicating continued but not accelerating search engine visibility despite Google's documented preference for Reddit content throughout 2024 and 2025.

The platform's international expansion outpaced domestic growth significantly during the quarter. International daily active users increased 31% year-over-year compared to just 7% growth in the United States. Huffman attributed international momentum to machine translation now available in 30 languages, describing it as "a good driver of top-of-funnel growth."

France, Brazil, and India emerged as particular areas of strength, representing markets where Reddit deployed what executives call an "international playbook" combining translation capabilities, local content frameworks based on interest identification, marketing efforts to drive awareness, and partnerships with brands and notable people.

Advertising revenue reached $549 million, growing 74% year-over-year and accounting for the vast majority of total revenue. Other revenue, which includes data licensing agreements, contributed $36 million with 7% year-over-year growth. Chief Operating Officer Jennifer Wong noted that advertising growth came from "broad-based strength across the business" as the platform expanded relationships with existing customers while acquiring new advertisers across large, mid-market, and small business segments.

Active advertiser count expanded more than 75% year-over-year during the third quarter. Wong credited ongoing investments in machine learning models and advertising formats for driving improved performance and returns for advertisers. Lower funnel app advertisements showed double-digit percentage improvements in performance outcomes, while machine learning-driven optimizations in the conversion objective improved performance by more than 20%.

Average revenue per user reached $5.40, representing a 41% year-over-year increase. Wong explained that impression growth served as the primary driver rather than increasing advertising load on user feeds. "Our ad load overall, if you look at the feed compared to peers, is much lower than our peers," Wong stated. "And it is not a core part of our strategy to increase ad load."

The company temporarily adjusted advertising load during the quarter to balance supply and demand dynamics in the advertising marketplace before reversing the change. "We did use that lever temporarily in Q3. We turned it back," Wong confirmed. Chief Financial Officer Andrew Vollero added that impressions remained "our key driver, but we saw a tailwind from pricing in the quarter."

Net income reached $163 million with a 28% net margin, improving $133 million compared to the prior year. Adjusted EBITDA hit $236 million, representing a 40% margin and surpassing the profitability target the company established at its initial public offering in early 2024. The incremental adjusted EBITDA margin reached 60%, reflecting significant operating leverage as revenue growth substantially outpaced cost increases.

Gross margin expanded to 91%, up 90 basis points year-over-year and marking the fifth consecutive quarter exceeding 90%. Operating cash flow totaled $185 million while free cash flow reached $183 million, representing a 31% free cash flow margin. Capital expenditures remained minimal at $2 million, less than 0.5% of revenue.

Adjusted operating expenses grew 35% year-over-year to $297 million, approximately half the 68% revenue growth rate. Sales and marketing expenses reached $115 million, about 20% of revenue, with investments concentrated in sales team expansion and branded user marketing campaigns. Total headcount grew roughly 3% sequentially with approximately 80 net additions, of which 70% focused on customer-facing functions including sales, marketing, and advertising technology.

Cash, cash equivalents, and marketable securities totaled $2.2 billion at quarter end. Fully diluted shares outstanding decreased to 206.1 million from 206.2 million in the prior year, while stock-based compensation declined from 19% to 16% of revenue on a sequential basis.

Wong outlined three specific advertising developments during the quarter. Dynamic product advertisements, which launched to general availability earlier in 2025, continued showing performance improvements beyond core conversion objectives but "currently account for a small portion of our total lower funnel revenue." Conversion API-covered conversion revenue tripled year-over-year as the platform simplified adoption of measurement tools including Pixel and CAPI.

Auto-targeting for middle and lower funnel objectives showed adoption growing more than 50% year-over-year, while a beta of auto-bidding for upper funnel campaigns delivered more than 15% additional impressions at lower pricing for advertisers. The company began early testing of an end-to-end automated campaign platform using artificial intelligence to streamline campaign setup, with Wong noting that "early results are promising, with advertisers unlocking higher return on ad spend while spending less time managing campaigns."

Reddit expanded access to conversation summary add-ons, a format that integrates positive platform conversations into advertisements, during the third quarter. Testing with video game publisher Bethesda showed 15% higher click-through rates. Interactive advertisements built on the developer platform, allowing creation of custom experiences like mini-games or quizzes directly within advertising units, entered testing with plans to scale more broadly in 2026.

The platform unveiled new tools for publishers in September 2025 through Reddit Pro. Early adopters including the Associated Press now synchronize feeds, automatically import articles, track how stories are shared across communities, and use AI-powered tools to identify appropriate communities for content distribution. "Reddit is better when we have a diverse set of users and entities, and leagues and businesses and publishers add a lot of vibrancy to our community," Wong explained.

Huffman emphasized consumer product strategy focused on converting casual visitors into daily users through improved relevance and intuitive design. The company is redesigning the Reddit experience with a more modern, search-forward interface while streamlining onboarding processes to reduce friction for new users. "Today, it's behind a couple of screens of interrogation before you actually get to see it," Huffman noted, describing planned simplifications to content discovery.

Moderation tools deployed across more than 3,000 communities showed a 30% increase in active moderators per community on average. The company is using artificial intelligence to interpret subreddit rules and surface post insights, including pre-submission guidance to inform users whether posts might violate community rules before submission occurs.

Reddit Answers, an AI-powered conversational search tool launched previously, underwent integration into core search functionality during the quarter. The feature provides curated, community-powered summaries of discussions and expanded to non-English languages including Spanish, German, Italian, French, and Portuguese. "Our goal there is to build a global, unified, and modern search experience," Huffman stated. The platform currently handles approximately 20% of search volume through Reddit Answers or the core search interface, with full integration planned for coming quarters.

Huffman addressed questions about referral traffic from AI chatbots during the earnings call, confirming such traffic remains immaterial. "They're not a traffic driver today," he stated, though he expressed optimism about collaboration with partner companies. When asked about search engine optimization specifically for large language models, Wong clarified that advertisers come to Reddit because "that conversation is on Reddit" rather than for influence on external AI systems.

The company provided fourth quarter guidance projecting revenue between $655 million and $665 million, representing 53% to 55% year-over-year growth with a midpoint of approximately 54%. Adjusted EBITDA is expected to range from $275 million to $285 million, representing 78% to 85% year-over-year growth and an adjusted EBITDA margin of 42% at the midpoint.

Looking toward 2026, management outlined strategic priorities including growing app users by improving experience and retention, broadening user types and communities both domestically and internationally, increasing top-of-funnel growth by diversifying traffic sources including organic, paid, and publisher-driven channels, and scaling monetization and advertising formats.

Huffman concluded by noting user growth momentum entering the fourth quarter. "We exited Q3 higher than our average, so we have a head start," he stated, while emphasizing focus on product-driven sustainable growth over dependence on external traffic sources.

Timeline

• February 2024: Reddit completes initial public offering, establishing 40% adjusted EBITDA margin as profitability target
• February 2024: Google signs $60 million annual licensing agreement with Reddit for AI training data
• February 12, 2025: Reddit reports Q4 2024 results showing temporary Google algorithm impact on logged-out user traffic with quick recovery in Q1 2025
• May 2, 2025: Reddit reports Q1 2025 with 108.1 million daily users and $358.6 million advertising revenue, up 61% year-over-year
• May 22, 2025: Reddit launches Dynamic Product Ads to general availability after beta testing showing 2x return on ad spend improvement
• July 21, 2025: Google Analytics 4 introduces native Reddit Ads cost data import, first direct connection between platforms
• July 31, 2025: Reddit reports Q2 2025 with $500 million revenue and 110.4 million daily users, achieving 78% year-over-year growth
• August 2025: Studies show Reddit climbing German search rankings despite market exclusion from Google AI Overviews
• September 2025: Reddit launches publisher tools through Reddit Pro with Associated Press as early adopter
• October 30, 2025: Reddit reports Q3 2025 results with 116 million daily users, $585 million revenue, and first achievement of 40% adjusted EBITDA margin target

Summary

Who: Reddit Inc., led by CEO Steven Huffman, COO Jennifer Wong, and CFO Andrew Vollero, reported third quarter 2025 financial results to shareholders and the investment community.

What: Reddit announced reaching 116 million daily active unique users and $585 million in revenue, representing 68% year-over-year growth, while achieving a 40% adjusted EBITDA margin for the first time. The company disclosed that external search traffic from Google remained flat during the quarter, with growth instead driven by organic product improvements and marketing investments.

When: The earnings announcement occurred on October 30, 2025, covering the quarter ended September 30, 2025, with an earnings conference call held at 5:00 p.m. Eastern Time.

Where: Results cover Reddit's global operations across the United States, which contributed $480 million in revenue with 51.6 million daily active users, and international markets, which contributed $105 million in revenue with 64.4 million daily active users across 30 languages supported by machine translation.

Why: The financial performance matters to the marketing community because it reveals Reddit's growth now stems primarily from product improvements and direct marketing rather than search engine visibility, despite extensive coverage of Google's algorithmic preference for Reddit content throughout 2024 and 2025. The platform's evolution toward self-sustaining growth through native search capabilities, advertising product development, and international expansion indicates reduced dependency on external traffic sources while maintaining strong advertiser demand and monetization efficiency.