Reddit Q2 revenue up 61% but AI search impact spooks investors
Original: Reddit reports a solid quarter but shows signs of AI’s impact
Why This Matters
Reddit's traffic pressure from AI search signals a broader structural risk for content platforms dependent on search referrals.
Reddit reported Q2 2026 revenue of $805M, up 61% YoY, with net income of $253M, up 183%. Despite beating Wall Street expectations and issuing strong Q3 guidance of $860M–$870M, the stock fell over 10% after-hours after CEO Steve Huffman warned of "choppy" search referral traffic.
Reddit's Q2 2026 results beat analyst expectations on both revenue and earnings, and the company guided Q3 revenue of $860M–$870M with healthy pre-tax earnings. Despite these strong figures, shares dropped more than 10% in after-hours trading following a shareholder letter from CEO Steve Huffman warning that "search referrals were choppy in the quarter, and traffic was more volatile later in the quarter."
Investors appear concerned about AI's growing impact on Reddit's traffic. Google's AI-generated search summaries are seen as reducing referral clicks to Reddit, cutting into logged-out user traffic. Reddit's U.S. daily active unique users dipped slightly to 53.2 million from 53.5 million in Q1, even as global user numbers grew.
During the earnings call, analysts pressed Huffman on whether Reddit would renew its data licensing deal with Google — a contract signed in 2024 to supply content for AI training. Huffman was noncommittal, saying "I don't think there's a binary outcome" and that Reddit's relationship with Google "predates the formal data licensing agreements." He maintained that Reddit's community-driven, human content would keep users returning, stating "Communities are universal...it's a matter of revealing that."