Overview
- The company reported second-quarter revenue of $805 million, net income of $253 million, and raised third-quarter revenue guidance to $860 million–$870 million, exceeding Wall Street expectations.
- Management said search referrals were “choppy” and that AI-generated search summaries have reduced click-throughs from Google, which coincided with slower U.S. daily active user growth versus stronger international gains.
- Advertising strength powered the quarter with roughly 70% year-over-year advertiser growth and AI-powered ad tools that improved campaign performance while 'other' revenue from data licensing rose but no new major AI licensing deals were announced.
- Investors punished the stock after the earnings period because executives highlighted referral volatility and did not announce new AI partnerships, and management has since pointed to product improvements, higher retention and a $235 million buyback as partial offsets.
- The shift in search behavior shows how AI overviews can cut logged-out discovery and thus make U.S. users—who generate far higher revenue per user—more valuable, which increases pressure on Reddit to convert search visitors into returning, logged-in users.