Reddit (NYSE: RDDT) revenue jumps 53%, but a search traffic drop may shrink its user base

What happened

Reddit, Inc. (NYSE: RDDT) grew third-quarter revenue 53% to $895 million and guided to higher fourth-quarter sales.

The growth came with a warning. Reddit said search referral traffic fell meaningfully in the quarter, and the fall sped up late in the period. If the October pace holds, total daily active uniques could drop by a low-double-digit percentage in the fourth quarter.

Reddit also said it joined the S&P 500 index earlier in the quarter.

Key numbers

Metric	Latest	Change	Source
Revenue, Q3 2026	$895 million	from $585 million, +53%	SEC 8-K earnings release
Net income, Q3 2026	$283 million	from $163 million, +74%	SEC 8-K earnings release
Diluted EPS, Q3 2026	$1.40	from $0.80, +75%	SEC 8-K earnings release
Adjusted EBITDA, Q3 2026	$402 million	from $236 million, +70%	SEC 8-K earnings release
Operating cash flow, Q3 2026	$364 million	from $185 million, +96%	SEC 8-K earnings release
Q4 2026 revenue guidance	$1 billion to $1.03 billion		SEC 8-K earnings release

Read more: Reddit (RDDT) company research

How the quarter was built

Advertising drove the gain. Ad revenue rose 54% to $847 million, which Reddit credited to higher pricing and more impressions. Other revenue rose 35% to $48 million.

U.S. revenue grew 50% to $719 million and International revenue grew 67% to $176 million. Average revenue per unique rose 36% to $6.87.

Profit grew faster than sales. Income from operations rose to $261.6 million from $138.5 million a year earlier. Net income rose 74% to $283 million from $163 million, and diluted EPS rose 75% to $1.40 from $0.80.

Adjusted EBITDA of $402 million was up 70%, and its margin widened to 44.9% from 40.3%. Gross margin was 91.5%, up from 91.0%. Adjusted EBITDA leaves out stock-based compensation and related taxes, which came to $136.4 million, up from $93.6 million a year earlier.

Operating cash flow rose 96% to $364 million. Free cash flow was $363 million on capital spending of $1 million. Reddit ended September with $3.03 billion in cash and marketable securities. It bought back about 670 thousand shares for $100 million, an average of $149.81 a share. Fully diluted shares of 206.3 million were down 0.3% from the prior quarter.

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The search traffic warning

Daily active uniques averaged 130.3 million, up 12% from a year earlier, but the gain was uneven. U.S. daily uniques fell 2% to 50.7 million, while International daily uniques rose 24% to 79.6 million.

Search is the source of the pressure. Reddit said logged-out and web traffic took the biggest hit. Some of the loss spilled over to logged-in and app users, because search is a common way back to the platform. During October, search referrals dropped by more than 1 million a week on average.

Reddit's most monetizable users held up. Logged-in and app daily uniques grew from the prior quarter in the U.S. and the rest of the world. Together they account for over 80% of monetization, the letter says.

Reddit plans to move toward a logged-in-only experience. Testing will begin in select markets outside the U.S. in the fourth quarter. Reddit said the change gives it more signals for ad targeting and helps protect access to its data corpus.

Why it matters

OptimistFi has argued that Reddit works if its conversation archive becomes a durable ad and AI-data asset while the community model keeps margins unusually high. The quarter backs the margin side of that view. The search decline puts pressure on audience growth.

Fourth-quarter guidance is for revenue of $1 billion to $1.03 billion and Adjusted EBITDA of $480 million to $510 million. By OptimistFi's calculation, the revenue range is 11.7% to 15.1% above third-quarter revenue. Reddit said the guidance rests on current estimates and is not a guarantee.

The traffic warning is the main caveat. In Reddit's own scenario, user counts fall in the same quarter its revenue guidance covers. Logged-out traffic took the heaviest hit, and logged-in and app users generate most of the monetization. Yet Reddit said some of the search loss reaches those users too.

What's next

Reddit holds its earnings call on Oct. 29 at 1:30 p.m. PT and will post answers to questions from its r/RDDT subreddit afterward.

The next test is the fourth-quarter report. It will show whether revenue and Adjusted EBITDA landed inside the guided ranges and whether daily active uniques fell as the search trend implied. Results inside the ranges with users near current levels would strengthen the case. A user drop of the size Reddit described would weaken it.

Reddit said results from its fourth-quarter logged-in-only tests will shape a version for global rollout.

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