Reddit revenue jumps 53% while its US audience shrinks. The login plan is the next test

Reddit’s third-quarter revenue rose 53% to $895 million, but the company’s new shareholder letter contains a more difficult audience story: US daily active uniques declined 2% from a year earlier, search referrals deteriorated and management warned that total daily activity could fall in the fourth quarter if current trends continue.

The proposed response includes testing a logged-in-only experience in selected markets outside the United States during the fourth quarter. That makes the login announcement more than a change to how someone reads a discussion thread. It is a test of whether Reddit can deepen its relationship with valuable users while reducing its exposure to traffic sent by search engines.

The number missing from the growth headline

Reddit’s October 29 earnings release reports global daily active uniques of 130.3 million, up 12% year over year. Its shareholder letter shows US daily active uniques of 50.7 million, compared with 51.6 million a year earlier and 53.2 million in the second quarter. International daily active uniques reached 79.6 million, up from 64.4 million a year earlier.

Using those disclosed figures, US daily activity fell about 1.7% year over year and 4.7% sequentially. International daily activity rose about 23.6% year over year. Rounding explains the company’s reported 2% US decline and 24% international increase. The global total consequently conceals two different geographic trends.

The company also reports that logged-in and app daily active uniques grew sequentially in both the United States and the rest of the world. There is no contradiction in a smaller overall US audience alongside growth in a more engaged subset. But the release does not give the size of those subsets in the same way it gives the overall regional figures, limiting an outside reader’s ability to quantify the shift.

Chief executive Steve Huffman says search-referral declines accelerated later in the third quarter and continued into early fourth-quarter trading. During October, search traffic had been dropping by more than one million referrals on average per week. He warns that, if that rate continues, current trends suggest total daily active uniques could fall by a low-double-digit percentage from the current base of about 130 million in the fourth quarter.

That is a conditional management warning, not a reported fourth-quarter result. A search referral is also not the same measurement as a unique daily user. Multiplying weekly referral losses by the number of weeks left in the quarter would not produce a reliable audience forecast, because people can visit repeatedly and arrive through several routes.

Advertising is paying more of the bill

Advertising revenue rose 54% to $847 million, while other revenue increased 35% to $48 million. Advertising therefore represented approximately 94.6% of total quarterly revenue, calculated as $847 million divided by $895 million. The earnings story remains overwhelmingly an advertising story, even when discussion of Reddit focuses on its data or AI relationships.

US revenue reached $719 million, up 50%, while international revenue was $176 million, up 67%. The United States supplied roughly 80.3% of revenue but about 38.9% of global daily active uniques. Those shares are not an individual-user price list or a substitute for the company’s formal revenue-per-user metric. They do show why the location and engagement of the audience matter as much as its headline size.

Revenue growth outpaced global daily-audience growth by 41 percentage points. That gap alone cannot identify how much came from ad prices, ad load or user behavior. Reddit attributes advertising growth to both higher pricing and more impressions. The shareholder letter says logged-in and app users account for more than 80% of monetization, helping explain why management is willing to prioritize those audiences.

Login adds signals, but also a hurdle

Huffman says moving primarily to logged-in use would give Reddit more advertising-targeting signals, improve personalization and engagement, protect access to its data and help it adapt to regulation. The planned fourth-quarter tests outside the United States will inform a later global version. The letter does not establish a date when every reader worldwide must create an account.

For an advertiser, the attraction is a more identifiable, returning audience rather than a one-time anonymous visitor. For someone who arrives from search to read a single answer, the same account requirement could be extra friction. For moderators and community contributors, the commercial question is whether improved retention brings sustained participation without discouraging useful new visitors.

Those outcomes remain hypotheses to test. A stronger advertising profile for remaining users could coexist with fewer casual visits. Conversely, converting more occasional readers into regular app users could offset some of the referral loss. Neither outcome follows automatically from requiring a login, and the company has not yet published results from the new tests.

The earnings provide room to experiment

Reddit reported $283 million in net income and $364 million in operating cash flow. Free cash flow, a non-GAAP measure, was $363 million. With capital expenditure of about $1 million, the difference between operating cash flow and that free-cash-flow figure was small. These are cash-generation results, rather than proof that the audience transition is already complete.

Management forecasts fourth-quarter revenue of $1 billion to $1.03 billion and adjusted EBITDA of $480 million to $510 million. The revenue midpoint of $1.015 billion would be about 13.4% above the third quarter’s $895 million. That is a sequential comparison of company guidance, not a prediction of realized growth, and the holiday advertising quarter is not interchangeable with an ordinary quarter.

The next dated test is the fourth quarter of 2026: whether the overseas login experiments begin as described, whether search deterioration persists and whether revenue meets the forecast despite the audience pressure. Reddit has not supplied a universal login launch date. Its report makes the trade-off clear enough: a much stronger advertising business is trying to secure a direct relationship with readers before a changing search market sends it fewer of them.