Reddit posted its Q3 2026 earnings report on Oct. 29, which showed that the app has continued to evolve its revenue base, while it also reported that more users are signing in to the app, and returning more often.
At the same time, Reddit also reported significant declines in search engine referral traffic, which had become a key advantage for the app.
First, on users, Reddit reported a slight increase in weekly active users in the third quarter, with users outside the U.S. becoming more active participants in Reddit discussion.
The downside here is that Reddit’s U.S. weekly active user count declined in the same period, which is also reflected in its daily active user numbers.
On balance, Reddit saw more growth year over year, and maintaining more than 500 million weekly actives is clearly significant. But a decline in U.S. users could also have a longer-term impact on the platform’s revenue opportunities, since Reddit is still heavily reliant on the U.S. market.
As per the above chart, Reddit posted $895 million in revenue for the quarter, up 53% year over year. However, only about 20% of that intake came from outside the U.S. market.
Reddit does have potential to tap into more growth opportunities through its popularity in other regions, but it also has some work to do in making ads a bigger consideration in these markets.
But the biggest story from Reddit’s Q3 report was the shift in search traffic, and how that’s impacted the company’s performance.
In recent years, Reddit has gleaned significant traffic benefits from search referrals, with the app’s posts cited in many artificial intelligence chatbot responses.
That’s because Reddit’s communities, as well as its up and downvote system, provide a powerful mechanism for highlighting the most relevant responses to many questions.
But in recent months, Reddit said its search and chatbot referrals have declined significantly.
As per Reddit CEO Steve Huffman: “Our search referral traffic was down meaningfully in Q3, with the decline accelerating later in the quarter. The biggest impact was on logged-out and web traffic, but some of the impact flows through to logged-in and App traffic, since search referral is a common source of re-engagement for users.”
Huffman said that Reddit offset some of these declines by “both driving reach primarily through user marketing and also by continuing to improve the product.” Even so, the company saw even more search referral declines during the early part of Q4.
“During October, we have seen that search traffic has dropped by more than 1 million referrals on average per week,” Huffman said. “If this rate of decline continues, current trends would suggest that total DAUqs could fall in Q4, by a low-double-digit percentage from our current base of 130 million DAUqs.”
Given that Reddit’s daily active user count is already dropping in its highest revenue market, this could become a major concern.
Huffman said Reddit could potentially combat this by shifting to an entirely logged-in experience.
He said Reddit is looking to limit more of its content to logged-in users, which means that if people want to glean insights from subreddit communities, they’ll have to use the Reddit app.
As per Huffman: “Moving to primarily logged-in will ensure our users have the best Reddit experience possible, and can find the content and communities most relevant to them. It is better for our business because we will have more signals for ads targeting, and being logged-in leads to higher engagement generally. It also allows us to protect access to Reddit’s extremely valuable corpus of data, and helps us better adapt to emerging regulations around the world.”
As such, there may be fewer Reddit results available to AI chatbots and Reddit could maintain direct ownership over its audience.
However, that may not work to address the company’s usage declines, and it’s not clear whether Reddit will be able to maintain enough logged-in users to drive significant advertiser value.
The most telling data point on this front is the platform’s variance between daily and weekly logged-in users.
Most social platforms generally see around a 2:1 variance between weekly or monthly active users than their daily active user count; Snapchat, for example, has 493 million daily active users, and 971 million monthly actives, while X claims 253 million daily actives, versus a reported 550 monthly active users.
But Reddit’s performance stats are different, with the app's weekly and monthly user ratio being closer to 4:1. That suggests that Reddit users are more transient, and less likely to log in every day.
Which reflects the way Reddit has increasingly been used to provide answers and insights, as opposed to facilitating social or community connection like other apps. But this also doesn’t bode well for the app’s user retention if the company moves to lock down all of its info.
Either way, investors will find out. Huffman said Reddit will begin transitioning more users to a logged-in experience in select markets outside the U.S. in Q4.
“The results of those tests will inform an optimized version of logged-in-only Reddit globally,” he said.
Reddit also reported that its machine learning improvements in recommendations saw more people coming back to the app more often, which could also help. The percentage of new users who return to the app the first week after installing increased by double digits quarter over quarter and by more than 50% year over year. Reddit said that video creation and consumption are both up, as are chained video views.
Reddit wants to double down on this with the addition of a For You feed to algorithmically recommended content.
Reddit is also testing new ways to keep users engaged in its video feed.
This is a significant update from the company, which also noted that its Q4 performance could fail to reach analyst expectations if the current trends continue.
