Reddit CEO says chatbots are not a traffic driver

Reddit's CEO Steve Huffman reported that AI chatbots are not currently significant traffic drivers, with Google search and direct access remaining primary, despite the company's strategic data licensing deals with OpenAI and Google and ongoing legal disputes with other AI firms. For Q3 2025, Reddit posted strong financial results, with revenue up 68% year-over-year to $585 million and robust user growth, including 116 million daily active unique users. The company is strategically investing in its AI-powered search experience and new user onboarding flows to enhance engagement and further leverage its valuable data assets.

Analysis

Reddit (RDDT) reported a robust Q3 2025, with revenue surging 68% year-over-year to $585 million, indicating strong financial performance. User engagement metrics also showed significant growth, with daily active unique users reaching 116 million and weekly active unique users at 444 million, marking a 20% year-over-year increase, alongside a 31% growth in international daily users. This performance underscores the platform's expanding reach and user base.

CEO Steve Huffman clarified that AI chatbots are not currently major traffic drivers for Reddit, with Google search and direct access remaining primary sources. Despite this, Reddit has strategically monetized its valuable data through licensing agreements with major players like OpenAI and Google, while simultaneously engaging in legal disputes with other AI firms such as Anthropic and Perplexity over data usage. This dual approach highlights a proactive stance on intellectual property and data monetization.

The company is heavily investing in enhancing its internal search experience, with 75 million weekly searchers in Q3, and is handling 20% of search volumes through its AI-powered 'Answers' feature. Furthermore, Reddit is implementing a simpler onboarding flow to improve early user engagement and content discovery, signaling a focus on platform stickiness and user retention. These initiatives aim to leverage Reddit's unique content and foster deeper user interaction.

Key Decisions for Investors

• Investors should closely monitor Reddit's (RDDT) ability to sustain its robust revenue and user growth rates, particularly the impact of its international expansion and enhanced user engagement strategies.
• Evaluate the long-term financial implications of Reddit's data licensing deals with OpenAI and Google, as well as the outcomes of its legal disputes with other AI companies, which could significantly affect future revenue streams and intellectual property value.
• Assess the effectiveness of Reddit's investments in its AI-powered internal search and new user onboarding flows, as these are critical for improving platform utility and retaining its growing user base amidst evolving digital consumption patterns.