Reddit Tops Q3 Estimates, but Weak Q4 Guide, User Miss and Search Traffic Slide Sink Shares After Hours

Reddit (RDDT) beat third-quarter estimates on Oct. 29 but guided below Wall Street for the fourth quarter, and its shares fell after hours. Revenue rose 53% to $895 million and GAAP diluted EPS was $1.40, against LSEG estimates of $878 million and $1.35. The Q4 revenue guide of $1.00 billion to $1.03 billion trails the $1.05 billion consensus cited by CNBC, and StockStory put its $495 million adjusted EBITDA midpoint below the $509.4 million estimate. Reported declines ranged from 8.5% (Investing.com) to 12.6% at $113.04 (StockStory) to more than 15% (CNBC).

User numbers drove much of the concern. Daily active uniques rose 12% to 130.3 million, short of the 133.7 million expected, and U.S. DAUq fell 2% to 50.7 million against 53.5 million projected. In its shareholder letter, Reddit said search referrals fell by more than 1 million per week on average in October, and that if the decline continues, total DAUq could fall in Q4 by a low-double-digit percentage.

CEO Steve Huffman told CNBC that shrinking referral traffic from Google, which CNBC tied to its push on AI overviews, played a major role in plans to require users to log in. The letter says Reddit will begin fully testing a logged-in-only experience in select markets outside the U.S. in Q4. Huffman gave no timing for a full change, and Reddit is still deciding what logged-out users will see.

The quarter itself was strong. Ad revenue rose 54% to $847 million and other revenue, which includes data licensing, rose 35% to $48 million. Adjusted EBITDA was $402 million, 45% of revenue. Growth did slow: 53% ends a run of eight straight quarters above 60%.

Watch the non-U.S. login test and whether Q4 DAUq actually falls as the letter warned. Reddit says logged-in and app users account for over 80% of monetization, and Huffman said Reddit is still in negotiations with Google over data licensing.