Reddit posted a stronger-than-expected second quarter and raised its outlook, yet shares fell after management said search referrals were uneven late in the period
Reddit delivered another quarter of fast growth on Thursday, topping Wall Street expectations on revenue, profit and forward guidance. Even so, investors sent the stock lower after management flagged uneven search referrals, a reminder that the platform still depends on outside traffic to keep new users coming in.
For the quarter ended June 30, Reddit said revenue climbed 61% from a year earlier to $805 million, beating the $730 million consensus estimate from LSEG. Earnings per share came in at $1.25, well ahead of the 95 cents analysts expected. Net income rose to $253 million from $89 million a year ago.
The company also said third-quarter revenue should land between $860 million and $870 million, above the $828 million analysts had modeled. Adjusted earnings are expected to come in between $385 million and $395 million, also ahead of expectations. That guidance matters because the market is not just rewarding Reddit for recent momentum; it is testing whether the business can keep converting new users and ad demand into sustained profit growth.
User metrics reinforced the operating strength. Global daily active unique users rose 18% from a year earlier to 130.3 million, slightly above analyst estimates. U.S. daily active unique users increased 6% to 53.2 million. Average revenue per user reached $6.18 overall and $11.85 in the U.S., showing that monetization continues to improve as the company expands beyond its core domestic audience.
Reddit's ad business has now posted revenue growth above 60% for eight straight quarters, helped by international expansion, new user gains and improvements to its ad tools. The company also said its "Other revenue" segment, which includes data licensing, grew 24% to $43 million. OpenAI and Google remain Reddit's two largest data licensing partners, which keeps the company tied to the same search and AI ecosystem that is now a source of investor concern.
That tension showed up in the stock. Shares fell about 11% after the report and were down around 7% in after-hours trading, according to trading cited by CNBC, as investors focused less on the beat and more on how much of Reddit's traffic still flows through Google. CEO Steve Huffman said search referrals were choppy during the quarter and became more volatile later on, but he argued that the broader commercial picture remains intact.
The concern is not limited to one quarter's traffic data. Earlier this month, the stock dropped after the Wall Street Journal reported that Reddit was weighing whether to limit Google's access to its data. Reddit and other publishers, including USA Today and Politico, have worried that Google is sending less referral traffic as it pushes its Gemini-powered AI products more aggressively. For Reddit, that makes traffic diversification more than a marketing issue; it is a direct question about how reliably the company can acquire users without leaning on a platform it does not control.
Reddit's latest numbers also echo a broader pattern in digital advertising: strong revenue growth can coexist with investor skepticism if the route to future growth looks fragile. A day earlier, another large tech company's results showed how quickly markets can reward one growth story while punishing another, especially when guidance or cash flow raises new doubts. In Reddit's case, the business is still growing quickly, but the market is treating traffic quality and source stability as just as important as headline sales.
That distinction matters for investors because ad-supported platforms usually depend on a chain of moving parts: audience growth, search visibility, engagement, ad pricing and product changes outside their control. If one link weakens, revenue can still rise for a while, but the market may lower the multiple it is willing to pay long before the company sees a hard slowdown in the income statement. Reddit's quarter showed both sides of that equation at once.
