Reddit Q3 2026 Earnings Call | Daily Active Uniques & High-Margin Data Licensing Sales Accelerate

Thanks Jesse. Hi everyone. Thank you for joining us and welcome to our quarterly earnings call. In Reddit's 21 years, the internet has changed in ways that would have been impossible to predict. We've gone from flip phones to smartphones to personal AI agents. And through it all, Reddit has always owned our own corner of the internet, offering people something that no one else does. Social media has evolved from friends and families to followers and famous people, and from status updates to the mindless scroll. Web search is evolving from a gateway to the web to becoming an AI-powered destination itself. While extraordinarily useful and powerful, AI search solves a different problem than Reddit. AI does not fulfill people's fundamental need for community, connection, and belonging with other people, and it lacks context and nuance. The Reddit experience captures the human experience in a way that no other platform can replicate.

Only Reddit can help people navigate life's journey through the lens of other people's lived experiences. Only Reddit can help you feel both like a multifaceted, unique individual and a part of a greater whole and do so without needing to reveal your real-world identity. That's why Reddit is and always has been a distinct and direct destination. People seek out Reddit because we meet a universal need they simply can't get anywhere else online. Our work now is about doubling down on what makes Reddit Reddit and making Reddit more of a daily habit. We come into that work with clear advantages and revenue momentum in the business. And you can see that in the exceptional commercial results we delivered in the third quarter. We generated 53% revenue growth, something few companies are doing. And it's even more significant when you consider that's on top of nearly 70% revenue growth last year. Those results in Q3 helped us cross three billion in revenue over the last 12 months. Our margins, which are already industry-leading, expanded across the board.

Reddit's continued growth at scale is proof of the strength of our business, the demand for our platform, and the value we provide advertisers. And it's that consistent delivery of growth and profitability that earned us a place in the S&P 500 index earlier this year — earlier this quarter, excuse me. Yet, while our business continues to grow significantly, internet search and how people discover things online continues to change rapidly and significantly. 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.

The company helped to offset the declines by both driving reach primarily through user marketing and also by continuing to improve the product. These declines have continued into 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. If this rate of decline continues, current trends would suggest that total DAUs could fall in Q4 by a low double-digit percentage from our current base of 130 million DAUs. However, search referral trends do not determine our relevancy and they do not define our future. Logged-in and app DAU are our most valuable users and they are our primary focus, and we grew logged-in and app DAU sequentially. Together these make up the vast majority of engagement and over 80% of the monetization on Reddit. Growing this high-value audience speaks to the strength of Reddit as a destination and this is what matters for the long-term health of our platform and our business.

So, as we look ahead, our strategy to make Reddit a direct daily habit for more people is simple: make Reddit awesome, grow community and belonging, and bring in new audiences. Making Reddit awesome means making it more relevant and easier to navigate, getting to personalization faster, and creating fun new experiences on Reddit. This will both improve retention of new users and deepen engagement of our core users. Our work in ML feeds and app performance is delivering results. The percentage of new users who return the first week after installing the Reddit app is up double digits quarter-over-quarter and over 50% year-over-year. Video creation and consumption are both up, as are chained video views. We'll continue our work in these areas in the coming quarters. And I'm particularly excited about some of the areas we'll be testing to make the core feed experience more consistent and predictable and to grow some of our new experiences like games and visual podcasts.

To grow community and belonging, we've been making it easier to create, grow, and contribute to communities on Reddit. This quarter, we've continued to grow the number of communities on Reddit and increase the contribution from our users. We added another billion posts and comments to our corpus. Looking forward, our work will be to make subreddits more distinct, to deepen the sense of belonging by making joining subreddits more intentional and significant, and to make moderation much easier and more consistent by giving moderators AI-powered tools. This approach has helped our own enforcement team reduce the median time to action on violating content from 58 hours to 5 seconds this year. Our current opportunity is to better retain the large cohort of users who try Reddit for the first time every day by executing on the above. We see a large number of unattributed, aka word-of-mouth, installs every day. We also have a large number of reinstalls which we can mitigate through things like an improved incognito mode in the app. And of course, we will continue to convert our still significant number of search-referred users from mobile web to app. Currently, only about 13% of eligible mobile web users are seeing the app conversion prompt. So, this has room to scale.

While early, so far we have seen that app users that come to Reddit through marketing retain at rates similar to app users that come organically. So, we will continue to invest here. Together, these efforts will help us reach more people and convert more first-time users into regular Reddit users. And a key piece of work to retain new audiences is shifting Reddit to a logged-in experience. It's a big one for us and it's a big one for me. I want to take a minute to outline why we're making this change. 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's better for our business because we 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. In Q4, we'll begin fully testing this in select markets outside the US. The results of those tests will inform an optimized version of logged-in-only Reddit globally. Pretty much all the major ad platforms have gone through this transition. So we are excited and are moving quickly. With the above work, we will make Reddit a fun, fulfilling, direct daily habit for every internet user. Thank you. And now over to Jen.

Thank you, Steve. Hello, everyone. Q3 was a strong quarter for Reddit. Revenue grew 53% year-over-year and trailing 12-month revenue crossed $3 billion. This milestone reflects our ability to grow at scale. That growth is happening as the internet changes quickly. AI is reshaping how people find information and get things done. At the same time, lived experience continues to increase in value as an essential source for advice and as a knowledge source for AI assistants. People turn to other people when they need a second opinion from someone who actually bought insurance for the first time or who is navigating mid-40s fitness, and to savor the sense of belonging from people coming together to share fun, hardships, and wins. As synthetic content and automated summaries become more common, Reddit's conversations and communities are an increasingly valuable destination for people and a high-intent audience for advertisers. These real experiences and perspectives help people make big and small decisions every day. And that's why half of US shoppers say they come to Reddit to verify AI recommendations.

We see significant opportunity ahead for our business. And we're making progress reflected in strong customer retention, growing share of wallet, and more always-on advertiser relationships. These trends give us confidence in Reddit's ability to deliver durable, differentiated growth. Now, moving to our results. In Q3, advertising revenue grew 54% year-over-year to $847 million. Growth came from both pricing and impressions, with pricing outpacing impressions as we delivered on our strategy to make every impression more valuable. We saw that translate into results. In Q3, click volume grew over 50% and conversion volume more than tripled year-over-year. We also saw strength across our primary sales channels, including large customers and scaled. Scaled revenue grew more than 80% year-over-year in Q3, driven by deeper relationships with existing advertisers, higher average spend, and new advertiser acquisition. Mid-market active advertisers grew more than 50% year-over-year with growth across both North America and AMIA. In the mid-market channel, our suite of shopping products is contributing to retail advertiser demand, while our B2B offering is driving demand from mid-market service advertisers.

Revenue growth was broad-based across verticals and regions. Business and finance, pharma, and travel industries were strong, and US ad revenue grew 51% year-over-year, while international ad revenue grew 68% year-over-year. Demand spanned the full funnel, led by lower-funnel performance revenue, particularly shopping and app install objectives, which both grew over 95% year-over-year. Now, I'll discuss our progress against the ad stack. Our investments in the ads stack are helping businesses achieve stronger performance and consistent returns. We're executing against three areas: scaling automation through our ads platform and Reddit Max campaigns, delivering advertiser value across the full funnel, and expanding the Reddit for Business ecosystem. So starting with automation, Reddit Max entered public beta in Q3 and we expanded access and integrated Max into the onboarding experience for new advertisers. Max advertiser adoption more than tripled quarter-over-quarter.

We also launched asset groups which let advertisers manage multiple product lines or creative themes within a single Max campaign. Improvements to the machine learning models beneath Max and our ad stack are helping us learn faster and improve performance. In Q3, we improved model training, added more real-time sequencing and session signals, and updated graph-based signals across our ranking models. These improvements contributed to performance gains across the funnel from stronger view rates in the upper funnel to lower cost per action in the lower funnel. Our roadmap of model improvements delivers consistent performance gains for advertisers in ad spend efficiency and higher returns. Now moving to our progress across marketing objectives for advertisers on our platform. Reddit users bring high intent to every interaction whether engaging with text, images, or video. In the upper funnel, video views was our fastest-growing objective with revenue more than doubling year-over-year. We brought in our video offerings with a new 15-second engaged video view objective, which entered public beta in Q3. And this objective helps advertisers optimize for people more likely to engage with longer-form video.

Now, in the lower funnel, shopping was our fastest-growing objective, and we expanded the product to support up to 20 million products, making it easier for larger and more complex advertisers to run shopping campaigns. People come to Reddit to ask questions, learn from real experiences, and make personal decisions based on the communities they trust. The same is true for people making decisions for their business. More than 20 million business decision makers come to Reddit globally and nine in 10 used Reddit in the past year to research business products or services. We enhanced our lead generation capabilities to help businesses turn high-intent engagement into measurable leads. Our in-market audiences targeting tools help B2B advertisers reach people actively researching or considering a purchase, including in the enterprise and business AI and cybersecurity industries. B2B advertisers using these audiences saw an average cost per action improvement of about 7% compared to other first-party targeting options. We're also adding audience and measurement partners and testing CRM integrations, helping advertisers connect Reddit campaigns to their sales workflows and assess performance across the funnel.

Next, I'll discuss how we're expanding the Reddit for Business ecosystem. We continue to expand our ecosystem by adding partners and extending our products through existing integrations. In Q3, revenue from our ads API ecosystem grew more than 45% quarter-over-quarter. We added Innovid and Skai to our advertising and customer management partnerships and began a beta integration with HubSpot. We also launched Smartly's Max API integration, the first third-party integration for Max campaign management. Our Shopify integration also continued to scale following its general availability launch in May. Using Reddit's DPA product and Shopify integration, backpack and accessories company Ethnotech connected its catalog to serve the most relevant products to high-intent shoppers. The campaign delivered a 4x return on advertising spend and a 40% more efficient CPA, helping Ethnotech scale while keeping the ads relevant to each user.

On measurement, third-party research validates our impact across verticals and categories. Research from a team found that Reddit audiences generated higher lifetime value across CPG, quick-serve restaurant (QSR), and retail categories. Reddit shoppers delivered 17% higher LTV in personal care and beauty, 19% higher value in QSR beverage and snacks, and 11% higher value in retail beauty and personal care. A Samba meta-analysis of 25 tune-in campaigns found Reddit ads drove an average 18% incremental lift in tune-in across linear and streaming, with exposed households watching 15% more minutes than the competitive benchmark, demonstrating that Reddit drove both more tune-in and deeper viewing.

Lastly, I'll share an update on our consumer marketing efforts. Our marketing strategy is to broaden awareness of Reddit and increase our top of funnel for logged-in and app users. To build awareness, we're continuing to evaluate our brand strategy. Our brand campaign, "People Are the Best," is showing early promise with gains in Reddit's relevance and strong ad recall. We also brought Reddit communities to life through r/bodega, our first-ever community pop-up in New York City. The bodega represented 75 Reddit communities and reached hundreds of thousands of people in person and online, driving engagement both at the event and across Reddit communities. For our paid marketing strategy, we are starting to shift focus from reach web campaigns to app campaigns. This aligns with our strategy of potentially trading some reach for higher-value engaged users. It's early, but in our experience so far, our US app install campaigns can retain new users at rates comparable to organic app users. Outside the US, reach-based user marketing is more of a lever given the lower awareness of Reddit's brand. In the quarter, we increased user marketing spend internationally in part to compensate for the lost reach from the declines of search referral traffic. This enabled us to continue to introduce new users to the platform. We will evaluate the effectiveness of that spend over the next few quarters. And we're also exploring ways to re-engage logged-in and app users to sustain core usage and offset pressure from search referral traffic. Overall, this was another strong quarter for Reddit. Our results reflect strong execution by our teams and the value Reddit delivers to users and customers. We're well positioned to build on this progress in the fourth quarter and into 2027. Thank you for joining us and for your continued support. Now, I'll turn the call over to Drew.

Okay, thanks for the question, Ben. So, [clears throat] the transition to logged-in, you know, the genesis is like every other platform has done this. Now Reddit's different. We've been accessible logged-out for a long time. But now is the right time for a variety of reasons. One, when Reddit was born, it was the same content for everybody. Now Reddit is huge and so the product works best when people are logged-in and can get personalized recommendations for communities and content. Second, it gives us better information to target ads better. Third, it lets us better protect the Reddit corpus of data. The vast majority of the scraping and stealing of Reddit happens in our logged-out user base. And finally, it allows us to more easily adapt to emerging regulations around the world. Now, there will be trade-offs here. So, we'll likely be trading reach for engagement, but when a user logs into Reddit, they engage much more deeply. Keep in mind that 80% of the monetization of Reddit happens within our app and logged-in cohort. And so, I think there's a lot of opportunity here. It's the reason why I think many of our peers went through this transition already. So, in our test, what we're looking for is to see, you know, which surfaces we put the login walls up on when we do it. So, for example, we want people to go to reddit.com and get a taste of Reddit. We want link sharing or post sharing on Reddit to continue to work. So, figuring out those nuances is really important. Studying the conversion rate on different surfaces is really important. Looking at how engagement improves on the other side of that conversion is really important. And so, all of these things are complex. And so, I think the best way to learn that is just to get to a test as soon as possible. And so we'll be doing that in a few markets outside the US as soon as we can to learn. And so then I'll hand over to Jen for the revenue question, which is actually related to this.

Yeah, sure. So Ben, look, demand is really strong. And obviously we grew really nicely in Q3 and been growing really nicely. You know, a couple of things. Over 80% of our monetization sits on the shoulders of logged-in and app users because they have, you know, order of magnitude more engagement and frequency than, you know, our search-referred logged-out users. So that's really our bedrock. And over 60% of our business is performance-oriented. So it's really based on business outcomes, right? So you heard that we increased click volume over 50% year-over-year. You know, we tripled conversion volume. That's actually the inventory that we need to grow this performance segment of our business, and that's driven by ML work.

signals work, etc. So we feel really good about our headroom here in terms of ARPU. I mean, you know, you look at Meta's ARPU, there's a lot of headroom between where we are today and where they are. And when you look at the engagement of Reddit users, just the raw materials we have in terms of engagement context, that I think, you know, gives us a lot of confidence that we feel like we see the opportunity because we're still mid-flight in our building. The other thing I'll just say is that, you know, I think that, you know, the CPMs, we grew more by CPMs than by impressions. And you know, we're a marketplace. You have to remember for lower-funnel outcomes, you can have CPMs that are triple digits. What people are paying for is that intent and that conversion to the outcome. And we think we have a roadmap that continues to deliver on that for advertisers.

Thanks, Josh. So on the change from Google, our hypothesis is twofold. The biggest one is the AI overviews or AI mode. Both have evolved a lot, and particularly recently they appear to be expanding them quite aggressively both in the US and outside. So what started as a feature is now the full search experience, and at the minimum it pushes everyone down the search page. And then on top of that, the experiences themselves are not traffic drivers. And so these things combined with the rollout just means Google has really shifted in their relationship with the rest of the internet. There's a second factor, which we believe our machine-translated content is also being ranked lower. So this primarily would affect us outside the US.

What this isn't likely, but we don't have, you know, visibility into this, is that the sort of algorithm change where I would say, hey, these things come and go. This appears to be really the rollout of AI mode and maybe a change in the machine translation or how they treat that. Reddit, however, is still a top search term in Google. So this doesn't say anything about the internet consumer's demand for Reddit. People still want Reddit. It says Google is not sending them to Reddit the way they used to. Given our strategy is to make Reddit a direct destination, this is actually in line with our strategy because Google is teaching people that if you want to come to Reddit, you need to come to Reddit.

I can take the paid marketing question. So, you know, we just started doing app install campaigns mainly in the US, and so it's early in terms of scale. But, you know, what we like is that the retention that we're seeing is equivalent to our organic users. So that's promising. Now, that's still a low base. But all the work that we're doing in the core product around feeds and notifications and personalization, you know, that should lift retention for all the users, hopefully including the return on our app install campaign. So it's early, but we, you know, we see scale there. Less known, I'd say, outside the US. We are happy that our brand work is driving efficiency in app install. So that's good. You know, so a cross a full-funnel approach for us, I think, will make sense because it'll drive efficiency in terms of acquiring those app users. And, you know, I think we're going to start the process of looking at re-engagement campaigns for some of our logged-in and app users as well. So early, but so far the app install shift, I think, has been promising.

Sure, John. Thanks for the questions. So for logged-in-only, part of the purpose of the test is to answer that question you asked: is there a light version of Reddit? Which is like, what is the boundary? And so we need to find the right boundary to, you know, provide value to the user, you know, whether they're coming from a shared link or maybe from search themselves or trying out Reddit. And so I think there'll be a ton of nuance and detail there for us to iterate on. And so there'll be some version of Reddit accessible for those moments before we do that hard prompt. This is a test, but we are going to make this transition. I think the engagement is important. The ads targeting is important. The protecting our corpus is very important, and having a firmer footing to adapt to regulation is also important. So there's a lot of reasons for doing this, and at this point we're the only platform that doesn't do this. And so, you know, Reddit has just evolved so much, I think this just meets the needs of the time.

So on engagement, we're seeing lots of green shoots. So our work on feeds, which has been some of our most important work this year, is improving engagement for new and core users. New user retention is up significantly over the course of this year and sequentially. Posts and comments are up sequentially as well. Our corpus is up to 27 billion posts and comments, a billion of those added in the last quarter. Time on site has been solid. Where we're seeing mixed results is total sessions are down because of that decline in search referral traffic. But we're growing web counts, which is engagement from our app and logged-in users.

Sure. So, thank you for the question. It doesn't change anything we mentioned on the call, doesn't change our perspective there. We don't have any updates to share, though we're in active discussions. But what's most important is that any deal we do needs to advance our long-term strategy and has to be a fair exchange of value. Now, these deals aren't binary, however. There's a bunch of options. So on one end there's access for training, but then there's also display and use in products. And then on the other end, there's more specific uses of our content. So we're only going to do what makes sense and is in the best interest for Reddit strategically and economically, which does potentially include not doing a deal, but those conversations continue to progress.

Thanks for the questions, Tom. So this is a consequential time for Reddit, and this period does remind me of about 11 years ago when I came back to the company, and we had a lot of conversations then about what is Reddit and what is Reddit for and what is our place in this ecosystem. And we've been having those conversations at Reddit recently. And so Reddit's mission is to create community and belonging for everyone in the world. And while there's overlap between Reddit and other players in the ecosystem, whether we're talking about social media or AI search, fundamentally, Reddit is communities and conversations. It's a place for people to come together. It's a fun and funny place, and it's with you throughout life's journey. And so, yeah, there's some overlap in utility and search and shopping, but really Reddit, I think, is a unique product on the internet that can play a really significant role in people's lives, and that's why our team who chooses to work at Reddit over our peers is here. And so these are the sorts of things that get us really energized. One thing I'm very excited about in the near to midterm are some of the product improvements we're making to kind of realize all of this. So there's some fun stuff we're doing in the core app experience that I think for both new and core users will allow the user to more consistently get to where they're going. So you more consistently see this is trending, this is news, these are my favorite subreddits, here's my games, here's some videos. That sort of work is really exciting because it really, I think, brings to life all of that Reddit has to offer. And I think that's one of the challenges we've faced for a long time is, hey, how do you sell this product in the first session when there's so many things you can do on it? So yes, we're seeing a lot of big evolutions with the Google search ecosystem changes, with this transition to logged-in-only, but alongside that we're investing in some areas of the product that I think will be really fun and I think really great for our users. Okay, Drew, the second question was about monetization and ARPU.