Reddit CEO: AI Search, Paid Subreddits Are Path to Profit

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Reddit 2024 Q2 Financial Results Announcement Co-founder and CEO Steve Huffman said Tuesday that Reddit’s 342 million active users are increasingly using the platform as a search engine, resulting in more than 1 billion internal searches each month.

Huffman also discussed how AI could help Reddit better engage its users, while also adding some advertising dollars to the company’s revenue. Medium content Reddit has begun an effort to make the site safer and turn it into a powerful search site.

“Search on Reddit is a big opportunity,” Huffman said on the conference call. “A lot of new users are doing searches… They’re literally typing exactly what they’re interested in into a box. [a] It’s a really important consumer product and service area.”

Huffman said Reddit will begin testing a new AI search results page with summaries and recommendations “later this year” to help users find answers and new communities. Google, currently the world’s largest search engine, is Over 90% of the marketintroduced AI search results earlier this year, but received mixed reviews. Reduced function.

Related: Co-founder Alexis Ohanian says Reddit turned down an acquisition offer from Google early on:

Huffman also said AI search has the potential to have long-term advertising opportunities, which could increase revenue for the platform. There was no profit For nearly two decades before going public in March, the platform had been profitable on adjusted earnings, but Huffman said EBITDA (earnings before interest, taxes, depreciation and amortization) basis.

“We’ve now had two consecutive quarters of positive cash flow,” he said. 2 quarterly reports so far.^{Reddit CEO Steve Huffman. Photo by Spencer Pratt/Getty Images}

Huffman also spoke about more ways for users to make money on Reddit, explaining that the team is working to monetize the developer platform “this year” to help creators earn money.

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While Reddit users may soon be able to monetize their conversations, Huffman assured shareholders that Reddit will never become like YouTube or Twitch: Reddit’s current free community will continue to grow, and paid subreddits will continue to exist alongside it.

“My experience with Reddit has been that basically adding new uses makes Reddit bigger, but it doesn’t cannibalize existing Reddits,” Huffman said. “Now it opens the door to building new types of subreddits, with new use cases, exclusive content, private areas, and so on.”

The rest of Reddit’s report showed that second-quarter revenue grew 54% year over year to $281.2 million, with the growth coming from a 41% increase in advertising revenue, which jumped to $253.1 million.

The platform’s daily active users also grew by 51% to 91 million.

Reddit has a content licensing agreement Google and OpenAI, the creators of ChatGPT.

Related: Reddit traffic nearly triples in eight months, posts appear at the top of Google searches