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

Throughout Reddit’s Q2 2024 earnings call Tuesday, cofounder and CEO Steve Huffman mentioned that Reddit’s 342 million lively customers are more and more utilizing the platform as a search engine, leading to over one billion inner searches per thirty days.

Huffman additionally defined how AI may draw customers deeper into Reddit whereas including some promoting {dollars} to the corporate’s income. AI may assist moderate content on Reddit to make the location safer and switch it right into a search powerhouse.

“Search on Reddit is a large alternative,” Huffman mentioned, on the decision. “Many new customers run a search… they’re actually typing right into a field precisely what they’re curious about. So it is [a] actually essential client product service space.”

Huffman mentioned that Reddit will begin testing new AI search consequence pages with summaries and proposals “later this yr” to assist customers discover solutions and new communities. Google, presently the most important search engine on the planet with over 90% of the market, rolled out AI search results earlier this yr to combined critiques and has since scaled back the function.

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Huffman additionally mentioned that AI search held long-term promoting potential, which may enhance the platform’s income. Reddit famously did not make a profit within the practically 20 years it operated earlier than it went public in March, however Huffman mentioned that the platform was now worthwhile on an adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) foundation.

“For the second consecutive quarter, we had constructive money circulation,” he mentioned. Reddit has solely launched two quarterly reports to this point.^{Reddit CEO Steve Huffman. Photograph Credit score: Spencer Platt/Getty Photos}

Huffman additionally talked about extra ways in which customers may become profitable off of Reddit. The staff is engaged on getting the developer platform monetized “this yr” in order that creators can earn cash, he defined.

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Though Redditors might quickly be capable to monetize conversations, Huffman reassured shareholders that Reddit would not turn out to be one other YouTube or Twitch. The present free communities on Reddit will continue to grow and current, with the paid subreddits current alongside them.

“In my expertise on Reddit, each time we add mainly a brand new manner of utilizing Reddit, what occurs is it expands Reddit, however we have not seen it cannibalize current Reddit,” Huffman mentioned. “Now we are going to unlock the door for brand new use instances, new kinds of subreddits that may be constructed which will have unique content material or non-public areas, issues of that nature.”

The remainder of Reddit’s report confirmed that income for the second quarter was up 54% year-over-year, hitting $281.2 million. The expansion was led by a 41% enhance in advert income, which jumped to $253.1 million.

The platform’s every day lively customers additionally grew by 51% to 91 million.

Reddit has content material licensing offers with Google and ChatGPT-creator OpenAI.

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