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Despite ad revenue growing 54% year-over-year, Reddit’s stock took a nosedive after the closing bell following the release of its Q3 earnings Thursday, largely due to slowed user growth and plunging referral traffic. Revenue overall grew 53% to $895 million YoY. 

The social media platform, which went public in 2024, has been riding a wave of explosive growth driven by increased advertising capabilities and its high citation rate by artificial intelligence. However, as growth shows signs of tapering off and daily active users remain flat quarter-over-quarter, Reddit’s future is less clear.

Below, Marketing Dive pulled together three numbers from Reddit’s most recent earnings materials that marketers should be aware of as the platform becomes a bigger player in the online advertising space.

Reddit’s ad revenue growth outpaced overall revenue growth by a point. While strong, ad revenue made bigger gains earlier in the year and grew 64% YoY in Q2 and 74% YoY in Q1.

Click volume grew more than 50% in the most recent quarter and conversion volume more than tripled YoY, said Jen Wong, Reddit’s chief operating officer, during an earnings call. The platform forged deeper relationships with existing advertisers, with average spending and new advertiser acquisition both on the upswing, Wong reported. There was also a more than 50% YoY growth in mid-market advertisers in Europe, the Middle East and Africa, as well as North America.

As shoppers are increasingly bombarded by synthetic content, Reddit remains a go-to for those looking for a human opinion and half of U.S. shoppers verify AI recommendations on the platform, according to Wong. This makes Reddit a prime environment for advertisers looking to go after high-intent audiences. 

“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,” said Wong, during the call. 

The number of U.S. daily users fell from 53.2 million in Q2 to 50.7 million in Q3 while international users rose from 77.1 million to 79.6 million, according to a shareholder letter. 

This falloff can be, in-part, attributed to a sharp decrease in referral traffic. In October, referrals are falling by over one million per week on average. If the trend continues, Reddit’s daily active unique user count could fall by low double-digits next quarter, according to the letter. Changes to how consumers use AI overviews on Google, which continue to routinely cite Reddit, are in no small part behind the drop, according to Steven Huffman, co-founder and CEO of Reddit, during an earnings call.

“The reality is the AI Mode does not drive traffic, not for us and not to anybody as far as I know. So it's just a fundamental shift in how Google works,” said Huffman during the call. “It used to be a traffic driver. Now it's not.”

The platform has existing relationships with AI developers. Just before it went public in 2024, the platform signed a $60 million-a-year AI content deal with Google. A few months later, it entered into a similar deal with OpenAI, the company behind ChatGPT. Both deals are set to expire in 2027. Google is still “crawling” the platform “as hard as ever,” per Huffman. He also maintains that Reddit is one of the most Googled terms, meaning demand for the platform remains high.

To help combat user loss, the platform is shifting to a “logged-in only” experience, Huffman announced during the call. Logged-in users make up the bulk of Reddit’s engagement and are more valuable to advertisers, according to the co-founder. It will also help to protect the platform’s data.

Reddit continues to build out its advertising tools. During the quarter, Reddit Max, an automated campaign offering, entered public beta, according to Wong. Automation is one area of focus for the company, along with expanding Reddit for Business and delivering increased value to advertisers. 

Reddit is also seeing strength in video, with video ad revenue growth more than doubling YoY in Q3, according to the shareholder letter. During the quarter, the platform launched a 15-second engaged video view, building on the momentum of a six-second option. Retailer JCPenney saw a 4-point lift in ad awareness and a 90% higher completion rate with the longer videos compared to the shorter ones, per the letter.