Reddit today reported advertising revenue of $847 million for the third quarter of 2026, up 54% from a year earlier, and total revenue of $895 million, up 53%, ahead of the range it had guided to in July. The same letter to shareholders carried a warning that sits uneasily beside those figures: search referral traffic fell "meaningfully" during the quarter, the decline has continued into October, and if it persists, Reddit's daily active uniques "could fall in Q4, by a low-double-digit percentage from our current base of 130 million DAUqs."

In Short

Reddit earned more from ads between July and September than in any quarter before, $847 million, about half as much again as a year earlier. At the same time, fewer people are arriving on Reddit by clicking links in search engines, and the company says its number of daily visitors could shrink by roughly a tenth or more before the end of the year if that keeps up. Reddit is betting that the people who log in and use its app, who account for more than 80% of what it earns from its audience, matter more than the drive-by visitors it is losing.

The quarter in numbers

Reddit's financial year runs with the calendar, so the third quarter covers July 1 to September 30, 2026. Total revenue reached $894.96 million, against $584.9 million a year earlier. US revenue grew 50% to $718.9 million; international revenue grew faster, by 67%, to $176.1 million, lifting its share of the total to 19.7% from 18.0% a year earlier, by PPC Land's calculation.

Net income was $283.3 million, up 74%, for a net margin of 31.7%. Diluted earnings per share came to $1.40, up 75%. Adjusted EBITDA, which excludes stock-based compensation, depreciation, interest and taxes, rose 70% to $402.3 million, a margin of 44.9% against 40.3% a year earlier. Gross margin was 91.5%, up half a percentage point.

The company had guided in July to revenue of $860 million to $870 million and adjusted EBITDA of $385 million to $395 million. Revenue cleared the top of that range by $25 million, and adjusted EBITDA by $7.3 million.

Across the last four quarters, revenue now totals about $3.09 billion, by PPC Land's arithmetic. Steve Huffman, Reddit's co-founder and chief executive, chose that milestone for the press release. "Surpassing $3B of revenue over the last 12 months shows Reddit's strength as a destination and the differentiated value of our platform," he said, according to the company's announcement. He opened the quote with a broader claim: "Our business is growing because the Reddit experience captures the human experience in a way that no other platform can replicate."

Advertising: still growing fast, but less fast

Advertising produced $847 million of the $895 million, or 94.6% of revenue. The remaining $48 million, reported as other revenue, rose 35%, faster than the 24% growth to $43 million recorded in the second quarter.

The letter describes 53% revenue growth as "something few companies are doing." The trajectory, though, has bent. A year ago, in the third quarter of 2025, Reddit reported advertising revenue of $549 million, up 74%. Growth held near that level for two more quarters: 75% to $690 million in the fourth quarter of 2025 and 74% to $625 million in the first quarter of 2026. Then it slowed to 64% in the second quarter, when ad revenue reached $762 million, and now to 54%. That is two consecutive quarters in which the growth rate has fallen by roughly ten percentage points.

Sequentially, ad revenue rose by $85 million, or 11.2%, between the second and third quarters. Total revenue growth followed the same curve: 68% a year ago, then 70%, 69%, 61% and 53%, according to the company's quarterly series.

What drove the growth? According to the shareholder letter, "Advertising revenue growth was driven by year-over-year growth in pricing and impressions." Reddit did not say how much of the increase came from higher prices and how much from more ads served. The letter cited "Broad strength across the full ad funnel - particularly in the lower funnel - and industry verticals, including Travel and B2C Services." No vertical-level revenue figures were given.

Revenue per user

Average revenue per unique, which Reddit calculates as quarterly revenue in a geography divided by average daily active uniques there, rose 36% globally to $6.87. In the United States it reached $13.82, up 53% from $9.04 a year earlier and up from $11.85 in the second quarter. International ARPU rose 32% to $2.43.

The US figure carries the story of the quarter in a single line. US daily active uniques fell 2% year on year, yet US revenue grew 50%. All of that growth, and more, came from extracting more revenue from each visitor rather than from adding visitors. For ARPU, Reddit allocates advertising revenue to the country where impressions are delivered, not to the advertiser's billing address.

The search referral warning

The letter, signed by Huffman, sets out the problem in plain terms. "Our search referral traffic was down meaningfully in Q3, with the decline accelerating later in the quarter," it says. "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 reengagement for users."

The company tried to compensate. "The company helped to offset the declines by both driving reach primarily through user marketing and also by continuing to improve the product," according to the letter. The fourth quarter has started badly. "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."

Then comes the forecast. "If this rate of decline continues, current trends would suggest that total DAUqs could fall in Q4, by a low-double-digit percentage from our current base of 130 million DAUqs."

A 10% decline, the bottom of a low-double-digit range, would leave Reddit with roughly 117 million daily active uniques, by PPC Land's calculation. That is about where the company stood in the third quarter of 2025, when it reported 116.0 million. A 13% decline would take it to about 113 million. Reddit gave no daily user guidance beyond the warning itself.

The letter does not name a search engine. It does not attribute the decline to AI-generated answers, to ranking changes or to any particular cause. The context is not hard to find. PPC Land reported in August that Reddit pages lost visibility in Google's May 2026 core update and its June 2026 spam update, and that Google said Reddit received no special preference in its rankings or AI search features. On the July call, Huffman attributed a soft quarter for daily users to declining referrals and said AI Overviews had not yet had a comparable positive effect; Reddit shares fell 12.5% after hours that evening. A year earlier, in October 2025, Huffman had described external search as basically flat.

The letter sets the shift in a longer frame. "Web search is evolving from a gateway to the web to becoming an AI-powered destination itself," Huffman wrote. "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." He also wrote: "Yet search referral trends don't determine our relevancy and they don't define our future."

The cost of buying reach

The user marketing that offset part of the decline shows up in the income statement. Sales and marketing expense rose 62.7% to $209.4 million, the fastest growth of any operating cost line. Excluding stock-based compensation and depreciation, sales and marketing rose 66.9% to $191.2 million, equal to 21.4% of revenue against 19.6% a year earlier. Reddit does not separate spending on attracting users from the cost of its advertising sales force, so the share that went into user acquisition cannot be isolated.

The letter says the early evidence supports the spending. "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."

The logged-out audience, one more quarter

Huffman announced earlier today, in a post on his personal profile, that Reddit will move to a primarily logged-in experience. In July, Reddit had said the second quarter would be the last in which it reported logged-in and logged-out daily users separately. The third-quarter tables nonetheless include the split, for the world, the United States and international markets. The company did not say whether it will continue to publish it.

The figures show where the search decline landed. Logged-out daily active uniques averaged 76.8 million in the third quarter, down from 77.7 million in the second quarter. Logged-in users rose to 53.5 million from 52.6 million. The two movements were the same size, 0.9 million each, which is why total daily active uniques were identical in both quarters at 130.3 million. Logged-out visitors made up 58.9% of the daily audience, by PPC Land's calculation, against 59.6% in the second quarter.

Year-on-year growth in the logged-out audience slowed to 17%, from 27% in the second quarter. Logged-in growth held at 7% in both periods.

The geographic split is starker. In the United States, logged-out daily users fell 4% from a year earlier to 27.3 million, while logged-in users grew 1% to 23.4 million. Total US daily active uniques fell to 50.7 million from 53.2 million in the second quarter, a sequential loss of 2.5 million. Because the letter says US logged-in users grew quarter on quarter, the drop in US logged-out visitors over the three months must have been larger than 2.5 million. Weekly active uniques tell the same story: 188.5 million in the US, flat on the year and down from 197.2 million in the second quarter.

International markets moved the other way. Daily active uniques outside the US rose by 2.5 million in the quarter to 79.6 million, up 24% on the year, with logged-out users up 33% to 49.5 million and logged-in users up 11% to 30.1 million. International weekly active uniques grew 28% to 326.7 million.

Where the money is

The letter makes a direct claim about the value of the two audiences. "We grew app and logged-in DAUq sequentially," it says. "Together, these make up the vast majority of engagement, and over 80% of the monetization on Reddit."

Read the other way round, users who are neither logged in nor using the app, in practice logged-out visitors on the web, generate less than a fifth of Reddit's monetization. That arithmetic explains how the company can warn of a double-digit fall in daily users while guiding to revenue growth of about 40%. It also frames the login decision in financial terms.

The letter gives a firmer timetable than Huffman's post earlier in the day, which spoke of tests in the coming months without a quarter. "In Q4 we'll begin fully testing this in select markets outside the U.S. The results of those tests will inform an optimized version of logged-in-only Reddit globally," the letter says. The business case is stated in one sentence: "It is better for our business because we will have more signals for ads targeting, and being logged-in leads to higher engagement generally." The letter adds: "Pretty much all of the major ad-based platforms have gone through this transition. We are excited and moving quickly."

Converting search visitors

Other levers are smaller but specific. "Currently only about 13% of eligible mobile web users are seeing the app conversion prompt, so this has room to scale," according to the letter. Reddit says it sees "a large number of unattributed, aka word of mouth, installs every day" and "a large number of re-installs, which we can mitigate through things like an improved incognito mode in the app." The share of new users who return in the first week after installing the app is up by double digits quarter on quarter and by more than 50% year on year, the letter says, without giving the underlying rate.

Ad products: Max, video and lead generation

Max campaigns reach general availability

During the quarter, Reddit "Expanded Reddit Max campaigns to general availability, adding Advertising API access, Smartly integration, and streamlining campaign management," according to the letter. Max campaigns are Reddit's automated campaign type, which hands bidding, targeting and creative selection to Reddit's systems. They entered beta in January, when Reddit said split tests had produced 17% lower cost per action than advertisers' existing campaigns. Smartly's integration with Reddit had reached general availability in June 2025; Max campaigns can now be run through it.

The letter gives no date for general availability, no spend figure for Max and no updated performance data for the product. It does say Max campaigns are now available for lead generation objectives. The tools Reddit introduced on October 20, a campaign planner, a campaign-level optimization score and campaign budget optimization, arrived after the quarter closed and are not mentioned.

Video ad revenue more than doubles

Video ad revenue grew more than twofold year on year in the third quarter, according to the letter. No dollar figure was disclosed. Video Views is described as Reddit's "fastest-growing upper- and mid-funnel objective, reflecting strong demand from video-centric advertisers."

Reddit launched a 15-second engaged video views optimization goal to public beta, extending the six-second goal it already offered. According to the letter, early testers saw a 51% increase in 15-second view-through rate and a 71% increase in video completion rate. The letter does not state the baseline for those comparisons.

The letter's case study is JCPenney, which split-tested optimization toward 15-second views against six-second views. The 15-second strategy produced a 4-point lift in ad awareness and a 90% higher video completion rate, according to Reddit. Lisa Schroder, vice president of integrated marketing at JCPenney, is quoted: "While JCPenney benefits from strong brand awareness, the greater opportunity lies in driving consideration for the fashion, style, and deals the brand offers today. A longer-form video experience provides the space to communicate the 'why' behind the brand, and it outperformed the shorter video optimization."

Lead generation for business buyers

The other product push is aimed at business-to-business advertisers. Reddit cites a Bombora figure, dated March 2025, that more than 20 million business decision-makers come to Reddit globally, and its own January 2025 survey of 600 US business decision-makers aged 18 to 60, conducted with Attest, in which 9 in 10 said they had used Reddit to research business products or services in the past year.

The lead generation updates described in the letter cover four areas. Max campaigns now support lead generation objectives. Businesses can route leads directly into their CRM workflows, with HubSpot being tested as a platform partner. New in-market audiences target people researching or considering a purchase, in categories including Enterprise and Business AI and Cybersecurity; the letter says these delivered an average CPA improvement of about 7% compared with other first-party targeting options, based on internal data from August 2026. And first and third-party audience integrations with Bombora, Demandbase, Clay, G2 and Octane11 are meant to connect Reddit activity to attribution and sales pipeline outcomes.

The case study here is Huntress, which used community and multi-placement targeting to reach IT and security decision-makers. Its top-performing ads achieved click-through rates of 1.5% to 2%, according to the letter, and CPA fell by more than half across two campaigns: 62% more efficient after multi-placement targeting, and 68% lower after two weeks in the second campaign. Kyle Munson, vice president of growth marketing at Huntress, is quoted: "This strategy allowed us to nurture early engagement and interest into a significant pipeline of qualified leads, driving tangible business growth - 40% of our sales-qualified accounts sourced from Reddit this year have now converted into opportunities."

Both case studies were selected and presented by Reddit. Neither includes spend levels, sample sizes or test duration beyond what is quoted above.

Beauty research

Reddit also published its first beauty report during the quarter, The People's Beauty Index. It cites a May 2026 survey of 1,000 US adults aged 18 to 65 who planned to buy beauty or personal care products within 30 days, run with Attest, in which 7 in 10 said they felt more confident about a purchase after reading about it on Reddit.

Feeds, video and moderation

On the consumer side, the letter lists changes to ranking and recommendations. Reddit shipped "a new model architecture trained on 20x more Reddit data" in the third quarter, and model freshness improved from nine days to four, meaning the feed picks up changes in user signals and content preferences more quickly. The company is rolling out separate For You and Following feeds, with controls to tune recommendations.

On video, Reddit launched vertical chaining and a modernized ranking pipeline in the third quarter, and tested visual podcasts, which turn text posts into video and audio. "Video creation and consumption are both up, as are chained video views," the letter says, without figures.

The content base grew past 27 billion posts and comments, with another billion added during the quarter. On moderation, the letter says AI-powered tools helped Reddit's own enforcement team "reduce the median time to action on violating content from 58 hours to 5 seconds this year."

Profits, costs and cash

Total costs and expenses rose 41.9% to $633.4 million, slower than revenue. Research and development, the largest line, rose 34.2% to $263.5 million. General and administrative expense rose 23.1% to $84.7 million, and cost of revenue rose 44.3% to $75.8 million. Operating income reached $261.6 million, a margin of 29.2% against 23.7% a year earlier.

The gap between revenue and cost growth narrowed, however. By Reddit's own measure, revenue grew 1.3 times as fast as total adjusted costs and expenses, down from 1.8 times in the third quarter of 2025. Incremental adjusted EBITDA margin, the share of each additional dollar of revenue that reaches adjusted EBITDA, was 53.6%, compared with 60.0% a year earlier.

Stock-based compensation and related taxes rose 46% to $136.4 million, equal to 15.2% of revenue. The company presents its combination of 53% revenue growth and a 45% adjusted EBITDA margin as a "Rule of 98." The same sum was 104 in the second quarter and 108 a year earlier.

Cash generation was strong. Operating cash flow nearly doubled to $363.8 million. Capital expenditure was $1.2 million, leaving free cash flow of $362.6 million, a margin of 40.5%. Reddit attributes its minimal capital spending to its use of "third-party infrastructure partners to host our services." Cash, cash equivalents and marketable securities stood at $3.03 billion on September 30.

The balance sheet passed a milestone that the company did not highlight. Retained earnings were $69.0 million at the end of September, against an accumulated deficit of $671.1 million at the end of 2025.

Reddit bought back about 670,000 Class A shares in the quarter for $100 million, at an average price of $149.81. Across the first nine months of 2026, repurchases total $340.0 million and about 2.19 million shares, by PPC Land's count. Fully diluted shares outstanding fell 0.3% to 206.3 million; excluding repurchases, they would have been flat at 207.0 million.

For the nine months, revenue was $2.36 billion, up 60%, and net income was $740.1 million, against $278.1 million in the same period of 2025. Reddit joined the S&P 500 on August 18, midway through the quarter.

Fourth-quarter guidance

For the fourth quarter of 2026, Reddit expects revenue of $1,000 million to $1,030 million and adjusted EBITDA of $480 million to $510 million. Reaching the range would make it the company's first billion-dollar quarter.

Against $725.6 million in the fourth quarter of 2025, the revenue range implies growth of 37.8% to 42.0%, by PPC Land's calculation, another step down from 53%. Sequentially, it implies an increase of 11.7% to 15.1% over the third quarter. A year ago, fourth-quarter revenue rose 24.1% from the third quarter. The adjusted EBITDA range compares with $327.0 million a year earlier, an increase of 46.8% to 56.0%.

The company did not split its guidance between advertising and other revenue. It provided no reconciliation of the adjusted EBITDA forecast to net income, saying that this "is not available without unreasonable effort." Reddit scheduled a conference call for 1:30 p.m. Pacific time today.

Why the numbers matter for marketers

Three points stand out for advertisers and search marketers.

First, the audience Reddit sells is changing shape faster than its revenue shows. Logged-out visitors, the group most dependent on search, made up close to 59% of daily users in the third quarter. Users outside the logged-in and app groups account for less than a fifth of monetization, on the letter's own account. A low-double-digit fall in daily users would remove impressions from the least valuable part of the inventory first. Reddit's guidance implies it expects pricing and logged-in engagement to absorb that loss. With growth in the third quarter driven by "pricing and impressions," fewer impressions would leave price to do more of the work, which would show up in what advertisers pay.

Second, the October figure gives the first company-stated measure of how fast Reddit's search referrals are falling: more than 1 million fewer on average each week. For brands and agencies that track Reddit threads ranking in search results for product and service queries, the letter puts company figures behind the visibility losses reported over the summer. It does not say whether the decline is concentrated in particular markets or query types.

Third, Reddit is steering advertisers toward the products that do not depend on reach from search. Video ad revenue doubled, business-to-business lead generation received new targeting and CRM routing, and automated Max campaigns became generally available. Each of these products leans on the signals that logged-in users generate. The planned login tests outside the US, starting this quarter, will decide how many more of those signals Reddit gets, and at what cost in audience.

Timeline

Summary

Who: Reddit, Inc., listed on the New York Stock Exchange as RDDT, led by co-founder and chief executive Steve Huffman. The results affect advertisers buying Reddit inventory, search marketers who track Reddit threads in search results, and the companies whose case studies Reddit cites, including JCPenney and Huntress.

What: Third-quarter 2026 revenue of $895 million, up 53%, with advertising revenue of $847 million, up 54%, and net income of $283.3 million. Daily active uniques were flat on the quarter at 130.3 million, with logged-out users falling to 76.8 million and US users to 50.7 million. Reddit warned that falling search referrals could cut daily users by a low-double-digit percentage in the fourth quarter, while guiding to revenue of $1,000 million to $1,030 million. Max campaigns reached general availability and video ad revenue more than doubled.

When: The results were released today, October 29, 2026, for the quarter ended September 30, 2026. The search referral decline accelerated late in the quarter and continued through October. Logged-in-only tests are due to begin in the fourth quarter.

Where: Revenue was $718.9 million in the US and $176.1 million internationally. The fall in daily users was concentrated in the US, where daily active uniques dropped by 2.5 million in the quarter; international users rose by the same amount. The login tests will run in select markets outside the US.

Why: According to the shareholder letter, search referral traffic fell "meaningfully," hitting logged-out and web visitors hardest. Reddit is responding with user marketing, app conversion and a move toward a logged-in-only experience, arguing that logged-in and app users account for "over 80% of the monetization on Reddit" and give it "more signals for ads targeting."