Reddit Q3 2026 Earnings Call: Revenue Up 53%, but Search Referral Decline Clouds Q4 User Outlook

Reddit grew Q3 revenue 53% to $895 million with a 45% adjusted EBITDA margin, but management said Google search referrals are falling and daily users could drop by a low double-digit percentage in Q4 if the trend continues.

Maz Vantage ·

Reddit (NYSE: RDDT) is in the earnings news after its third-quarter 2026 results and call on 29 October 2026, summarised in Nasdaq's earnings call highlights feed on 31 October 2026. This article summarises the call; the views below are those expressed by management and analysts, not the publisher's.

Key takeaways

  • Revenue rose 53% year over year to $895 million; advertising revenue was $847 million (+54%), and trailing-12-month revenue passed $3 billion, according to CEO Steve Huffman and CFO Drew Vollero.
  • Profitability was strong: net income of $283 million ($1.40 diluted EPS), adjusted EBITDA margin of 45%, gross margin of 91.5%, and free cash flow of $363 million (41% margin), per Vollero.
  • Huffman said search referral traffic fell meaningfully in Q3, with the decline accelerating late in the quarter and continuing in October. He said that if the rate persisted, daily active uniques (DAUq) could fall by a low double-digit percentage in Q4 from about 130 million.
  • Management plans to test a logged-in-only experience in select markets outside the U.S. in Q4, and said it intends to make the transition. It expects to trade some reach for deeper engagement.
  • Q4 guidance: revenue of $1.00 billion to $1.03 billion (38% to 42% growth) and adjusted EBITDA of $480 million to $510 million.

Bull case

  • Growth at scale: Vollero noted revenue grew about 1.3 times the rate of total adjusted costs, and adjusted opex fell to 47% of revenue from 51% a year earlier.
  • Ad performance: COO Jen Wong said click volume grew over 50% and conversion volume more than tripled. Shopping and app-install objectives each grew over 95%, and "scaled" customer revenue grew over 80%.
  • Monetization headroom: Wong pointed to the gap between Reddit's average revenue per user and Meta's as room to grow. ARPU rose 36% to $6.87, and over 80% of monetization comes from logged-in and app users, whose DAU grew sequentially.
  • Product traction: Huffman said new-user week-one return rates were up double digits quarter over quarter and over 50% year over year, with better feeds driving engagement.
  • Balance sheet and capital return: cash and investments of $3.03 billion; about $100 million of stock repurchased in the quarter, with about $660 million of authorization left, per Vollero.

Bear case

  • Traffic dependence: Huffman said the October search-referral drop averaged more than 1 million referrals per week and that total sessions are down. He attributed this mainly to Google's AI Overviews and AI Mode, and secondarily to lower ranking of machine-translated content outside the U.S.
  • Analysts pressed on the logged-in-only shift. Jason Helfstein (Oppenheimer) and Ygal Arounian (Wedbush) asked how to model it. Huffman said the conversion rate over time is unknown and that the change will make scraping harder, so the test is meant to find the answers.
  • Revenue upside: Doug Anmuth (JPMorgan) noted the Q3 beat was smaller than in prior quarters. Vollero said some bookings on a couple of strong September days could not be delivered.
  • Guidance implies a slowdown from 53% to a roughly 40% midpoint growth rate in Q4.
  • Marketing: Vollero said domestic web user marketing brought users but low retention hurt ROI. International user marketing was increased partly to offset lost search reach.

What management said

  • "Our search referral traffic was down meaningfully in Q3" - Steve Huffman, CEO.
  • "This is a test, but we are going to make this transition." - Steve Huffman, on logged-in-only Reddit.
  • "AI Mode does not drive traffic, not for us and not to anybody" - Steve Huffman, on Google.
  • "There are not a lot of companies growing at 53%." - Drew Vollero, CFO.

Risks

  • Further declines in Google search referrals, especially among logged-out and web users, with spillover to logged-in and app traffic (Huffman).
  • Execution and conversion risk in the logged-in-only transition; Huffman said reach would likely be traded for engagement and that conversion rates are unknown.
  • Content licensing: Huffman said talks with AI partners are active but gave no update, and said any deal must be a fair exchange of value, which could include no deal.
  • Wong said Reddit is skeptical of generative engine optimization (GEO) and that it is not a core part of advertiser partnerships.
  • Vollero said the company is reassessing its U.S. valuation allowance on deferred tax assets and will keep evaluating how it reports user metrics.

Outlook

Management guided Q4 2026 revenue to $1.00 billion to $1.03 billion (38% to 42% growth) and adjusted EBITDA to $480 million to $510 million (about a 49% margin at the midpoint). Vollero said Reddit would keep reporting logged-in and logged-out DAUq by geography for now, and named $5 billion in revenue as the next internal North Star. Management did not commit to a 2027 revenue or user forecast, to the outcome or timing of the global logged-in-only rollout, to a content-licensing deal, or to an acquisition for users, which Huffman said is not on the radar.

Sources