Reddit CEO Steve Huffman has identified two primary user groups on the social media platform: Scrollers and Seekers. Scrollers engage with community conversations about various topics, while Seekers use the platform to find specific information and advice. To cater to Seekers, Reddit has developed an AI-powered chatbot called Reddit Answers, which provides verbatim answers and summaries from existing posts.
Huffman revealed during the company’s first-quarter earnings call that Reddit Answers has already gained significant traction, with 1 million weekly active users since its beta launch in December. The feature has been expanded to several countries, including Australia, the U.K., Canada, and India. Looking ahead to 2025, Reddit plans to integrate Answers more deeply into the platform, potentially incorporating it into the primary search box and the beginning of the user journey.
Key Features and Future Plans
Reddit Answers currently resides in the navigation bar of the app as a separate experience. The company is exploring ways to make it a more integral part of the user experience, including:
- Integrating Answers into the primary search box to allow for full queries
- Using Answers as a point of entry for new users to discover content on Reddit
- Enhancing external search to provide summarized answers from Reddit content
These developments aim to improve user experience and potentially mitigate the impact of Google Search algorithm changes on Reddit’s user growth. In the fourth quarter of 2024, a Google Search algorithm update caused some volatility in Reddit’s user growth, despite the company beating earnings estimates.
Financial Highlights
Reddit reported strong financial results, with:
- Revenue of $392.4 million, up 61% year-over-year
- Adjusted EBITDA of $115.3 million
- Daily active unique users of 108.1 million, a 31% YoY increase
- Projected revenue for the second quarter in the range of $410 million to $430 million
- Projected adjusted EBITDA between $110 million and $130 million
The positive earnings report led to a surge in Reddit’s stock in after-hours trading. As the company continues to evolve and expand its features, it remains focused on improving user experience and maintaining its growth trajectory.
