Reddit’s AI play is for the Google crowd, not just the community scrollers

Reddit CEO Steve Huffman says there are two sorts of people that come to the social media platform: Scrollers and seekers.

Scrollers are those who come to Reddit’s core product, which is group dialog and fascinating about subjects they’re enthusiastic about, from r/sourdough to r/popculturechat. Then there are the Seekers; the individuals who would possibly kind their particular question into Google Search and tack “Reddit” on the top to allow them to discover actual recommendation and opinions from actual individuals. 

Reddit Answers, the corporate’s AI-powered chatbot that surfaces verbatim solutions and summaries from current Reddit posts, is for the Seekers. And early outcomes counsel it’s already gaining traction.

“Up till very not too long ago, we haven’t constructed a product for them,” Reddit CEO Steve Huffman mentioned Thursday on the corporate’s first-quarter earnings name. “These customers should not coming to Reddit for a group in that second. They’re coming for a solution. And I believe we are able to [acknowledge] the use case that the person’s bringing us and be simpler at fixing it.”

Reddit introduced through the name that its Solutions product already has 1 million weekly lively customers because it launched in beta in December. Final month, Reddit expanded Solutions past the U.S. and into Australia, the U.Okay., Canada, and India. 

The characteristic, which remains to be in beta, at the moment lives within the navigation bar of the app as its personal separate expertise. Going into 2025, Reddit plans to combine Solutions extra deeply into the platform in a number of other ways. 

Huffman mentioned the obvious method to do that could be to combine Solutions into the first search field, which may permit customers to kind in a full question somewhat than only a few key phrases. 

The chief additionally mentioned the corporate is exploring methods to combine Solutions into the start of the person journey.

“So that you’re a brand new person opening Reddit for the primary time, utilizing Solutions to see what’s in Reddit and be taught that Reddit nearly actually has what you’re searching for,” he mentioned.

One other “level of entry” for Solutions could be by way of exterior search, “serving to [users] get a extra summarized or easy-to-parse model of the reply on Reddit,” Huffman mentioned.

That would additionally shield Reddit from being on the mercy of Google Search. Within the fourth quarter of 2024, a Google Search algorithm change induced some “volatility” with Reddit’s person progress, which spooked buyers on the time, regardless of beating earnings estimates.  

“We’re an open platform, and we would like individuals to seek out Reddit content material in [Google] Search,” Huffman mentioned. “Being open drives consciousness and visibility. It could possibly additionally create variability, and we do anticipate some bumps alongside the way in which from Google, as a result of we’ve already seen a number of this 12 months. That is anticipated in any 12 months, however provided that the Search ecosystem is beneath heavy development, the close to time period may very well be extra bumpy than ordinary.”

Reddit’s inventory soared in after-hours buying and selling as the corporate beat analyst earnings expectations and powerful person progress. The corporate reported income of $392.4 million, up 61% year-over-year, an adjusted EBITDA of $115.3 million, and each day lively distinctive customers of 108.1 million, a 31% YoY enhance. 

Within the second quarter, Reddit estimates income within the vary of $410 million to $430 million and adjusted EBITDA between $110 million and $130 million.