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

Reddit CEO Steve Huffman says there are two varieties 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 interesting about subjects they’re keen about, from r/sourdough to r/popculturechat. Then there are the Seekers; the individuals who may kind their particular question into Google Search and tack “Reddit” on the tip to allow them to discover actual recommendation and opinions from actual individuals. 

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

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

Reddit introduced in the course of 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.Ok., Canada, and India. 

The characteristic, which remains to be in beta, presently 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 alternative ways. 

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

The manager 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 on the lookout for,” he mentioned.

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

That might 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 wish individuals to search out Reddit content material in [Google] Search,” Huffman mentioned. “Being open drives consciousness and visibility. It will probably additionally create variability, and we do count on some bumps alongside the best way from Google, as a result of we’ve already seen a number of this yr. That is anticipated in any yr, however provided that the Search ecosystem is below heavy building, the close to time period might be extra bumpy than typical.”

Reddit’s inventory soared in after-hours buying and selling as the corporate beat analyst earnings expectations and robust person progress. The corporate reported income of $392.4 million, up 61% year-over-year, an adjusted EBITDA of $115.3 million, and day by 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.