Reddit revenue soars as it bets on AI and advertising

Reddit reported its second-quarter earnings on Thursday, and it’s clear that the company’s focus on AI has ramped up considerably.

One significant area of investment is growing its advertising business, supported by its AI-powered marketing tools. The results revealed that the majority of Reddit’s revenue continues to come from ads, which brought in $465 million, representing 93% of the company’s total revenue. 

Last month, Reddit launched two new features for advertisers: Reddit Insights, a tool that leverages the billions of posts and comments on the platform to spot trends and offer real-time insights for campaign strategies, and Conversation Summary Add-ons, which let advertisers include Reddit user discussions directly in ads, showing public opinions about products or brands.

The company also saw growth in its “other revenue” category, which includes its data licensing business — meaning its deals with AI providers for access to its data. Reddit said the category jumped 24% year-over-year to $35 million, up from $28.1 million in the same period a year prior. 

Reddit has already established content licensing agreements with major players in AI, including Google and OpenAI. Although these deals are still new, the results from the second quarter point out a steady income stream that has significant potential for the long haul.

Another key AI-powered feature is the Reddit Answers tool, which launched in December. This tool, which offers answers in a conversational interface, has attracted 6 million weekly users, a considerable jump from 1 million users in the previous quarter. 

In a letter to shareholders, Reddit CEO Steve Huffman said the platform is working to integrate the tool “more deeply into the core search experience” to make “search a central feature across Reddit.”