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 obsessed with, from r/sourdough to r/popculturechat. Then there are the Seekers; the individuals who would possibly sort 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 lately, we haven’t constructed a product for them,” Reddit CEO Steve Huffman mentioned Thursday on the corporate’s first-quarter earnings name. “Those customers usually are not coming to Reddit for a group in that second. They’re coming for a solution. And I feel we are able to [acknowledge] the use case that the person’s bringing us and be simpler at fixing it.”
Reddit introduced in the course of the name that its Answers product already has 1 million weekly energetic customers because it launched in beta in December. Last month, Reddit expanded Answers past the U.S. and into Australia, the U.Ok., Canada, and India.
The function, which continues to be in beta, at present lives within the navigation bar of the app as its personal separate expertise. Going into 2025, Reddit plans to combine Answers extra deeply into the platform in a couple of other ways.
Huffman mentioned the obvious approach to do that could be to combine Answers into the first search field, which might permit customers to sort in a full question somewhat than just some key phrases.
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The government additionally mentioned the corporate is exploring methods to combine Answers into the start of the person journey.
“So you’re a brand new person opening Reddit for the primary time, utilizing Answers to see what’s in Reddit and be taught that Reddit nearly definitely has what you’re in search of,” he mentioned.
Another “level of entry” for Answers could be by exterior search, “serving to [users] get a extra summarized or easy-to-parse model of the reply on Reddit,” Huffman mentioned.
That might additionally defend Reddit from being on the mercy of Google Search. In the fourth quarter of 2024, a Google Search algorithm change brought about some “volatility” with Reddit’s person development, which spooked traders 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 may create variability, and we do count on some bumps alongside the way in which from Google, as a result of we’ve already seen a couple of this 12 months. This is predicted in any 12 months, however provided that the Search ecosystem is below heavy building, the close to time period could possibly be extra bumpy than normal.”
Reddit’s inventory soared in after-hours buying and selling as the corporate beat analyst earnings expectations and powerful person development. The firm reported income of $392.4 million, up 61% year-over-year, an adjusted EBITDA of $115.3 million, and each day energetic distinctive customers of 108.1 million, a 31% YoY improve.
In the second quarter, Reddit estimates income within the vary of $410 million to $430 million and adjusted EBITDA between $110 million and $130 million.
