How AI helped Reddit make first-ever profit in 19 years
Popular online forum Reddit has reported its first-ever profit in its 19-year-long history. The company's third-quarter financial report shows a net income of $29.9 million on revenues of $348.4 million, marking a whopping 68% increase from last year. The financial turnaround comes after two consecutive quarters of losses amounting to $585.2 million, making for a strong recovery for the newly public company.
Reddit's user engagement hits new highs
Reddit's co-founder and CEO Steve Huffman described the third quarter as a "landmark" period for the company. The platform witnessed an average of over 97 million daily active users, a whopping 47% increase from last year. Huffman also highlighted that Reddit crossed 100 million users multiple times during this quarter, something that had long been a goal for the company.
AI-driven translation boosts Reddit's user engagement
Huffman credited the company's financial success to its use of artificial intelligence (AI). He said Reddit started using AI this year to translate content into other languages, making it more accessible for non-English speakers. Thanks to this effort, machine translation brought in four times more users than the last quarter. Huffman said they plan to expand machine translation services to over 30 countries by 2025.
Reddit's AI partnerships and future plans
Earlier this year, Reddit announced partnerships with Google and OpenAI, giving both companies access to its Data API. In return, Reddit uses their products for its own purposes. The main use of these AI tools has been to translate posts and extend the site's reach. Huffman also highlighted plans to enhance the search experience on Reddit as part of their future strategy.
Reddit forecasts continued growth in Q4
Looking ahead, Reddit expects more profit in Q4, with revenues projected at up to $400 million and EBITDA as high as $125 million. Huffman said that "as we look to 2025 and beyond, we'll seek opportunities to accelerate our roadmap, whether through new product developments, global expansion or growing our ads business." These plans show a bright future ahead for Reddit's growth and profitability.
