Reddit

Reddit (RDDT) shares jumped 7% following strong Q3 earnings, beating revenue and EPS estimates with a 68% revenue increase to $585 million. Daily active users grew 19% to 116 million. The company anticipates Q4 revenue of $655-$665 million. Reddit credits strategic automation investments for boosting advertising return, seeing growth across verticals. Active advertiser growth surged 75%. While AI poses potential challenges, data licensing partnerships are expanding revenue streams.

Reddit’s Q3 earnings exceeded expectations, with revenue jumping 68% year-over-year to $585 million and EPS at 80 cents. Growth was fueled by strong advertising and data licensing, with the latter becoming increasingly important as companies like Google and OpenAI leverage Reddit’s data for AI training. Global daily active users reached 116 million, a 19% increase. While US logged-in DAU growth slowed, Reddit focuses on improving user experience and international marketing to drive further engagement. Q4 sales are projected to reach $655-$665 million.

Reddit has sued AI search engine Perplexity, data scraping service Oxylabs, AWMProxy, and SerpApi, alleging unauthorized scraping of user-generated content to train AI models. Reddit claims Perplexity illegally used its data, while Perplexity denies training models on Reddit content and accuses Reddit of “extortion.” This lawsuit, following a similar one against Anthropic, underscores the escalating battle over data rights in the AI era and the growing tension between content platforms and AI developers. The case could set precedents for data licensing and AI training practices.

The internet experiences a decline in human-generated content as AI creations proliferate. This surge fuels “Generative Engine Optimization” (GEO), a new tactic aiming to manipulate AI outputs. Legitimate applications, like Bacula Enterprises, enhance visibility with credible content. However, widespread exploitation, seen on platforms like DeepSeek, involves flooding systems with promotional content to game rankings—turning genuine products top recommendations. This arms race risks transforming the web into a battleground dominated by corporate agendas, threatening authenticity and user trust.