Reddit reported strong second-quarter financial results but saw its stock fall over 10% in after-hours trading after CEO Steve Huffman warned that search referrals had become “choppy” and traffic more volatile late in the quarter.

Total revenue reached $805 million, up 61% year over year, and net income hit $253 million, up 183%, both beating Wall Street expectations.

The company also guided for Q3 revenue of $860–$870 million with healthy pre-tax earnings, above consensus.

The after-hours sell-off appeared driven by investor concern that AI-driven changes in search are reducing Reddit‘s logged-out traffic.

In 2024, Reddit signed a licensing deal providing its content to Google for AI training, but Google‘s deployment of AI summaries may be drawing audience away.

Huffman would not commit to renewing the deal, saying only that there is no “binary outcome” and that Reddit would maximize its value. U.S. daily active unique users slipped slightly from 53.

5 million in Q1 to 53.2 million, while global users grew. On the earnings call, analysts pressed whether the logged-out traffic decline is structural as search shifts to AI.

Huffman defended Reddit‘s long-term value as a destination for human community-driven content but offered no concrete fix for the traffic volatility.