Reddit will soon add AI-generated summaries atop its search results, co-founder and CEO Steve Huffman told investors on a Q2 earnings call last week. The company will later this year begin testing AI-powered search result pages that “summarize and recommend content,” said Huffman, who expects the technology will help Reddit users “dive deeper” into content and aid in discovery. Huffman mused monetization strategies, including boosting ad inventory and possibly installing a paywall to differentiate premium content. The discussions accompanied news that Reddit lost $10.1 million in Q2, which saw revenues of $281 million, a 54 percent increase year-over-year.

The earnings report — Reddit’s second as a public company — outperformed Wall Street expectations, with a loss narrower than that which analysts expected, and less than the $41.1 million net loss from the same quarter a year earlier.

CNBC reports that “online advertising revenue climbed 41 percent from a year prior to $253.1 million,” at a time when “the digital ad market is continuing to recover from a tough 2022, when businesses pulled back on promotional spending because of inflation and other factors.”

“There are still many places on Reddit without ads today,” said company COO Jen Wong on the earnings call, as quoted in a report by Ars Technica. Wong added that “we’re more focused on designing ads for spaces where users are spending more time versus increasing ad load in existing spaces. So, for example, 50 percent of screen views, they’re now on conversation pages — that’s an opportunity.”

The platform is “light” on ad inventory compared to its competitors, Wong said, which could be why its ad revenue is “a minuscule sum compared with the $38.3 billion in ad sales at Facebook and Instagram owner Meta Platforms during the same period,” writes The Wall Street Journal, citing the company’s recent purchase of Memorable AI, “whose generative artificial-intelligence tools Reddit said would help advertisers pick the ad creative that is most likely to spur consumers to action.”

Data licensing through deals Reddit cut with OpenAI and Google helped propel “other revenue” to $28.1 million. Overall, it was a rosy report for Reddit.

“AI was a common topic,” during the Reddit earnings call, TechCrunch explains, noting “Huffman also touted the success of Reddit’s AI-powered language translation feature, reporting that France is one of its ‘fastest growing countries,’” and discussing how the company is “also beginning to expand the translation feature to German, Spanish and Portuguese.”

Daily Active Uniques increased 51 percent year-over-year, to 91.2 million, while Weekly Active Uniques jumped 57 percent year-over-year, to 342.3 million, Reddit specified in an earnings release.

The company drills down more deeply in its letter to shareholders.

Related:
How Reddit Became the Most Important Website on the Internet, Digital Trends, 8/6/24
Reddit Might Let Users Make Paid Subreddits, The Verge, 8/7/24