Reddit CEO thanks AI for helping the site finally turn a profit

After months of uncertainty, it looks like going public was a good thing for Reddit's bottom line, as the online forum just posted a profit for the first time in its 19-year history.

This isn't some barely-in-the-green "profit" either - Reddit made a net income of $29.9 million in its third quarter as a publicly-traded firm, which ended September 30, on revenues of $348.4 million - a 68 percent year-over-year increase. 

Compare that to the previous two quarters, in which Reddit lost $10.1 million and $575.1 million, and it's hard to see Q3 as anything but the outfit finally coming into its own after an IPO many users objected to. 

"Q3 was a landmark quarter for Reddit," said co-founder and CEO Steve Huffman in the quarterly report [PDF] to shareholders. "We averaged over 97 million daily active uniques, an increase of 47% from last year, and for the first time, we exceeded 100 million a few times during the quarter, which has been a longstanding milestone for us." 

AI deals pay off

It's fair to wonder what the hell just happened to swing Reddit into the green for the first time in its history, but Huffman has a ready answer: Artificial intelligence. 

"This year, we started using AI to translate Reddit's corpus into other languages, making it more accessible for non-English speakers to enjoy in their native languages," Huffman said. "This quarter, machine translation drove four times more users than last quarter, and based on the success we've seen so far, we plan to expand machine translation to over 30 countries through 2025."

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Machine translation is currently translating English-language posts into French, Spanish, Portuguese, Italian, and German. 

Reddit had been very vocal about a pair of deals it signed with Google and OpenAI earlier this year, granting both companies access to its Data API, while Reddit leverages their products for its own uses. It wasn't clear at the time what Reddit intended to do with these AI tools, but it appears translating posts to extend the site's reach was at the top of the list. 

Reddit's outlook is predicting further profit in the fourth quarter, with revenues predicted to grow to as much as $400 million, and EBITDA as high as $125 million. 

That said, Reddit will likely have to show its users, who can be a contentious bunch, that it'll make good use of those profits to improve the platform. Huffman said that enhancing the search experience on the site, an oft-requested improvement, is a key part of Reddit's strategy for the near future. That includes improving external searches that drive users to Reddit, something the company said it hoped to do with all that new AI, but that hasn't materialized yet. 

"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," Huffman said, without giving much in the way of specifics. 

We've reached out to the company to learn more about its plans for all that profit, but haven't heard back. ®