Reddit delivered the kind of quarter most public companies would celebrate: revenue up 61 percent, profit nearly tripled, and guidance above Wall Street estimates. The stock fell anyway, and the chief executive used the earnings call to publicly challenge the company’s most important partner, a business dependent on Google twice over, as both its largest source of traffic and a paying customer for its content.
Revenue reached $805 million in the quarter ended June 30, the eighth consecutive quarter of growth above 60 percent, with advertising contributing $762 million. Net income rose to $253 million from $89 million a year earlier, and free cash flow more than doubled to $261 million. The company guided third-quarter revenue to between $860 million and $870 million, ahead of analyst estimates.
The weakness showed up in the United States, which generates roughly 79 percent of revenue. US daily active users dipped to 53.2 million from 53.5 million in the prior quarter, the first sequential decline in the five quarters the company charts, though still up 6 percent year over year. Global daily actives grew 18 percent to 130.3 million. The disparity matters because US users monetize at more than five times the rate of international users, and advertising growth has leaned increasingly on pricing rather than audience expansion.
Executives attributed part of the softness to search. Referral traffic from search engines was described as choppy during the quarter, with volatility worsening late in the period and visibility into the channel remaining low. That is the channel where Google dominates and where the strategy of converting casual visitors into logged-in habits has the most ground to make up. Management said Reddit is not building for drive-by traffic, but acknowledged the platform still depends heavily on search engines for new visitors.
The criticism of Google’s AI Overviews came in the same breath. The CEO argued that the traditional layout of ten blue links delivered measurable value and growth to the wider web, while AI Overviews has not yet produced a comparable benefit for businesses, publishers, and retailers. A letter to shareholders positioned Reddit as a counterweight to an automated web, arguing that machine-compressed summaries cannot replace the discussions and lived experience the platform hosts.
The stakes are concrete. Reddit has a roughly $60 million annual licensing deal with Google, and a Wall Street Journal report earlier in the month said the company is considering ending it. The same report said The Economist, Reuters, Politico, and USA Today are weighing similar exits. Reddit also maintains a separate data-licensing deal with OpenAI, which gives it some leverage in negotiations. Independent evidence supports the complaint: a Pew Research study based on data from 900 US adults concluded that AI Overviews cut referrals to websites by almost half compared with the ten-blue-links approach, though Google had already moved away from that layout in other ways before AI Overviews existed.
The market reaction suggested investors heard the warning. Shares closed more than 20 percent below their prior level even as the company beat on revenue, profit, and guidance, and the decline erased the buyback cushion from a $235 million repurchase program completed at an average price well above the current trading level.
The public pressure campaign makes strategic sense even if the licensing deal survives. Google is simultaneously Reddit’s biggest traffic funnel and one of its largest customers, and the threat of walking away from the $60 million arrangement is the strongest negotiating signal the company can send. Whatever the outcome, a renegotiated deal, an exit, or a louder voice in how Google presents Reddit content inside AI summaries, the platform that helped train the AI era wants a say in how its value is distributed.
Sources: As Reddit stock falls, CEO questions value of Google’s AI Overviews (Ars Technica, Aug 1, 2026); Reddit shares sink 11% on ‘choppy’ search referrals even as results blow past estimates (CNBC, Jul 30, 2026); Reddit Beat on Revenue, Profit, and Guidance. Its U.S. Daily Users Went Backward, and the Stock Fell 21% (The Motley Fool, Jul 31, 2026); Reddit CEO Criticizes Google AI Overviews in Quarterly Earnings Report (Gate News, Aug 1, 2026)