One of the most interesting examples comes from Reddit, which has rolled out its AI-powered feature Answers to international markets such as Australia, the U.K., Canada, and India. This strategic shift comes on the heels of strong financial performance and record user growth. Revenue grew to $392.4 million, a stunning 61% increase compared to the prior year as daily active unique users jumped to 108.1 million, a 31% year-over-year increase.
The platform’s stock skyrocketed in after-hours trading as it beat analyst earnings projections. Reddit now projects its Q2 revenue to be $410-$430 million. They expect adjusted EBITDA will be in the range of $110 million to $130 million. The new Answers product, which hit beta launch last December, has amassed 1 million weekly active users. This latest surge is a strong vote of confidence in what it can do.
AI-Powered Answers to Solve User Needs
As Reddit CEO Steve Huffman recently described the two different types of users, Reddit tend to be both scrollers and seekers. He further noted that many of their users interact with the ecosystem to establish social bonds. At the same time, other people are searching for easy solutions to their problems.
“Up until very recently, we haven’t built a product for them,” – Reddit CEO Steve Huffman.
Huffman provided some insight into the motivation behind the Answers feature. It is meant to be used by users who arrive at Reddit with particular questions in mind, not for broad community conversation. Powered by artificial intelligence, the chatbot provides straightforward answers and quick summaries based on original Reddit user content.
“Those users are not coming to Reddit for a community in that moment. They’re coming for an answer. And I think we can [acknowledge] the use case that the user’s bringing us and be more effective at solving it,” – Reddit CEO Steve Huffman.
In view of these advancements, Reddit is looking to implement Answers even more broadly into user interactions by 2025. One potential strategy involves embedding Answers into the primary search functionality, allowing users to enter full queries rather than just keywords. Huffman noted that now users can find Answers via other search engines, too. This new feature will bring short, summarized insights straight from Reddit to you.
“So you’re a new user opening Reddit for the first time, using Answers to see what’s in Reddit and learn that Reddit almost certainly has what you’re looking for,” – Reddit CEO Steve Huffman.
Reddit, for its part, saw huge user growth in Q4 2024. Shifts in Google’s search algorithm introduced a lot of volatility into that growth trajectory. Huffman stood by the platform’s promise to make sure users searching for Reddit content on Google Search are able to easily find it.
“We’re an open platform, and we want people to find Reddit content in [Google] Search,” – Reddit CEO Steve Huffman.
Author’s Opinion
Reddit’s introduction of the Answers feature demonstrates its ability to innovate and adapt to user needs. The AI-powered feature will not only help broaden the platform’s appeal but also reinforce its growing value in the competitive landscape of digital content.
Featured image credit: SlashGear
Follow us for more breaking news on DMR