Reddit requires all users to create an official account before they can access this social media platform. This represents a significant shift for a website that is known as the "internet homepage."

The company disclosed this change when releasing its third-quarter financial report on Thursday. During that quarter, Reddit's revenue and profits both exceeded expectations, but the sales forecast for the fourth quarter was weaker. After the release of the financial report, the company's stock price fell by more than 11%.

The following is a comparison of the company's performance with the expectations of LSEG:

• Earnings per share: $1.40, with an expectation of $1.35.
• Revenues: $895 million, with an expectation of $878 million.

Reddit CEO Steve Hoffman stated in an interview with CNBC that the decline in search traffic from Google is a significant reason for the company's initiative to require users to become "logged-in" users.

In the past few years, the last search update by Google aimed at highlighting "authentic" content on internet forums helped Reddit expand its user base. However, this search giant's continuous promotion of AI overview and related chat functions has had a negative impact on traffic diversion.

Hoffman said, "I believe that, fundamentally speaking, the relationship between Google and the entire internet is evolving. Therefore, for us, this means continuing to focus on those core users who come directly to Reddit."

Hoffman stated that in the past, the algorithm adjustments of Google were often "back and forth," but the company's AI measures represent a "fundamental shift in the way Google products operate, from being traffic-driven to what they are now."

Hoffman did not provide a specific timeline for when the platform registration changes will be implemented with the Reddit label, only indicating that implementing this measure through the website will involve many complex issues. The company will begin testing in regions outside of the United States in the fourth quarter.

He said that Reddit is still deciding which parts of the service unlogged-in users will be able to see, and the details will be finalized in the upcoming tests.

Reddit indicates that the number of daily active independent users in the third quarter (DAUq) increased by 12% year-on-year, reaching 130.3 million, which is lower than Wall Street's forecast of 133.7 million. Among them, in the United States, DAUq decreased by 2% year-on-year to 50.7 million, also falling short of analysts' estimate of 53.5 million.

Hoffman stated, "The traffic directed by searches has significantly decreased this quarter," and this trend is expected to continue in the fourth quarter as well.

He said that Reddit is continuing to work hard to make its platform a “daily habit” for users. Hoffman stated, “So that’s where our focus lies: growing these App users and the number of logged-in users.”

Reddit The majority of its overall revenue comes from online advertising. Compared to unlogged-in users, the company is able to monetize logged-in users more effectively, as these registered users are more active and thus more valuable to advertisers who wish to place more targeted ads.

Hoffman said, "The vast majority of our revenue comes from App users and logged-in users, which is direct traffic. Both of these aspects are showing month-over-month growth, so that's where our focus lies."

The company's sales in the third quarter increased by 53% year-on-year, which also signifies that the record of achieving a revenue growth rate of over 60% for eight consecutive quarters, as disclosed in its second-quarter financial report released in July, has come to an end.

Reddit indicates that sales in the fourth quarter are expected to be between $1 billion and $1.03 billion, which is lower than Wall Street's forecast of $1.05 billion.

Hoffman said regarding the revenue guidance, "This is still a strong guidance. Despite facing headwinds in search traffic redirection, we are still growing at a pace that leads the industry."

Reddit In the third quarter, the average revenue per user ($ARPU) was $6.87, which is higher than the analysts' forecast of $6.50.

The company's "other income" business segment (including its data licensing business) saw a year-on-year increase of 35% in the third quarter, reaching $48 million. Reddit The two major data licensing partners are OpenAI and Google.

Hoffman stated that Reddit is still "negotiating" a data licensing agreement with Google, and mentioned that if the company chooses to continue this partnership, "it will only result in a transaction that is meaningful for Reddit."

Hoffman said, "I think there are many strategic considerations involved."

Hoffman stated that, considering he "grew up in the era of the open internet," the mandatory registration program is also a "major change" for him personally.

Hoffman said, “Reddit is the last platform that still provides almost unrestricted access to unlogged-in users, and that’s largely because of me; I’ve been sticking to that approach. I think users will gradually come to understand, just like I have, that this is a signal of the times. It’s an evolution in the way these platforms operate.”