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Reddit’s latest earnings report, released on Wednesday (Feb. 12), has revealed how much OpenAI is paying Reddit to license its content.
According to Adweek, Reddit makes about 10% of its revenue from AI licensing deals, which adds up to roughly $130 million. We know Google paid around $60 million for its content deal with Reddit, and the only other company known to have a similar deal is OpenAI. That means OpenAI likely paid the remaining $70 million for its licensing agreement with Reddit.
$RDDT Earnings:
– Total revenue increased 71% year-over-year to $427.7 million, Ad revenue increased 60% year-over-year to $394.5 million, and Other revenue reached $33.2 million
– Basic and diluted earnings per share (“EPS”) were $0.40 and $0.36
– Gross margin was 92.6%, an… pic.twitter.com/uTWfhrEiDw— AlphaSense (@AlphaSenseInc) February 12, 2025
The company’s COO Jen Wong told Adweek that licensing was a “small part of our revenue,” but added that it was still valuable nonetheless. The social media platform saw a 71% jump in its fourth-quarter revenue compared to the previous year and its COO says it’s been “very thoughtful” about which AI developers it partners with.
Wong said the firm was only working with companies that agree to “specific terms … that are really important to us.” Those terms cover things like protecting user privacy and ensuring “how [Reddit is] represented.” That said, the company is also attempting to compete with the tech giants, having launched its own AI search tool called Reddit Answers.
"We also have an opportunity to build our own products around our corpus of information." Jen Wong, @Reddit COO on building out their chat-based search feature "Reddit Answers" https://t.co/9l8Lsd3uDX pic.twitter.com/7Llhk8IWSw
— Bloomberg TV (@BloombergTV) February 13, 2025
If everything goes as planned, the tool could take a big bite out of Google’s traffic, especially for searches where users usually start with “Reddit” to find results.
Reddit attempts to stabilize through ads and AI licensing after going public
The San Francisco-based company officially filed its IPO prospectus with the Securities and Exchange Commission last February. By October, it reported a profit for the first time in its history.
A big chunk of Reddit’s $427.7 million in Q4 revenue came from its expanding ad business. In fact, its ad revenue jumped 60% year over year, showing that more brands are seeing Reddit as a valuable platform. However, at the time of writing, Reddit stock slipped as user growth came in slower than originally forecasted. Shares initially dropped by as much as 18% after the earnings report.
CEO Steve Huffman told analysts Wednesday night that the platform saw “some volatility” in traffic late in Q4 because of changes to Google’s search algorithm. But he reassured them that “traffic from [Google] Search has recovered so far in Q1 and we’ve regained momentum.”
ReadWrite has reached out to OpenAI for comment.
Featured image: Canva
