Reddit just turned a profit for the first time in 20 years and its Google and OpenAI partnerships played a surprisingly small part in it

Reddit logo
(Image credit: SOPA Images (Getty Images))

It might surprise you to hear that, until now, the internet's favourite discussion hub hadn't turned a profit since it started almost 20 years ago. Now, in a letter to shareholders [PDF] (via The Verge), Reddit has just announced that it was profitable in Q3 2024 with a "Net Income of $29.9 million and net margin of 8.6%, an improvement of $37.2 million from the prior year".

Reddit getting out of the red and into the black has put it firmly on Wall Street's radar, too, as The Guardian says that its shares rose over 35% following this report.

It might seem no coincidence that this happened during the same year that Reddit decided to partner up with Google and OpenAI to hand the site's content over for AI model training. However, Reddit CEO Steve Huffman puts the company's newfound profitability down to something else entirely: a new translation feature.

"This year," the CEO says, "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." And "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."

This makes sense of Reddit's figures, too. Advertising revenue grew 56% year-over-year, up to $315.1 million, whereas other revenue totaled $33.2 million. So, it makes sense: the introduction of machine translation led to more views which led to more advertising revenue. Simple as.

$33.2 million from other sources isn't nothing, however, and it's likely the OpenAI and Google partnerships contributed to this substantially.

One can't help but also consider the possible influence of Google's now well-known prioritisation of Reddit pages in its search results, too. When Reddit pages adorn the top of an ever-increasing number of Google searches, we'd expect advertising revenue to increase.

Whatever the reasons, it's good news for Reddit, which it must surely see as somewhat of a landmark moment given its almost 20-year history of being in the red. Although, I suppose this shouldn't be overstated given Reddit was previously doing fine enough with its millions of dollars of revenue.

Perhaps more of a landmark for the Wall Street investors, then, who will no doubt be hoping this newfound profit will pay literal dividends.

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Jacob got his hands on a gaming PC for the first time when he was about 12 years old. He swiftly realised the local PC repair store had ripped him off with his build and vowed never to let another soul build his rig again. With this vow, Jacob the hardware junkie was born. Since then, Jacob's led a double-life as part-hardware geek, part-philosophy nerd, first working as a Hardware Writer for PCGamesN in 2020, then working towards a PhD in Philosophy for a few years (result pending a patiently awaited viva exam) while freelancing on the side for sites such as TechRadar, Pocket-lint, and yours truly, PC Gamer. Eventually, he gave up the ruthless mercenary life to join the world's #1 PC Gaming site full-time. It's definitely not an ego thing, he assures us.

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