Reddit just hit the profitability inflection point—net income up 255% year-over-year to $252 million, revenue crushing estimates at $726 million, and a $1 billion buyback announcing management's confidence in future cash flow. But buried in Thursday's earnings is a more significant transition: CEO Steve Huffman's decision to phase out reporting on logged-in versus logged-out users signals Reddit's fundamental shift from a community-engagement platform to an algorithmic reach play powered by data monetization. Six straight quarters of slowing logged-in user growth finally meets its disclosure exit.

Reddit's earnings announcement Thursday night tells two stories, and only one is getting attention. The surface narrative—a company that's finally profitable, growing faster than peers, and confident enough to return capital to shareholders—is real. The deeper transition, however, reveals why management suddenly wants to bury the metric that institutional investors have watched for years.

Start with the numbers that matter. Revenue grew 70% year-over-year to $726 million. Net income hit $252 million, up 255% compared to the same quarter last year. The company's global daily active unique users hit 121.4 million, beating Wall Street's 120 million estimate. For a social platform company trying to convince investors it's a durable business, these are the readings that move stock price. Reddit shares rose 6% in after-hours trading before settling flat, a muted response to a beat that, on paper, should excite growth investors.

That muted response matters. It reflects the fact that Wall Street's been watching a different metric—one that's been deteriorating for six consecutive quarters. Logged-in DAU growth, which measures users with Reddit accounts actively using the platform, slowed to 5% year-over-year in Q4. Six quarters. That's not noise. That's a trend line pointing toward user engagement saturation at the core community level. The previous quarter showed 7% growth. The quarter before that, slower still. This is the deceleration that questions whether Reddit's core value proposition—community participation and discussion—is actually sustaining growth.

Huffman's strategic response: stop reporting it. In his investor letter Thursday, he announced Reddit will phase out the logged-in versus logged-out distinction later this year. The stated reason—that instant personalization features blur the line between registered and non-registered users—is technically accurate. It's also convenient timing. Once the metric disappears, investors can't track deterioration.

But here's what's actually shifting: Reddit's business model is transitioning from "engaged community members create ad inventory" to "total audience reach via search and data monetization." The economics now work differently. Logged-out users—people finding Reddit through Google searches—account for roughly 70% of daily actives. They generate less direct engagement per session. But they're increasingly valuable because of what they bring: search query data, training material for AI models, and more importantly, the leverage to negotiate higher rates with data buyers and search partners. That US revenue beat of $54 million isn't coming from incremental logged-in user engagement. It's coming from the expansion of non-traditional revenue streams.

Consider the pattern. Global DAU growth of 19% far outpaces logged-in user growth of 5%. That gap represents pure reach without engagement—the people falling into Reddit via search, scrolling without creating accounts. That's not ideal for traditional ad targeting. It's ideal for data licensing, API access, and partnership revenue. Google paid Reddit $60 million to license its content for AI training. Those arrangements scale with total reach and search prominence, not with registered user depth.

The $1 billion buyback matters in this context. Share repurchases are typically executed by management teams confident in future cash generation but uncertain about growth-driven valuation multiples. It's the signal of a company entering a mature profitability phase—the textbook move of a platform that's hit saturation in its core metric. Compare this to the behavior during hyper-growth years, when companies reinvest every dollar into expansion. Reddit, now, is returning capital. That's not weakness. It's realism about the growth trajectory.

The timing is revealing. Q1 guidance—$595-605 million in revenue, up from expectations of $577 million—extends this quarter's beat but doesn't suggest acceleration. It's 15-17% sequential revenue growth into a quarter historically softer than Q4. This is a company running toward profitability, not pursuing monster growth.

What happens now is the inflection point. For investors, the shift is from growth stock to mature platform with strong margins and cash return. For companies building on Reddit's platform, the message is clearer: the logged-in community isn't growing at the rate that historically justified investment in Reddit-specific products. For professionals in ad tech and content strategy, the pivot away from engagement metrics to reach metrics should signal a changing distribution model. And for Reddit itself, phasing out the logged-in DAU metric buys time before the market realizes that core engagement is decelerating while total reach masks the deterioration.

The inflection moment isn't the profitability. It's the metric death. When management changes how they measure success, they're not improving the business. They're improving the narrative.

Reddit's earnings inflection is real—the profitability is genuine, the buyback signals confidence, and the revenue growth is strong. But the strategic transition being executed here is from engagement-driven value to reach-driven monetization. The decision to stop reporting logged-in DAU growth isn't administrative. It's acknowledgment that the metric investors historically used to validate Reddit's moat is no longer pointing in the right direction. For enterprise investors betting on platform growth through community participation, this signals a maturation phase. For data businesses and AI training operations, it confirms Reddit's pivot toward becoming a content/query provider rather than an engagement platform. The next threshold to watch: what margins look like once non-core revenue streams (data licensing, API) fully disclose, and whether management's instant personalization features can genuinely re-engage the 70% of daily actives who currently interact without logging in.