Snap’s stock surged 16% in after-hours trading following its Q3 earnings beat and announcement of a $400 million partnership with Perplexity AI, integrating the AI search engine into Snapchat’s chat inbox starting in early 2026 to enhance user experiences with conversational AI tools.
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Snapchat integrates Perplexity AI as default search in chat for over 477 million global users, allowing real-time answers without ads.
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The partnership marks Snap’s broader strategy to collaborate with external AI firms, keeping its My AI chatbot as an option.
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Snap reported $1.51 billion in Q3 revenue, up 10% year-over-year, with 477 million daily active users and improved net loss of $104 million.
Snap’s $400 million Perplexity AI partnership boosts Snapchat with advanced search features. Discover Q3 earnings highlights and future AI integrations for enhanced user engagement—explore now for key insights on tech investments.
What is the Snap Perplexity AI Partnership?
Snap’s partnership with Perplexity AI involves a $400 million deal to integrate the AI search engine directly into Snapchat’s global platform, starting in early 2026. This collaboration will position Perplexity’s tool as the default search option within the chat inbox, providing users with real-time, credible answers while allowing choice between it and Snap’s existing My AI chatbot. The initiative supports Snap’s vision to evolve Snapchat into an open platform for leading AI companies, fostering innovative connections with its vast user community.
How Will Perplexity AI Integrate into Snapchat’s Chat Features?
The integration places Perplexity’s AI search engine prominently in Snapchat’s chat inbox for seamless access. With over 20 million active users, Perplexity will handle response generation, ensuring high-quality, sourced information without any advertising interference from Snap. This setup aims to drive Perplexity’s subscriber growth, as users can explore topics effortlessly within the app. Snap CEO Evan Spiegel emphasized the value of conversational AI, stating, “We certainly see a lot of opportunity to open up Snapchat to more AI partners over time. The conversational interface has become a lot more valuable with the advent of conversational AI.” Meanwhile, existing My AI functionality remains available, giving users flexibility in their interactions.
The partnership extends beyond immediate integration, serving as an initial step in Snap’s efforts to build trusted AI ecosystems. Perplexity will compensate Snap via cash and equity, with revenue recognition slated for 2026 upon global rollout. Despite ongoing legal challenges for Perplexity, including lawsuits from Amazon and Reddit over data usage terms, both companies expressed optimism about the collaboration’s potential to enhance user discovery and engagement without delving into the disputes during earnings discussions.
Frequently Asked Questions
What Are the Key Details of Snap’s Q3 2025 Earnings Report?
Snap achieved $1.51 billion in third-quarter revenue, surpassing expectations of $1.49 billion, with global daily active users hitting 477 million against a forecast of 476 million. Average revenue per user stood at $3.16, and adjusted EBITDA reached $182 million, exceeding projections of $125 million. The company narrowed its net loss to $104 million from $153 million year-over-year.
How Does the Perplexity Integration Affect Snapchat Users?
Snapchat users will gain access to Perplexity’s AI for quick, real-time answers from credible sources right in the chat inbox, making it easy to explore new topics without leaving the app. You can still use My AI if preferred, and the feature rolls out globally in early 2026, prioritizing user choice and privacy in conversational searches.
Key Takeaways
- Snap’s AI Expansion: The Perplexity partnership opens Snapchat to external AI tools, enhancing conversational features for its 477 million users while maintaining ad-free experiences in the integration.
- Strong Financial Performance: Q3 revenue grew 10% to $1.51 billion, with positive guidance for Q4 sales between $1.68 billion and $1.71 billion, signaling recovery amid market challenges.
- Strategic Moves Ahead: Snap authorizes a $500 million stock buyback and forms a subsidiary for AR glasses development, positioning for long-term innovation in tech partnerships.
Conclusion
Snap’s Perplexity AI partnership and robust Q3 results underscore its commitment to integrating advanced AI technologies while delivering solid financial growth. With revenue beats, user expansion, and forward-looking AI strategies, Snap is well-positioned to navigate competitive pressures in the social media landscape. Investors and users alike should watch for the 2026 rollout, which promises to redefine in-app discovery and engagement through seamless, trusted AI interactions.
Snap Integrates Perplexity as Default Search Inside Chat
This strategic alliance highlights Snap’s pivot toward ecosystem openness. By embedding Perplexity’s capabilities, Snapchat aims to meet the rising demand for intuitive, AI-driven interfaces. The absence of ads in Perplexity responses aligns with user-centric design principles, potentially boosting retention and satisfaction rates. Spiegel’s comments during the earnings call reinforced this direction, noting the transformative role of conversational AI in elevating platform utility.
Perplexity’s robust user base and focus on accurate, sourced information make it a fitting partner for Snap’s youth-oriented audience. The deal’s structure, combining upfront payments with equity, reflects mutual confidence in long-term value creation. As rollout approaches, Snapchat users can anticipate a more dynamic chat experience that blends social interaction with intelligent search.
Snap Reports Q3 Results and Issues Q4 Guidance
Snap’s third-quarter performance demonstrated resilience, with revenue climbing 10% year-over-year to $1.51 billion. This outperformance against analyst expectations of $1.49 billion was driven by steady user growth and monetization improvements. Daily active users increased to 477 million, marking a slight edge over the anticipated 476 million, while average revenue per user rose to $3.16 from the expected $3.13.
Profitability metrics also improved, with adjusted EBITDA at $182 million surpassing the $125 million forecast. Net loss narrowed to $104 million, a significant reduction from the prior year’s $153 million, reflecting operational efficiencies. Looking ahead, Snap’s Q4 guidance projects revenue between $1.68 billion and $1.71 billion, modestly above Wall Street’s midpoint estimates, and adjusted EBITDA from $280 million to $310 million, outpacing projections of $255.4 million.
The announcement of a $500 million stock repurchase program further signals management’s belief in the company’s undervaluation, especially after shares declined 32% year-to-date prior to the report, contrasting the Nasdaq’s 22% gain. However, finance chief Derek Andersen acknowledged persistent headwinds in North America’s large customer segment, which continues to challenge overall revenue expansion. He noted brighter spots in small-to-medium business demand from international markets, providing a buffer against regional slowdowns.
Post-earnings, shares initially spiked up to 25% on the partnership news but moderated during the call as details on regional challenges emerged. CEO Evan Spiegel’s update on creating a dedicated subsidiary for Specs AR glasses development aims to streamline collaborations with external partners, potentially unlocking new revenue streams in augmented reality. This multifaceted approach positions Snap to capitalize on AI and AR trends while addressing core business pressures.
Overall, Snap’s latest developments paint a picture of a company adapting to technological shifts and economic realities. The Perplexity integration not only diversifies its AI offerings but also aligns with broader industry moves toward open platforms. As Snap executes on its guidance and partnerships, stakeholders can expect continued evolution in how social experiences incorporate intelligent tools.
