Snap Inc. shares jumped over 25% in extended trading on Wednesday after the company announced $400 million partnership with Perplexity AI and reported stronger-than-expected third-quarter earnings.
Under the deal, Perplexity will pay Snap $400 million over one year in cash and equity. The collaboration aims to integrate Perplexity’s answer-engine into Snapchat’s Chat interface by 2026, enhancing user interaction through AI-powered responses. Revenue from this partnership is expected to start contributing to Snap’s results next year. Snap’s existing “My AI” chatbot will continue to be available to users.
For the third quarter ended September 30, Snap reported revenue of $1.51 billion, a 10% year-on-year increase, surpassing analyst estimates of $1.49 billion (LSEG data). The company’s net loss narrowed to $104 million from $153 million a year ago.
Advertising, which accounts for nearly 90% of Snap’s revenue, generated $1.32 billion, up 5% year-on-year. Direct response ads rose 8%, driven by strong demand for “Pixel Purchase” and “App Purchase” optimizations.
Snapchat’s paid subscribers reached 17 million, up from 16 million in the previous quarter, fueling a 54% jump in “other revenue” to $190 million. Daily active users (DAUs) grew 8% to 477 million, though Snap warned that user growth could slow in Q4 amid regulatory changes and evolving age verification measures.
The company forecast Q4 revenue between $1.68 billion and $1.71 billion, aligning with analysts’ expectations of $1.69 billion. Snap shares closed at $7.30 during regular trading hours on the NYSE.
