Snapchat's stock surges ~16% after beating Q3 earnings and sealing $400 million Perplexity deal

Snap’s stock jumped about 16% in after-hours trading on Wednesday after the company reported third‑quarter results and revealed a $400 million partnership with Perplexity AI.

The deal will allow Perplexity’s AI search engine to be distributed to Snapchat’s global user base. The companies said the integration will begin appearing inside Snapchat in early 2026, where Perplexity’s tool will take default placement in the chat inbox.

Snap said its existing My AI chatbot will stay and users can choose between both. The company described this as the start of a wider plan to open Snapchat to more external AI partners.

Snap CEO Evan Spiegel said the company sees rising demand for conversational interfaces. He said:

“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.”

Perplexity will pay Snap through a combination of cash and equity. Snap said revenue from the partnership will begin showing on its books in 2026, once the global rollout is in motion.

Snap integrates Perplexity as default search inside chat

Snap said Perplexity has over 20 million active users, and the company’s product will appear directly inside Snapchat’s chat inbox.

Spiegel said Perplexity will control the responses generated within Snapchat. He said the chatbot will be visible by default, but users can continue using Snap’s own chatbot if they want.

Spiegel also said Snap will not sell ads against Perplexity responses. He explained that the integration is expected to help Perplexity gain additional paying subscribers, which is part of Perplexity’s business model.

Snap and Perplexity described the deal as “a first step in Snap’s effort to make Snapchat a platform where leading AI companies can connect with its global community in creative and trusted ways.”

The agreement also comes while Perplexity faces lawsuits from Amazon and Reddit, accusing it of violating terms of service around data usage. The companies did not comment further on those disputes during the earnings call.

Users will still be able to chat with My AI, but Snap said the new integration will allow users to get “real‑time answers from credible sources and explore new topics within the app.”

Snap reports Q3 results and issues Q4 guidance

Snap reported $1.51 billion in revenue for the third quarter, beating Wall Street’s $1.49 billion expectation. The company posted a loss of 6 cents per share, which Snap said was not directly comparable to analyst estimates.

Global daily active users reached 477 million, compared to expectations of 476 million. The company’s average revenue per user was $3.16, slightly above the $3.13 expected.

Snap also approved a $500 million stock repurchase program. Third‑quarter sales grew 10% year over year, while the company reported a net loss of $104 million, an improvement from a $153 million net loss in the same quarter last year.

Snap reported adjusted EBITDA of $182 million, ahead of the $125 million projection. The company expects fourth‑quarter sales between $1.68 billion and $1.71 billion, with midpoint slightly above Wall Street estimates.

It also expects Q4 adjusted EBITDA between $280 million and $310 million, compared to $255.4 million projected.

Snap shares had been down 32% this year before the earnings release, while the Nasdaq gained 22% in the same period.

While shares jumped as much as 25% after the news, gains faded during the call after Snap’s finance chief Derek Andersen highlighted ongoing challenges in the North America LCS segment, calling it the “primary headwind to our overall revenue growth.”

Derek said Snap is seeing stronger demand from small‑to‑medium businesses in other regions.

Meanwhile, Spiegel also said Snap is forming a separate subsidiary to handle development of its Specs AR glasses to improve work with external partners.

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