New Delhi: Snapchat-parent Snap Inc. recently they have reported a revenue of $1.51 billion, up 10% year over year, beating the analysts’ average estimate of $1.49 billion. However, along with this, the company has also announced that they are going to partner with the most popular and well-known AI startup, Perplexity AI, to integrate its AI-powered search engine into the Snapchat application. This latest news pushed Snap’s shares up by 16% in after-hours trading.
By this partnership, Perplexity AI will be paying Snap $400 million over one year in a mix of cash and equity, with the revenue contribution expected to begin in 2026. According to the company, the collaboration will allow the Snapchat users to get verifiable answers to the question within the application itself. Perplexity will control the responses from their chatbot inside of Snapchat. So, Snapchat won’t be selling advertising against the Perplexity resources, as said by Snap CEO Evan Spiegel. Some sources have also suggested that this partnership could help both companies expand their reach.
Perplexity needs a way to build its profile among young consumers, and Snap needs an AI chat partner that will enable its users to stay engaged without leaving its application. The partnership is expected to help Snap compete more effectively with the larger social media rivals, such as TikTok and Meta-owned Facebook and Instagram, which continue to dominate the digital advertising space. The company’s net loss narrowed to $104 million from $153 million in the same period last year.
Snapchat has also stated that its daily active users rose 8% to 477 million globally. However, the company cautioned that the user growth may slow in the fourth quarter due to shifting investment priorities, new age verification measures, and regulatory changes, including Australia’s upcoming Social Media Minimum Age bill set to take effect in December. Snapchat has also highlighted an 8% increase in direct-response ad revenue, driven by strong demand for tools like the Pixel Purchase and App Purchase, which are going to help advertisers reach users more likely to complete purchases online or in the application itself.
