Snap strikes $400 million deal with Perplexity to bring AI search to Snapchat

Snap Inc., the parent company of Snapchat, has announced a $400 million deal with Perplexity AI to integrate conversational search capabilities into its platform, following a strong set of third-quarter earnings that surpassed Wall Street expectations.

The agreement, valued at $400 million in a mix of cash and stock, will see Perplexity’s AI search technology embedded within Snapchat starting early next year. Snap stated that the partnership marks the beginning of its broader plan to position Snapchat as a platform where leading AI firms can engage with its global audience through innovative and trusted experiences.

Snap revealed that its monthly active users have now reached 943 million, reflecting a 7 percent year-on-year increase as it edges closer to the one billion user milestone. Revenue rose by 10 percent to $1.51 billion, while Adjusted EBITDA came in at $182 million and free cash flow totalled $93 million. The company also narrowed its net loss to $104 million, showing a notable improvement compared with the same quarter last year.

Chief Executive Evan Spiegel stated that Snap’s emphasis on performance, creativity, and simplicity was enabling advertisers to achieve stronger results while offering users richer ways to communicate. He explained that he was proud of the company’s progress and expressed confidence that its continued discipline and focus on innovation would drive sustainable, long-term growth.

The integration with Perplexity AI adds another layer to Snap’s growing use of artificial intelligence, following earlier rollouts of AI-powered lenses, chatbots, and creative tools across its ecosystem. The partnership is expected to enhance both user engagement and advertiser opportunities as Snap continues to expand its technological capabilities.