Post by : Bianca
Haleem
Snap Inc. reported stronger-than-expected third-quarter results and announced a strategic agreement with AI startup Perplexity to embed its search technology into Snapchat, a move that triggered a 23% rise in Snap shares after market hours.
Perplexity will invest roughly $400 million in Snap over the coming year through a mix of cash and equity. While material revenue from the deal is expected to begin in 2026, the integration aims to strengthen Snap’s position versus competitors such as TikTok and Meta by improving in-app discovery and advertiser appeal.
For the quarter, Snap’s revenue grew 10% to $1.51 billion, topping the $1.49 billion analysts had forecast. The company narrowed its net loss to $104 million from $153 million a year earlier, and daily active users rose 8% to 477 million globally, slightly exceeding estimates.
Snap highlighted enhancements to creator tools, including on-device AI features that let creators generate augmented reality lenses from prompts. Demand for direct-response ad formats supported revenue gains, with optimizations like Pixel Purchase and App Purchase contributing to an 8% rise in that segment.
Looking ahead, Snap cautioned that daily active users could decline in the fourth quarter amid shifting investment priorities and new regulation, including Australia’s Social Media Minimum Age bill taking effect in December. The company forecasted fourth-quarter revenue between $1.68 billion and $1.71 billion, in line with the $1.69 billion analyst consensus.
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