Post by : Badri Ariffin

Snap Inc. reported quarterly results that outpaced analyst expectations and revealed a strategic partnership with AI developer Perplexity, which will embed an AI-powered search experience inside Snapchat to surface verifiable answers for users — a move that propelled Snap stock up roughly 23% after hours.

Under the agreement, Perplexity will provide Snap with $400 million over the coming year in a combination of cash and equity. While material revenue from the arrangement is not expected until 2026, the tie-up is intended to sharpen Snap's competitive stance against rivals such as TikTok and Meta's platforms and to make the app more attractive to advertisers.

Financially, Snap reported third-quarter revenue of $1.51 billion, a 10% increase that slightly exceeded the consensus estimate of $1.49 billion. Losses narrowed to $104 million from $153 million a year earlier, and daily active users rose 8% to 477 million globally, modestly topping forecasted levels and indicating steady audience growth.

The company also highlighted AI-driven creator tools, including on-device features that let creators generate augmented reality lenses from prompts. Revenue from direct-response formats — notably "Pixel Purchase" and "App Purchase" optimizations — grew about 8%, underscoring advertiser demand for precise targeting capabilities.

Looking forward, Snap warned that daily user counts could soften in the fourth quarter amid shifting investment priorities and regulatory changes, including Australia’s Social Media Minimum Age bill taking effect in December. Management expects fourth-quarter revenue in the $1.68 billion to $1.71 billion range, roughly aligned with analysts' $1.69 billion estimate.

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