Snap stock price jumped more than 25% in extended trading on Wednesday after the company announced a $400 million partnership with Perplexity AI Inc, along with a third-quarter revenue beat.
Perplexity will pay Snap $400 million over one year in cash and equity. Revenue from the partnership is expected to start contributing to results next year. Perplexity’s answer-engine will be integrated into Snapchat’s Chat interface beginning in 2026.
Snap said that its existing My AI chatbot will also be available to users.
Snap Q3 Earnings
Snap’s revenue rose 10% to $1.51 billion the third quarter ending September 30, beating analysts’ average estimate of $1.49 billion, according to data compiled by LSEG. Its net loss narrowed to $104 million from $153 million a year ago, Reuters reported.
Snap’s advertising business, which drives about 90% of its revenue, reported a revenue of $1.32 billion in Q3, up 5% from a year ago. Direct response ad revenue surged 8% during the quarter, driven by strong demand for “Pixel Purchase” and “App Purchase” ad optimizations.
Snapchat’s paid subscribers rose to nearly 17 million from almost 16 million in the prior quarter. These subscriptions form the main driver of Snap’s “other revenue” category, which jumped 54% year-over-year (YoY) to $190 million in Q3.
Daily active users (DAUs) of Snapchat increased 8% to 477 million globally. But the company warned that overall DAUs may decline in the fourth quarter due to changing investment priorities and anticipated impact from age verification and evolving regulatory landscapes.
The company forecast Q4 revenue between $1.68 billion and $1.71 billion, while analysts expect $1.69 billion.
Snap stock price ended 2.28% lower at $7.30 apiece during the normal trading hours on NYSE.
(With inputs from Agencies)
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