New Delhi, India, November 6- Snap Inc., the operator of Snapchat, has delivered an impressive financial update. The company reported better-than-expected revenue for the third quarter of 2025. Furthermore, Snap announced a significant, forward-looking partnership with Perplexity AI. This major AI deal immediately propelled Snap’s shares. The stock soared 16% in Wednesday’s after-hours trading session.
The company posted strong financial growth for the quarter. Revenue saw a 10% increase, reaching $1.51 billion. This figure surpassed the average analyst forecast of $1.49 billion. Data compiled by LSEG confirmed the beat. Moreover, Snapchat successfully tightened its net loss. The loss shrank to just $104 million. This marked a substantial improvement from the $153 million loss reported a year earlier. The dual positive news fueled investor enthusiasm.
In a strategic move to boost in-app utility, Snap unveiled its deal with Perplexity AI. The agreement is valued at $400 million. The total compensation includes both cash and equity components. This investment will be disbursed over a one-year period. The core plan is to integrate Perplexity’s powerful, AI-driven search engine into the Snapchat app. Therefore, users will soon be able to receive verified answers to queries without leaving the platform.
Snapchat CEO Evan Spiegel quickly clarified the operational dynamics of the integration. He stated clearly that Perplexity will fully manage the chatbot’s responses. Furthermore, Spiegel confirmed that Snap will not sell advertising space alongside the AI-generated content. “Perplexity will control the responses from their chatbot inside of Snapchat,” Spiegel asserted. “So, we won’t be selling advertising against the Perplexity responses.” This approach emphasizes user experience over immediate monetization.
Market observers view this alliance as a win for both firms. Max Willens, a principal analyst at Emarketer, commented on the deal’s benefits. He noted that Perplexity AI gains exposure. Specifically, it needs a way to build its profile among younger consumers. Meanwhile, Snap gains a crucial AI chat partner. This allows its large user base to stay engaged without navigating away from the app. Thus, the partnership aligns commercial interests perfectly. The financial contribution from the Perplexity AI deal is expected to begin impacting Snap’s revenue stream starting in 2026.
In the near term, Snapchat remains highly focused on its core business. The company is actively strengthening its crucial advertising segment. Snap reported an 8% rise in its direct-response ad revenue. This growth was driven by high demand for effective advertising tools. These popular features include “Pixel Purchase” and “App Purchase.” They help advertisers target users who are most likely to complete purchases.
Snapchat’s daily active users (DAUs) also continued their upward trajectory. Global DAUs grew by 8% year-over-year. This brings the current total user base to 477 million. However, the company offered a note of caution for the fourth quarter. Snap warned that DAU growth might slow down. New regulatory changes may cause this potential reduction. It is also tied to shifting investment priorities. For instance, Australia’s Social Media Minimum Age bill is set for implementation in December. This law could potentially impact user engagement metrics in that vital region.
Regarding future performance, Snap released its revenue guidance for the fourth quarter. The company expects revenue to fall between $1.68 billion and $1.71 billion. Analysts had initially forecast $1.69 billion. Consequently, Snap positioned its guidance just slightly below the midpoint of market expectations. Despite this conservative outlook, the company’s recent strong performance and bold strategic moves have generally boosted investor confidence.
The successful integration of cutting-edge AI technology through Perplexity AI is a clear differentiator. Coupled with the steady growth in targeted advertising revenue, the strategy is evident. Snap is purposefully positioning itself to compete more effectively. It faces steep competition from industry heavyweights like Meta’s platforms and TikTok.
As the digital ecosystem continues to evolve rapidly and consistently, Snap’s efforts to innovate are therefore beginning to show positive results. Moreover, the company’s focus on AI integration, enhancing user engagement, and developing targeted advertising tools plays a crucial role in driving its progress. In addition, this multi-faceted and forward-thinking approach may ultimately help the company secure a stronger and more durable market position. Furthermore, Snap’s latest financial report and its pivotal partnership with Perplexity AI together represent a major milestone in its growth journey. Consequently, these actions clearly demonstrate the company’s ongoing commitment to sustained relevance and long-term profitability. For now, Snap continues to enjoy significant and well-deserved attention from the market. Looking ahead, the long-term success of these initiatives will likely remain a compelling story to monitor closely as the digital landscape continues to transform.
