New Delhi, India, November 6- Snap Inc., the parent company behind the popular Snapchat application, recently reported impressive financial results. The company posted stronger-than-expected revenue for the third quarter of 2025. Crucially, Snap also announced a transformative partnership with Perplexity AI. The news of the AI deal and earnings success sent Snap’s shares soaring 16% in after-hours trading on Wednesday.
The social media giant recorded a solid 10% increase in revenue. This brought the quarterly total to $1.51 billion. This figure comfortably surpassed the analysts’ average estimate of $1.49 billion. LSEG data confirmed the positive forecast beat. Furthermore, Snap effectively narrowed its net loss to only $104 million. This represented a significant improvement from the $153 million net loss during the same period last year. The financial turnaround clearly buoyed investor sentiment.
Snap is moving strategically to redefine user interaction within its app. The company revealed a massive $400 million deal with Perplexity AI. The agreement is structured to include both cash and equity components. Importantly, the financial commitment will be spread over one year. The collaboration will seamlessly integrate Perplexity’s AI-powered search engine into the Snapchat application. Consequently, users will gain the ability to get verified answers to their questions directly inside the app.
Snapchat CEO Evan Spiegel provided immediate clarity on the technical arrangement. He explained that Perplexity will strictly manage the chatbot’s responses. Furthermore, Spiegel confirmed Snap will not sell ads alongside the AI-generated content. “Perplexity will control the responses from their chatbot inside of Snapchat,” Spiegel said directly. “So, we won’t be selling advertising against the Perplexity responses.” This statement addresses potential concerns about advertising ethics and user experience.
Industry experts view this partnership as highly strategic for both firms. Max Willens, a principal analyst at Emarketer, analyzed the move. “Perplexity needs a way to build its profile among young consumers,” Willens noted. He added that Snap needs an AI chat partner. This partner must allow its users to remain deeply engaged without having to leave the app. Thus, the deal serves mutual commercial and strategic needs. The new Perplexity AI deal is expected to start boosting Snap’s revenue in 2026.
Meanwhile, Snapchat continues to put significant effort into strengthening its core advertising business. The company specifically reported an 8% rise in its direct-response ad revenue. Strong demand for key features drove this growth. These popular features include “Pixel Purchase” and “App Purchase.” They help advertisers target users who are more likely to finalize purchases. This focus on conversion is a key strategy against rivals.
Snapchat’s daily active users (DAUs) also showed healthy growth. The user base expanded 8% year-over-year. This growth brought the global DAU count to an impressive 477 million. However, the company issued a cautionary note for the upcoming quarter. Snap warned that DAU growth might see a slowdown in the fourth quarter. This potential deceleration stems from two factors: shifting investment priorities and new regulatory changes. For example, one upcoming rule is Australia’s Social Media Minimum Age bill. This regulation is set to take effect in December. It could specifically impact user engagement metrics in that region.
Looking ahead, Snap provided its revenue guidance for the fourth quarter. The company expects revenue to fall between $1.68 billion and $1.71 billion. Analysts had previously forecast $1.69 billion. Therefore, Snap’s guidance came in slightly below the middle point of expectations. Despite this cautious outlook, the company’s recent operational performance and major strategic moves have strongly boosted investor confidence.
The successful integration of cutting-edge AI technology via Perplexity AI is a major factor. Combined with the continued growth in targeted advertising revenue, this suggests a clear direction. Snap is actively positioning itself to better compete with larger, more dominant rivals. These competitors include TikTok and Meta’s popular platforms, Facebook and Instagram.
As the entire digital landscape undergoes rapid and continuous evolution, Snap’s commitment to innovation appears to be rewarding shareholders. The company’s three-pronged strategy focuses on AI integration, user engagement, and advanced targeted advertising. This strategic focus may help Snap successfully carve out a much stronger position. It can maintain relevance in the highly competitive world of social media. Snap’s latest financial results and its bold new partnership with Perplexity AI mark a defining moment.
They represent a significant step in the company’s continuous journey. The goal is to remain both profitable and relevant in an increasingly saturated market. For the time being, Snap is certainly enjoying a well-earned moment in the corporate spotlight. The long-term impact of these strategic shifts remains an important development to watch.
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