Snap Inc. (NYSE:SNAP) shares surged more than 18% in premarket trading Thursday after the social media company delivered stronger-than-expected third-quarter results and announced a major partnership with Perplexity AI to bring the startup’s conversational search technology to Snapchat.
For the quarter ended September 30, Snap reported a loss of $0.06 per diluted share on revenue of $1.51 billion, surpassing Wall Street’s forecast for a $0.12 loss on $1.49 billion in revenue.
The upbeat results come as Snap accelerates its push into artificial intelligence, aiming to attract advertisers who have increasingly turned to platforms such as Meta’s Facebook and Instagram or ByteDance’s TikTok.
“We took an important step toward building out our AI platform by partnering with Perplexity AI to integrate its conversational search directly into Snapchat,” the company said Wednesday.
Under the agreement, Perplexity will pay Snap $400 million in a mix of cash and equity over one year. The collaboration will allow Snapchat users to ask questions and receive AI-generated answers directly within the app. Revenue from the deal is expected to begin contributing in 2026.
Daily active users climbed 8% year-over-year to 477 million globally. However, Snap cautioned that user numbers could decline in the fourth quarter due to regulatory adjustments and enhanced age verification requirements.
For the fourth quarter, Snap projected revenue between $1.68 billion and $1.71 billion, compared with analysts’ estimates of $1.69 billion. Core income is expected to reach $295 million, well above Wall Street’s forecast of $255 million, according to analysts at Vital Knowledge.