Snap shares surge after $400 million AI partnership with Perplexity
Snap Inc. shares jumped 15% in premarket trading on Thursday after the company reported better-than-expected third-quarter revenue and announced a major partnership with AI startup Perplexity.
The stock had already surged 16% in after-hours trading on Wednesday following the news, News.Az reports, citing Reuters.
As part of the deal, Perplexity will pay Snap $400 million over one year in a combination of cash and equity. The collaboration aims to integrate Perplexity’s artificial intelligence-powered search engine into Snapchat, providing users with verifiable answers to their questions directly within the app.
Snapchat's parent has also been leaning on direct-response ads, designed to prompt specific actions such as app downloads or website visits, to bolster digital advertising.
Direct response ad revenue surged 8% during the quarter, driven by strong demand for "Pixel Purchase" and "App Purchase" ad optimizations that enable businesses to target users most likely to complete a purchase on their website or within their app.
Snap's third-quarter revenue rose 10% to $1.51 billion, 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.
Daily active users (DAUs) of Snapchat increased 8% to 477 million globally.
But Snap 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.
Australia's Social Media Minimum Age bill, set to take effect in December, is among the regulations that Snap expects would impact user engagement.
The company forecast fourth-quarter revenue between $1.68 billion and $1.71 billion, while analysts expect $1.69 billion.
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