Snap says its $400M Perplexity deal ended amicably
▼ Summary
– Snap and Perplexity have amicably ended their partnership, which was announced in November and would have integrated Perplexity’s AI search into Snapchat, with Perplexity paying Snap $400 million over one year.
– Snap’s sales guidance assumes no financial contribution from Perplexity, as the deal was expected to start contributing in 2026 but was terminated in Q1.
– The integration was being tested with select users but never rolled out broadly, as the companies had not agreed on a path forward.
– Snapchat’s global daily active users rose 5% year-over-year to 483 million, and monthly active users grew 5% to 965 million, driven by features like Snap Map and AR Lenses.
– Snap laid off roughly 16% of its global workforce (about 1,000 employees) in April, citing advancements in AI as the reason for the cuts.
Snap has confirmed that its partnership with Perplexity has ended, disclosing the development during its latest quarterly earnings call on Wednesday. The agreement, originally unveiled in November, was designed to embed Perplexity’s AI search engine directly into Snapchat’s interface. Under the terms, Perplexity was expected to pay Snap $400 million over one year, split between cash and equity.
Snap described the split as an “amicably ended” relationship that concluded in the first quarter. The company’s sales guidance now “assumes no contribution from Perplexity,” according to its earnings statement. When Snap first announced the deal during its third-quarter earnings in 2024, executives projected that revenue from the partnership would start appearing in financial results by 2026.
The integration would have placed Perplexity within Snapchat’s “Chat” feature, enabling users to ask questions and receive conversational responses directly in the app. While a limited test was underway with some users, Snap acknowledged in February that the two companies had “yet to mutually agree on a path to a broader roll out.”
At the initial announcement, Snap CEO Evan Spiegel framed the deal as part of the company’s broader ambition to leverage AI for enhanced discovery on Snapchat. He expressed enthusiasm for “collaborating with more innovative partners in the future.”
Perplexity did not respond to a request for comment from TechCrunch.
In the same earnings report, Snap revealed that Snapchat’s global daily active users increased 5% year-over-year, reaching 483 million. Monthly active users also grew 5%, hitting 965 million. Snap attributed this user growth to new features, including updates to Snap Map and its Lenses AR filters.
“In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow,” Spiegel said in a prepared statement. “We remain focused on disciplined execution as we invest in Specs and our long-term opportunity in intelligent eyewear and look forward to sharing more at AWE on June 16th.”
Earlier this year, in April, Snap announced it would cut roughly 16% of its global workforce, affecting about 1,000 full-time employees. The company cited advancements in AI as a key reason for the layoffs.
(Source: TechCrunch)
