Snap confirms its proposed $400M Perplexity deal ended mutually

Snap confirmed on Wednesday that its previously announced partnership with AI search startup Perplexity has officially ended. The update was disclosed as part of Snap’s latest quarterly earnings report. The deal, first announced in November last year, would have integrated Perplexity’s AI-powered search technology directly into Snapchat. Under the agreement, Perplexity had planned to pay Snap $400 million in cash and equity over the course of one year.

In its earnings filing, Snap stated that the company “amicably ended the relationship in Q1” and noted that its future sales guidance now “assumes no contribution from Perplexity.” When the agreement was originally revealed during Snap’s third-quarter earnings report last year, the company said it expected revenue generated from the partnership to begin contributing to financial results sometime in 2026.

The proposed integration would have allowed Snapchat users to access Perplexity’s conversational AI search capabilities directly inside Snapchat’s “Chat” interface. Users would have been able to ask questions and receive AI-generated answers without leaving the app. Although the feature had reportedly entered limited testing with select users, Snap said earlier this year that the two companies had “yet to agree on a path to a broader rollout mutually.”

At the time of the initial announcement, Snap CEO Evan Spiegel described the partnership as part of Snap’s broader effort to use artificial intelligence to improve content discovery and user experiences across Snapchat. Spiegel also said the company hoped to continue working with innovative AI partners in the future. Alongside the update on Perplexity, Snap also shared new user growth figures in its earnings report.

The company said Snapchat’s global daily active users increased by 5% year-over-year to 483 million. Monthly active users also grew by 5%, reaching 965 million worldwide. Snap attributed much of that growth to ongoing product updates and feature expansion across the platform, including improvements to Snap Map and the company’s augmented reality Lens 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 statement included with the earnings release. He added that the company remains focused on long-term investments in augmented reality hardware and intelligent wearable technology, including Snap’s upcoming “Specs” smart glasses initiative. Spiegel said the company plans to share additional details during the AWE conference scheduled for June 16.

The earnings update also follows Snap’s recent workforce reductions. In April, the company announced plans to cut approximately 16% of its global workforce, affecting around 1,000 full-time employees. Snap said advances in artificial intelligence and efficiency improvements contributed to the restructuring decision.