Snap has announced the amicable termination of its partnership with Perplexity, as revealed in their latest quarterly earnings report. Initially disclosed last November, the collaboration aimed to integrate Perplexity's AI search capabilities directly into the Snapchat platform, with an agreement involving a substantial $400 million in cash and equity over one year.
According to Snap, the decision to end the partnership was made in the first quarter of the year, and the company's sales forecasts no longer include any contributions from Perplexity. When the partnership was first introduced, Snap anticipated that the financial benefits would begin to materialize in 2026.
The intended integration would have allowed users to engage with Perplexity's AI within the "Chat" feature of Snapchat, enabling conversational queries and responses directly in the app. Although the feature was being trialed with select users, Snap indicated in February that a broader rollout had not been mutually agreed upon.
Snap CEO Evan Spiegel had previously expressed excitement about the partnership, emphasizing the company's vision to leverage AI to enhance content discovery on Snapchat. He mentioned the eagerness to collaborate with innovative partners in the future.
Despite the setback with Perplexity, Snap reported a 5% year-over-year increase in daily active users, reaching 483 million, along with a similar growth in monthly active users, which hit 965 million. This growth has been attributed to the introduction of new features, including Snap Map and augmented reality Lenses.
Spiegel stated, "In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow." He also highlighted the company's commitment to disciplined execution as they invest in their long-term vision for intelligent eyewear, with more details expected to be shared at the upcoming AWE event in June.
