Snap terminates $400 million Perplexity partnership amid Q1 user growth
The deal, originally announced in November 2025, was to integrate Perplexity's search engine into Snapchat's Chat interface. Snap has adjusted its sales guidance to exclude the revenue stream while reporting a 5% rise in global daily active users.
Snap Inc has confirmed that its strategic partnership with Perplexity has been terminated amicably during the first quarter. The agreement, which was originally announced in November 2025, was valued at $400 million in cash and equity. The collaboration was designed to integrate Perplexity's AI search engine directly into Snapchat's Chat interface, a feature that was tested with select users but never broadly rolled out to the wider public.
Following the decision to end the relationship, Snap has adjusted its sales guidance to assume no revenue contribution from Perplexity. The company noted in its quarterly earnings report that the termination occurred after the firms failed to mutually agree on a path to a broader rollout of the integration. Perplexity did not immediately respond to requests for comment regarding the termination of the deal.
Despite the setback regarding the AI partnership, Snap reported a 5% year-over-year increase in global daily active users, reaching 483 million. Monthly active users also grew by 5% to hit 965 million during the period. CEO Evan Spiegel stated in a press release that the company returned to growth in daily active users and accelerated revenue growth in the first quarter, even as the deal concluded.
The social media firm attributed this positive user engagement to new features across the app, specifically highlighting Snap Map and AR Lenses filters. Spiegel noted that the company expanded margins and generated strong free cash flow while maintaining disciplined execution. He emphasised that the firm remains focused on its long-term opportunity in intelligent eyewear, known as Specs.
This development follows cost-cutting measures announced in April, where Snap laid off approximately 1,000 full-time employees, representing roughly 16% of its global workforce. The reductions were cited as being driven by advancements in AI. Snap is scheduled to present further details regarding its long-term strategy at the AWE conference on June 16.
