Snap has quietly hit the brakes on a major AI partnership. In its latest quarterly earnings report released Wednesday, the company confirmed it no longer has a deal with Perplexity, ending plans that would have brought Perplexity’s AI-powered search directly into Snapchat.
The partnership was originally unveiled last November and came with a hefty price tag: Perplexity was set to pay Snap $400 million in cash and equity over a one-year period. The goal was to embed Perplexity’s conversational AI search experience inside Snapchat’s Chat interface, letting users ask questions and get instant, chat-style answers without leaving the app. While the feature had been tested with a limited group of users, Snap indicated earlier this year that the two companies still hadn’t agreed on how to expand it to a wider audience.
Now, Snap says the relationship ended in the first quarter and emphasized that its forward-looking sales guidance assumes zero contribution from Perplexity. That’s a notable shift from what Snap had previously communicated when the agreement was first announced, when the company said it expected revenue from the partnership to start showing up in its financial results in 2026.
At the time the deal was revealed, Snap CEO Evan Spiegel positioned it as part of a broader push to use artificial intelligence to improve discovery on Snapchat. He also signaled that the company planned to keep working with other innovative partners in the future—language that now feels especially relevant as Snap moves on from this particular arrangement.
Even without the Perplexity integration, Snap’s latest numbers show steady user growth. Snapchat’s global daily active users climbed 5% year over year to 483 million, while monthly active users also rose 5% to 965 million. Snap credited the gains to ongoing feature improvements across the platform, including updates tied to Snap Map and its popular Lenses augmented reality filters—two areas that continue to help Snapchat stand out in the social media and AR landscape.
Spiegel also highlighted improved business performance in the quarter, pointing to renewed growth in daily active users, faster revenue growth, expanding margins, and strong free cash flow. Looking ahead, he reiterated Snap’s focus on investing in Specs and what the company calls its long-term opportunity in intelligent eyewear, suggesting the next phase of Snap’s AI strategy may be more closely tied to hardware and wearable computing than to in-app search partnerships.
The earnings update lands alongside major internal changes at Snap. The company recently said it is laying off about 16% of its global workforce—roughly 1,000 full-time employees—linking the cuts to advancements in AI. The move reflects a growing trend across the tech industry: as AI tools automate more tasks, companies are reshaping teams, reducing costs, and reallocating resources toward new product bets.
For Snapchat users, the immediate takeaway is simple: the planned AI search experience powered by Perplexity is no longer on the roadmap. For Snap, it’s another reminder that high-profile AI partnerships can be difficult to operationalize at scale—even when there’s money on the table—and that the company’s next AI chapter may be built more around its own platform features and future smart eyewear ambitions.
