Snap Ends $400M Perplexity Deal as Q1 Earnings Released

Snap Inc. has officially pulled the plug on its high-profile partnership with AI search platform Perplexity. The $400 million agreement, which was originally intended to weave conversational AI search capabilities directly into the Snapchat interface, was dissolved during the first quarter of 2026.

The company disclosed the development in its latest quarterly earnings report, noting that the relationship was concluded “amicably.” According to the update, Snap’s current sales projections now exclude any anticipated financial contributions from the Perplexity integration.

A Short-Lived Integration

First announced in November, the deal was structured as a combination of cash and equity payments totaling $400 million over a one-year period. The vision was to allow Snapchat users to pose questions and receive AI-generated answers directly within the “Chat” feature.

While the feature underwent limited testing, it never reached a full-scale deployment. By February, Snap had already signaled friction, stating that both companies had yet to reach a mutual agreement on how to proceed with a broader rollout. Perplexity has not yet provided comment on the termination of the agreement.

Growth Metrics and Strategic Shift

Despite the end of the Perplexity partnership, Snap reported growth across its core user base. The platform’s global daily active users (DAU) climbed 5% year-over-year to 483 million, while monthly active users (MAU) also saw a 5% increase, reaching 965 million. Snap credited this momentum to updates in features like Snap Map and AR Lenses.

CEO Evan Spiegel highlighted the company’s performance in a recent statement:

• Return to growth in daily active users during Q1.
• Accelerated revenue growth and expanded margins.
• Strong generation of free cash flow.

Looking ahead, Spiegel emphasized that the company is prioritizing “disciplined execution” and ongoing investments in its intelligent eyewear and Specs hardware. The company plans to share further details at the AWE event on June 16th.

The update on the Perplexity deal follows a period of internal restructuring for Snap. In April, the company announced a workforce reduction affecting approximately 1,000 full-time employees—roughly 16% of its global staff—citing the rapid advancements in AI as a primary driver for the layoffs.