Shares in Snap Inc. jumped more than 20% in late trading today after the company announced a new deal with Perplexity AI Inc. and impressed investors with earnings and revenue beats in its fiscal third quarter.

The new partnership with Perplexity will see Perplexity’s artificial intelligence-powered “answer engine” directly integrated into Snapchat, giving Snapchat’s community of nearly 1 billion monthly active users a new way to ask questions. Perplexity will appear in the chat interface of Snapchat and will allow users to ask questions and get clear, conversational answers drawn from verifiable sources.

The Perplexity integration was noted as a first step in Snap’s effort to make Snapchat a platform where leading AI companies can connect with its global community in creative and trusted ways. Snapchat users will still be able to chat with the existing My AI chatbot, with Perplexity joining as an answer engine that helps them find real-time answers from credible sources and explore new topics within the app.

“Our goal is to make AI more personal, social and fun – woven into the fabric of your friendships, Snaps and conversations,” said Chief Executive Evan Spiegel.”This partnership reflects our shared vision for the power of AI to enhance discovery and connection on Snapchat, and we look forward to collaborating with more innovative partners in the future.”

According to Bloomberg, the deal, worth $400 million to Snap, will see Perplexity pay Snap a combination of cash and equity that will be reflected in the company’s revenue beginning in 2026.

On the financial side, for the quarter that ended on Sept. 30, Snap reported an adjusted earnings per share loss of six cents, up from a loss of nine cents per share in the same quarter of 2024, on revenue of $1.506 billion, up 10% year-over-year. Both figures were ahead of a 12-cents-per-share loss and revenue of $1.49 billion expected by analysts.

The better-than-expected results were driven by user growth, with Snapchat reaching 943 million global monthly users in the quarter, up 60 million, or 7% year-over-year. Daily active users were up 8%, to 477 million.

More users equals more advertising revenue and Snap saw direct response advertising revenue grow 8% and purchase-related advertising grow 30%.

The quarter saw Snap launch the Imagine Lens, an Open Prompt Image Generation Lens where Snapchat users can create, edit and recreate Snaps simply by entering their own prompts. The company also launched the complementary Lens Studio AI Assistant, an assistant that helps developers to describe a Lens concept and have AI generate, code and refine it automatically.

For its fiscal fourth quarter, Snap expects revenue of $169 million to $1.71 billion.

Image: SiliconANGLE/Ideogram