Snap says its $400M deal with Perplexity ‘amicably ended’

In a recent quarterly earnings update, Snap announced that its partnership with Perplexity has ended amicably. The collaboration, which was first revealed last November, aimed to incorporate Perplexity's AI search engine into Snapchat, with a financial arrangement involving $400 million in cash and equity over a year. Snap confirmed that the decision to terminate the deal occurred in the first quarter of this year, and it indicated that its revenue projections do not expect any contributions from Perplexity going forward. Initially, Snap had anticipated that the integration would start impacting its financials by 2026, enhancing user interaction within Snapchat's 'Chat' interface by allowing users to pose questions and receive conversational replies. While testing was underway with a select group of users, Snap had previously noted ongoing discussions on the broader rollout. CEO Evan Spiegel expressed optimism about the deal at its announcement, emphasizing Snap's ambition to leverage AI for improved discovery on the platform and signaling a desire to collaborate with innovative partners in the future. In other news, Snap reported a 5% increase in its global daily active users, now totaling 483 million, and a similar growth rate for monthly active users, reaching 965 million. This growth has been attributed to new features like Snap Map and AR Lenses. Spiegel highlighted Snap's return to growth in user engagement, along with accelerated revenue and strong free cash flow, as key achievements in the first quarter. Moreover, Snap revealed plans for strategic investment in its long-term vision for intelligent eyewear, despite announcing layoffs affecting about 1,000 employees, or 16% of its workforce, largely attributed to advancements in AI technology.