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

Snap confirmed on Wednesday that its partnership with Perplexity AI has been terminated, ending a deal valued at $400 million in cash and equity over one year. The agreement, announced in November 2024, would have embedded Perplexity's conversational search engine directly into Snapchat's Chat interface, allowing users to ask questions and receive AI-generated answers. During testing with a select group of users, the companies were unable to agree on a path to broader deployment. Snap stated that the relationship ended 'amicably' in Q1, and that its future sales guidance assumes zero contribution from the deal. CEO Evan Spiegel had previously framed the partnership as part of Snap's vision to use AI for enhanced content discovery.

Separately, Snap reported quarterly user growth: daily active users rose 5% year-over-year to 483 million, while monthly active users reached 965 million (also +5%). The growth was attributed to features like Snap Map and Lenses AR filters. In a broader cost-cutting move, Snap laid off roughly 1,000 employees (16% of its workforce) in April, citing advances in AI as a catalyst. The company remains focused on its smart glasses initiative, Specs, with a major update expected at AWE on June 16. The Perplexity deal's collapse removes a potential $400M revenue stream, but Snap's core ad-supported business continues to grow modestly.