Snap Inc. said it has ended its partnership agreement with Perplexity AI, canceling a previously announced plan to integrate Perplexity’s AI search technology into Snapchat.
The company disclosed the change on Wednesday as part of its quarterly earnings report, stating that the companies “amicably ended the relationship in Q1” and that Snap’s sales guidance no longer includes any expected contribution from Perplexity.
The agreement, first announced in November last year, would have involved integrating Perplexity’s conversational AI search engine into Snapchat’s Chat interface. Users would have been able to ask questions and receive AI-generated responses directly within the messaging feature.
As part of the original arrangement, Perplexity had agreed to pay Snap $400 million in cash and equity over a one-year period.
When the deal was initially announced during Snap’s third-quarter earnings report, the company said it expected partnership-related revenue to begin contributing to financial results in 2026.
Integration Never Reached Full Rollout
Although the AI search integration was tested with a limited number of users, Snap said earlier this year that both companies had not yet agreed on a broader deployment strategy.
In February, Snap stated that the companies had “yet to mutually agree on a path to a broader roll out.”
At the time of the original announcement, Evan Spiegel said the partnership aligned with Snap’s efforts to use artificial intelligence to improve content discovery and user experiences inside Snapchat.
Spiegel also said the company expected to continue working with additional AI-focused partners in the future.
Snapchat User Growth Continues
Alongside the partnership update, Snap reported growth in Snapchat’s user base during the first quarter.
The company said Snapchat’s global daily active users increased 5% year over year to 483 million. Monthly active users also rose 5% to 965 million.
Snap attributed the growth to product additions and engagement across features including Snap Map and the platform’s augmented reality Lenses filters.
“In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow,” Spiegel said in the company’s earnings release.
He added that Snap remains focused on investing in Specs, the company’s smart eyewear initiative, and plans to provide additional updates during the Augmented World Expo event scheduled for June 16.
Company Continues AI-Focused Restructuring
The earnings report follows workforce reductions announced by Snap in April.
The company said at the time that it would cut approximately 16% of its global workforce, affecting about 1,000 full-time employees.
Snap cited advances in artificial intelligence as one of the reasons behind the layoffs.
Featured image credits: Allied One Marketing
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