Snap's (SNAP) stock surged after the company beat third quarter revenue expectations, issued a strong fourth quarter forecast, and unveiled a major AI search partnership.
The company reported $1.51 billion in the third quarter revenue, slightly ahead of estimates, with 477 million daily active users and ARPU also topping forecasts. Sales grew 10 percent YoY, while the net loss narrowed to $104 million.
Snap also announced a $400 million deal with Perplexity AI to integrate its conversational search directly into Snapchat starting in early 2026. Perplexity will pay through a mix of cash and equity as the rollout scales globally. The new feature will sit in the chat inbox, providing real-time, source-based answers.
Adjusted EBITDA for third quarter reached $182 million, exceeding expectations, and Snap guided fourth quarter revenue to $1.68-$1.71 billion with adjusted EBITDA of $280-$310 million, ahead of estimates.
Despite the upbeat results, Snap warned that new child-safety regulations, including Australia's minimum-age law and upcoming platform-level age verification from Apple and Google, could hurt user growth, especially in North America. The company's shares remain down on the year, though Wednesday's rally narrowed losses.
Snap said challenges in its large-client ad segment persist, while stronger demand from small-to-mid-sized advertisers is helping offset the slowdown.
SNAP currently trades at $8.03 or 10.07% higher on the NYSE.
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