Snapchat’s latest partnership signals a bold step into the evolving world of AI-powered chat. With new integrations set to reshape how users interact and discover information inside the app, the move could mark a turning point for Snap’s broader strategy. MEF CEO Dario Betti takes a look at what this development could mean for the platform’s future.
Snap announced a partnership with Perplexity AI on November 5th 2025 that will integrate Perplexity’s conversational “answer engine” directly into Snapchat’s chat interface starting in early 2026. The one-year deal will see Perplexity pay Snap $400 million in a mix of cash and equity to feature prominently inside the app.
Key Takeaways for Snapchat/ Perplexity deal
- Perplexity inside Chat: Perplexity will appear in the popular Chat tab, letting users ask questions and receive concise, conversational answers with citations “from verifiable sources,” all without leaving Snapchat.
- Side-by-side with My AI: This won’t replace Snap’s existing “My AI” assistant. According to Snap’s Help Center, My AI runs on LLMs like OpenAI’s GPT and Google’s Gemini with Snap-specific safety layers. In practice, users may be able to ask both bots the same question and compare answers—Perplexity for research-style responses, My AI for general assistance.
- UX trade-offs: With two AI chatbots—and Sponsored Snaps already appearing in DMs—the chat experience risks feeling crowded. For $400 million, Snap seems willing to navigate that friction.
Perplexity’s integration offers Snapchatters a credible research-oriented assistant with source transparency, while My AI remains for broader conversational use.”
Why Perplexity, and why now
Perplexity’s research-focused positioning makes it a natural fit for Snapchat’s emphasis on “verifiable sources,” as reviews frequently rate Perplexity higher than generic chatbots on factual accuracy and citation quality. Beyond the product alignment, the deal’s $400 million consideration delivers an immediate, high-margin, non-advertising revenue stream, signaling Snap’s push to diversify beyond ads and accelerate its path to improved profitability.
Market reaction and business context
Snap’s announcement of the Perplexity partnership landed alongside a better-than-expected quarter, sending shares up as much as 24% in after-hours trading before settling to a 14% gain. However, the stock remains roughly 20% lower year to date. The results underscored steady user momentum, with monthly active users climbing 7% year over year to 943 million, claimed to be due to Snap’s pull with Gen Z. Financially, revenue rose 10% YoY to $1.5 billion, modestly topping estimates, while net losses narrowed to $104 million from $153 million a year earlier, outperforming forecasts that had anticipated losses above $200 million. Still, the ad mix shows strain: international demand is improving, but North American ads grew just 1% as large brands pulled back, which Snap flagged as its primary headwind. Strategically, the company is carving out its AR glasses business into a subsidiary dubbed “Specs,” echoing Alphabet’s structure for bets like Waymo; Snap has explored outside investment but says it doesn’t need external capital to bring Specs to market in 2026.
The bottom line
Snap is leaning into AI platform partnerships to both improve in-app utility and diversify revenue. Perplexity’s integration offers Snapchatters a credible research-oriented assistant with source transparency, while My AI remains for broader conversational use. The dual-bot approach may clutter the chat experience, but the $400M economics, and the signal that Snap can monetize beyond ads, help offset near-term UX concerns.
Snap is positioning itself for a more resilient, multi-revenue future. However, there are signs of weakness in the USA and the ads business it current revenue pillars. The key watch items: how the two-chatbot UX lands with users, whether Perplexity drives measurable engagement and retention, and if North American brand ad spend stabilizes into 2026.
