Shares of Snap Inc. (NYSE:SNAP) were up more than 24% in post-market hour action on Wednesday after the Snapchat owner reported third-quarter results and forecast that were above expectations and struck a partnership with AI search engine company Perplexity.
Daily active users in Q3 were 477M, up 7.7% year-over-year and ahead of the consensus estimate of 476.31M. Average revenue per user was $3.16 in the quarter, above the estimate of $3.14.
Free cash flow surged 30% to $93.4M during the quarter, exceeding expectations of $66.8M. Adjusted EBITDA jumped 38% to $182M vs. the $124.2M estimate.
Net loss for the three months ended September 30 narrowed to $103.5M, compared to a loss of $153.2M for the same period last year.
On a per-share basis, the Santa Monica, California-based firm lost 6 cents, while the average expectation was a loss of 12 cents per share.
Revenue rose nearly 10% to $1.51B and was above the $1.49B estimate.
For the fourth quarter, the company said it sees revenue between $1.68B and $1.71B (midpoint $1.695B; est. $1.69B) and adjusted EBITDA of $280M to $310M (est. $254.6M).
In a separate press release, the company said it will integrate Perplexity’s AI-powered answer engine directly into Snapchat under its new partnership.
Starting in early 2026, Perplexity will appear in the chat interface for Snapchat users around the world, the companies said.
Perplexity will pay Snap $400M over one year, through a combination of cash and equity, as the company rolls the service out globally. Snap expects revenue from the partnership to begin contributing in 2026.