Snap Inc. shares soared 18% after announcing a $400 million partnership with Perplexity AI Inc. to integrate its AI-powered search engine into Snapchat. The deal expands Snap’s business into AI chatbots and assists, with Perplexity’s engine to be integrated into Snapchat’s Chat interface in 2026.

Snapchat slightly surpassed user growth expectations, reporting 477 million daily active users in the third quarter, an 8% increase from the previous year. The company also reported 943 million monthly active users, nearing its goal of one billion. Snap’s advertising business, which accounts for 90% of revenue, rebounded in the third quarter, with ad revenue reaching $1.32 billion.

Snapchat+ monthly subscription product has helped decrease reliance on advertising, with nearly 17 million paid subscribers. However, Snap warned shareholders of potential user engagement decline due to the removal of underage users to comply with age verification laws. Snap remains committed to reaching one billion global monthly active users, despite potential declines in daily active users in Q4.

Read more at Yahoo Finance: Snap Shares Surge on $400 Million Perplexity AI Deal