Snap Inc. (NYSE: SNAP) closed Wednesday at $7.31 before releasing third‑quarter results after the bell; shares spiked more than 20% in extended trading following a revenue beat and a new AI partnership. The after‑hours pop came minutes after the earnings release hit at 4:10 p.m. ET.
Key takeaways today
- Revenue beat: Q3 revenue rose 10% year over year to $1.507 billion, topping consensus. DAUs reached 477 million (+8% y/y) and MAUs 943 million (+7% y/y). Free cash flow was $93 million.
- New AI partnership: Snap unveiled a $400 million agreement with Perplexity to bring conversational AI search into Snapchat in early 2026 (cash and equity; revenue contribution expected to start in 2026).
- Market reaction: SNAP surged ~21% after hours, with prints around $8.96 shortly after the release.
- Early read on outlook: Snap guided Q4 revenue to $1.68–$1.71 billion and cautioned that overall DAUs may dip in Q4 amid age‑verification and other regulatory changes, according to Reuters.
What happened
Snap’s third‑quarter print showed a return to double‑digit growth and steady user expansion:
- Revenue:$1.507B (+10% y/y).
- Users:477M DAUs (+8% y/y); 943M MAUs (+7% y/y).
- Profitability:Diluted net loss per share of $(0.06), narrower than a year ago.
- Cash:Operating cash flow $146M; free cash flow $93M.
These headline metrics came directly from the company’s news release.
On the monetization side, Snap highlighted improving direct‑response advertising and new formats like Sponsored Snaps, themes also reflected in same‑day wire coverage. Reuters noted direct‑response ad revenue grew 8% in Q3 as Snap leaned into purchase‑optimized campaigns.
The AI catalyst: Perplexity inside Snapchat
The other major driver today: Perplexity’s AI answer engine is coming to the Snapchat chat interface. Under the deal, Perplexity pays $400M over one year (cash + equity), with global rollout targeted for early 2026 and financial contribution starting in 2026. Management framed it as the first large‑scale integration of an external AI partner directly into the app—positioning Snap to expand AI‑powered discovery for nearly a billion monthly users.
Guidance and near‑term watch‑items
While Snap said it would detail outlook on today’s call and in the investor letter, Reuters reported a Q4 revenue range of $1.68–$1.71B (in line with expectations) and flagged possible DAU pressure tied to age‑verification rules and evolving regulations (e.g., minimum‑age bills). That regulatory context is one reason executives are emphasizing quality of engagement alongside scale.
How the market is reacting
Before the release, SNAP finished regular trading at $7.31. Within minutes of the print, shares jumped more than 20% after hours, trading near $8.96 by about 4:16 p.m. ET, as investors digested the revenue beat and AI announcement. Options desks earlier in the day were implying a double‑digit move into earnings, and the initial reaction overshot those expectations.
Why this matters for SNAP
- Execution vs. competition: A clean revenue beat and healthier direct‑response trends suggest Snap’s ad stack improvements and purchase optimization are gaining traction, an important counter to ad‑platform headwinds seen earlier this year.
- Diversification beyond ads:Other Revenue (largely Snapchat+) rose strongly y/y in Q3, and the Perplexity deal indicates Snap is building new, potentially stickier use cases inside chat—an area where it has a structural advantage with younger users.
- Regulatory overhang: Age‑verification and safety rules could temporarily trim headline user counts—even if monetization quality improves. Investors will watch how Snap balances compliance with engagement.
By the numbers (Q3 2025)
- Revenue:$1.507B (+10% y/y)
- DAUs:477M (+8% y/y)
- MAUs:943M (+7% y/y)
- Diluted EPS:$(0.06) (vs. $(0.09)$ y/y)
- Free Cash Flow:$93M
- Q4 guide:$1.68B–$1.71B (company commentary per Reuters)
- Perplexity deal:$400M, rollout early 2026
What to watch next (today)
- Earnings call:5:00 p.m. ET via Snap’s IR site; the investor letter and any Q4 details will post there as well. Expect color on the Perplexity integration timeline, ad‑stack performance, and regulatory impacts.
This article focuses on news from Wednesday, November 5, 2025: Snap’s Q3 2025 results and the Perplexity partnership, plus immediate market reaction and preliminary outlook commentary reported the same day.
Disclosure: This coverage is for information purposes only and is not investment advice.
