Snap shares climbed 15% on Wednesday after the company issued its third-quarter earnings, reporting revenue that beat analysts expectations and a $500 million stock repurchase program.

Here is how the company did compared with Wall Street’s expectations:

• Earnings per share: Loss of 6 cents. That figure is not comparable to analysts’ estimates.
• Revenue: $1.51 billion vs. $1.49 billion expected, according to LSEG 
• Global daily active users: 477 million vs. 476 million expected, according to StreetAccount
• Global average revenue per user (ARPU): $3.16 vs. $3.13 expected, according to StreetAccount

Snap also announced that it is partnering with the startup Perplexity AI, which “will integrate its conversational search directly into Snapchat.” The feature is set to appear in Snapchat starting in early 2026, Snap said.

“Perplexity will pay Snap $400 million over one year, through a combination of cash and equity, as we achieve global rollout,” Snap said in the letter. “Revenue from the partnership is expected to begin contributing in 2026.”

The partnership represents “a first step in Snap’s effort to make Snapchat a platform where leading AI companies can connect with its global community in creative and trusted ways,” the two companies said in their announcement.

In the company’s earnings call, Snap CEO Evan Spiegel said Perplexity will have “default placement in our chat inbox” and the startup will “control the responses from their chatbot inside of Snapchat.”

Although Snap will not be selling “advertising against the Perplexity responses,” Spiegel said that the integration “will help Perplexity drive additional subscribers, which I think is something that will be valuable to their business.”

“We have a really unique opportunity ahead to help distribute AI agents through our chat interface,” Spiegel said.

While Snapchat users will still be able to engage with the company’s My AI chatbot, the integrated Perplexity AI service will provide them with “real-time answers from credible sources and explore new topics within the app,” the companies said.

Regarding Snap’s expensive foray into developing augmented reality glasses, Spiegel said the company plans to create a separate subsidiary around the Specs AR glasses to speed up development with partners.

Snap said fourth-quarter sales will come in between $1.68 billion and $1.71 billion. That figure’s midpoint of $1.695 billion is slightly ahead of Wall Street expectations of $1.69 billion.

For the third quarter, Snap said sales grew 10% year over year while it logged a net loss of $104 million. During the same quarter last year, Snap recorded a net loss of $153 million.

The Snapchat parent said that third-quarter adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, came in at $182 million, ahead of the $125 million that StreetAccount was projecting.

The company also said that its adjusted EBITDA for the fourth quarter will be between $280 million and $310 million, which tops StreetAccount’s projections of $255.4 million.

Snap shares were down 32% for the year, as of Wednesday’s close, compared to the Nasdaq’s 22% gain.

Although the company’s shares soared as high as 25% in after-hours trading on Wednesday, they began their descent after Snap finance chief Derek Andersen detailed some of the company’s sales-related challenges on the earnings call.

“The North America LCS segment remains the primary headwind to our overall revenue growth,” said Andersen, adding that the company is seeing more growth and demand for Snap’s ad products from small-to-medium sized businesses in other regions.

In a letter to investors, Snap said that government regulations like Australia’s social media minimum age bill and related policy developments “are likely to have negative impacts on user engagement metrics that we cannot currently predict.”

“While we remain committed to our goal of serving 1 billion global monthly active users, we expect overall DAU may decline in Q4 given these internal and external factors, and as noted above we expect particularly negative impacts in certain jurisdictions,” Snap said in the letter.

The Australian senate passed the bill in November 2024, and when the law comes into effect next month, companies like Facebook and Instagram parent Meta, TikTok and Snap will be penalized if they fail to adequately prevent children under 16 from possessing accounts on their respective platforms.

Snap also said in the investor letter that the “upcoming rollout of platform-level age verification” from companies like Apple and Google could also negatively impact user metrics in the future.  

Utah and California have signed online-child safety bills that put the onus on app store makers to verify user ages. Utah’s law is set to fully take effect in May 2026.

“We are also preparing for the upcoming rollout of platform-level age verification, which will use new signals provided by Apple — and soon Google — to help us better determine the age of our users and remove those we learn are under 13,” Snap said in the letter.

Snap’s warning to investors underscores how new laws, policies and regulations around the globe are beginning to impact tech firms.

In the letter, Snap also said that some of its efforts to improve monetization, such as its Snapchat+ subscription service, could result in “adverse impact on engagement metrics as these experiences are rolled out globally.”

Pinterest shares tanked on Tuesday after the company reported third-quarter results that missed on earnings per share and provided weaker-than-expected guidance. The company’s finance chief Julia Donnelly told analysts that Pinterest expects “broader trends and market uncertainty continuing with the addition of a new tariff in Q4 impacting the home furnishing category.”

Big tech companies like Meta, Alphabet and Amazon reported their latest quarterly earnings last week in which they posted solid digital advertising sales and hefty spending on AI-related computing infrastructure.

The Facebook-parent saw third-quarter sales boom 26% year-over-year to $51.24 billion, while revenue in Amazon’s online ad unit soared 24% year-over-year to $17.7 billion.

Alphabet said that its total advertising revenue for the third quarter rose 13% year-over-year to $74.18 billion, while YouTube’s online ad sales climbed 15% to $10.26 billion.

Reddit said last Thursday that third-quarter sales surged 68% year-over-year to $585 million. The company’s global daily active uniques increased 19% year-over-year to 116 million, surpassing estimates of 114 million. 

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