Snap reported first-quarter 2026 revenue of $1.53 billion, up 12% year over year, and disclosed that its $400 million partnership with Perplexity ended during the quarter before generating any revenue. The company posted a net loss of $89 million, narrowed 36% from $139.6 million a year earlier, and grew global daily active users to 483 million, ahead of the 475.6 million StreetAccount consensus. Shares fell about 4% in extended trading, giving back part of the 15% rally that followed the original Perplexity announcement in November 2025.
The Perplexity deal, unveiled alongside Snap's Q3 2025 earnings, was the company's most prominent generative AI revenue tie-up. Snap had told investors at the time that contributions would begin in 2026. In Wednesday's investor letter, the company said its Q2 sales guidance "assumes no contribution from Perplexity as we amicably ended the relationship in Q1."
Neither side has detailed why the arrangement collapsed. What is clear is that Snap is now guiding Q2 revenue to a range of $1.52 billion to $1.55 billion, with a midpoint roughly in line with the $1.54 billion analyst estimate, and doing so without the Perplexity uplift it had been pricing into 2026.
Key facts
- 01Snap reported Q1 2026 revenue of $1.53 billion, up 12% year over year, with a net loss of $89 million.
- 02The company ended its $400 million Perplexity partnership in Q1, before any revenue from the deal had landed.
- 03Global daily active users hit 483 million, beating the 475.6 million StreetAccount estimate and up 5% year over year.
- 04Snap shares fell about 4% in extended trading; the stock had jumped 15% when the Perplexity deal was first announced in November 2025.
- 05Q2 sales guidance of $1.52B–$1.55B assumes no Perplexity contribution and stable Middle East ad conditions.
User growth told a more encouraging story. The 5% year-over-year DAU gain reverses a rough stretch: Snap disclosed in February that global DAU had fallen by 3 million quarter over quarter, which it attributed to lower marketing spend and the impact of Australia's social media minimum age act. Chief executive Evan Spiegel said in a statement that the company "returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow." Snap credited updates to its Lenses filters and Snap Map feature for the rebound.
“Snap's Q2 sales guidance of $1.52B to $1.55B assumes zero contribution from Perplexity, unwinding a $400M deal that had sent the stock up 15% when it was announced in November.”— Jaeden Schafer
Average revenue per user came in at $3.17, just under the $3.20 StreetAccount estimate. The miss is small but consistent with the broader message in Snap's letter, which acknowledged that "large advertisers in North America remained a headwind to advertising growth" in Q1. The company said it is "not satisfied with that outcome" but is "beginning to see encouraging signs that this part of the business is improving."
The other overhang is geography. Snap warned that its Q2 guide "assumes that the operating environment in the Middle East region remains consistent relative to the magnitude of the headwinds we have experienced in March and April," and added that "the trajectory of the geopolitical situation in the region is uncertain." That is a notable disclosure for a company whose advertising business is exposed to consumer brands and regional ad budgets.
Snap is also restructuring around AI. In April the company said it would lay off about 16% of its workforce and stop hiring for 300 open positions, framing the cuts as part of an "AI-driven transformation." Removing the Perplexity revenue line while simultaneously rebuilding internal teams around AI puts more weight on Snap's own products to monetize the technology.
Peers offer a mixed comparison. Reddit reported the prior Thursday that Q1 revenue jumped 69% year over year to $663 million, which chief executive Steve Huffman said marked "seven straight quarters in which sales growth was over 60%." Pinterest beat on the top and bottom lines on Monday, though finance chief Julia Donnelly told analysts that "large retailers remained a headwind to growth" amid tariffs imposed by the Donald Trump administration. Meta and Alphabet, reporting the prior Wednesday, both beat on sales while flagging higher AI infrastructure spending; Alphabet's stock rose, Meta's fell.
The skeptical read on Snap is that the Perplexity deal was the cleanest near-term proof point that generative AI partnerships could be a real revenue line for a mid-cap social platform, and it evaporated before paying out a dollar. Without it, Snap's 2026 story leans on advertiser recovery in North America, stable conditions in the Middle East, and self-built AI features inside Snapchat — three variables, none of which the company fully controls.
Snap's quarter underscores how thin the bridge is between AI partnership announcements and AI revenue on the income statement. A 15% pop on the deal news in November and a quiet unwind two quarters later is a pattern other ad-supported platforms should expect to repeat as generative AI vendors and distribution partners renegotiate terms. For Snap specifically, the burden now shifts onto the 16% workforce reduction and the AI roadmap behind it to produce the margin expansion the Perplexity deal was supposed to underwrite.
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