Snap Shares Jump After $400M Deal with AI Startup Perplexity
“`html
Snap’s Revenue Growth Slows Amidst North American Ad Spend Decline, Focus Shifts to Augmented Reality
Table of Contents
Snap Inc., the parent company of Snapchat, reported third-quarter earnings on November 2, 2024, revealing a slowdown in revenue growth despite overall gains. The company announced a $400 million deal to roll out Perplexity AI’s search capabilities within Snapchat, aiming to enhance user engagement and provide a new revenue stream. Financial Times reported on the earnings and partnership.
Revenue Performance and Advertising Headwinds
Snap’s total revenue increased to $1.37 billion in the third quarter, a 5% year-over-year increase.Though, this growth was tempered by a significant disparity between its US and international performance. While its non-US advertising business experienced growth, North American advertising revenue only rose by 1%.
The company attributes this sluggish growth in North America to reduced spending by large brands, which it identifies as “the primary headwind to our overall revenue growth.” This suggests a broader trend of cautious spending among major advertisers in the region, potentially reflecting economic uncertainty or shifts in advertising strategies.
| Region | Year-over-Year Revenue Growth (Q3 2024) |
|---|---|
| North America | 1% |
| Rest of World | (Data not specified in source, but indicated as growing) |
| Total | 5% |
Strategic Shift to Augmented Reality: ‘Specs’
Snap is doubling down on its augmented reality (AR) ambitions, recently confirming the move of its Spectacles development into a dedicated subsidiary named ‘Specs’. This mirrors the structure adopted by Alphabet with its self-driving car project, Waymo. The verge detailed the restructuring.
The company is reportedly exploring additional funding for Specs, engaging in conversations with investors. However, Snap maintains it does not require external capital to launch Specs as planned in 2026. this suggests the company has sufficient internal resources to support the initial rollout of its AR glasses.
Perplexity AI Integration
The $400 million partnership with Perplexity AI aims to integrate the AI-powered