Story perspectives

Snap Cuts $400M AI Deal, Plans AR Glasses

5/7/2026

Summary

Snap Ends Perplexity Deal

Snap ended its Perplexity AI partnership in Q1 2026, removing the $400 million deal from guidance.
Snap reported 483 million daily active users, a 5 % YoY increase, and 965 million monthly users.
Snap posted adjusted EBITDA of $233 million and free cash flow of $286 million.
Snap plans to launch AR glasses later this year using a Qualcomm Snapdragon XR chipset and AI from OpenAI and Google Gemini while its Specs Inc. unit hires nearly 100 roles.

Summary

Snap Cuts Costs

Snap will cut at least $500 million in costs by H2 2026 after activist investors, including Irenic Capital Management, pressed for savings.
Snap’s “other revenue” rose 87% to $285 million, driven by subscriptions such as Snapchat+, Memories Storage and Lens+.
Nearly 70% of ad spend now uses Snap’s AI-powered automation tool, deepening the platform’s AI integration.
Snap added Sponsored Snaps in Chat as a new ad placement to expand revenue beyond its classic formats.

History

Historical Context

Snap Inc.’s AR journey began with its 2014 purchase of Vergence Labs and the 2016 debut of Spectacles, which sold about 220,000 units before a $40 million write-off in 2017. After iterative upgrades, the fifth-generation glasses launched in September 2024 with a 46-degree display powered by Qualcomm’s Snapdragon XR1. In June 2025 Snap announced a consumer version for 2026, underscoring its renewed hardware focus.

1 of 3

Snap Ends Perplexity Deal

Snap ended its Perplexity AI partnership in Q1 2026, removing the $400 million deal from guidance.
Snap reported 483 million daily active users, a 5 % YoY increase, and 965 million monthly users.
Snap posted adjusted EBITDA of $233 million and free cash flow of $286 million.
Snap plans to launch AR glasses later this year using a Qualcomm Snapdragon XR chipset and AI from OpenAI and Google Gemini while its Specs Inc. unit hires nearly 100 roles.

1 / 3