Snap Stock Surges on Earnings and New Perplexity Deal

Shares of Snapchat parent Snap soared 15% late Wednesday after the company reported strong earnings. (Asanka Ratnayake/Getty Images)

Shares of Snap surged late Wednesday after the Snapchat parent reported third-quarter earnings results that exceeded Wall Street analyst expectations across various metrics. The stock was up 15% in late trading.

Adjusted earnings-per-share came in at 10 cents, above analyst projections of five cents. Sales topped the company’s previous guidance range, and also came in above the Wall Street consensus at $1.51 billion. The company easily cleared the bar for adjusted Ebitda, or earnings before interest, taxes depreciation, and amortization.

Guidance for fourth-quarter revenue and adjusted Ebitda were also comfortably above estimates.

The company also announced a new partnership with Perplexity, who makes an artificial-intelligence search engine that will soon be featured in the chat interface of the Snapchat app. Beginning next year, Perplexity will pay Snap $400 million over a year for the placement, split between cash and stock.

The company also announced a new $500 million buyback authorization.

On a more sour note, the company prepared investors for the loss of some younger users, as certain countries like Australia begin to ban users under 17.

Snap stock frequently sees outsize price moves after the company’s earnings reports.

Write to Adam Levine at adam.levine@barrons.com