Snap has terminated its partnership with Perplexity, the company disclosed on Wednesday during its quarterly earnings report. The agreement, originally announced last November, was designed to embed Perplexity’s AI-powered search engine directly into Snapchat. As part of the deal, Perplexity was scheduled to pay Snap $400 million in cash and equity over a one-year period. Snap stated that the two companies “amicably ended the relationship in Q1,” and that its sales guidance “assumes no contribution from Perplexity.”

When Snap first unveiled the partnership during its third-quarter earnings last year, the company projected that revenue from the collaboration would start impacting its financial statements in 2026. The integration aimed to bring Perplexity into Snapchat’s “Chat” interface, enabling users to pose questions and receive conversational responses directly within the app. Although the feature underwent testing with a select group of users, Snap noted in February that the companies had “yet to mutually agree on a path to a broader roll out.”

Snap CEO Evan Spiegel remarked at the time of the initial announcement that the deal aligned with the company’s goal of leveraging AI to improve discovery on Snapchat. He also expressed enthusiasm for “collaborating with more innovative partners in the future.” On Wednesday, Snap revealed that Snapchat’s global daily active users (DAU) increased by 5% year-over-year to 483 million, while monthly active users (MAU) also grew by 5% to reach 965 million. The company attributed this growth to new features across the app, such as Snap Map and its Lenses AR filters.

“In Q1, we returned to growth in daily active users, accelerated revenue growth, expanded margins, and generated strong free cash flow,” Spiegel said in a press release. “We remain focused on disciplined execution as we invest in Specs and our long-term opportunity in intelligent eyewear and look forward to sharing more at AWE on June 16th.” Snap also announced in April that it would lay off approximately 16% of its global workforce, affecting around 1,000 full-time employees, citing advancements in AI as the reason for the cuts.