Snap stock surged 13% on Thursday after announcing a $400 million deal with Perplexity AI and releasing its third-quarter financial results.

The company said that it will be integrating Perplexity’s artificial intelligence-powered search engine directly into the Snapchat app.

As part of the agreement, Perplexity is set to pay the social media platform $400 million over one year “through a combination of cash and equity,” according to Snap’s letter to investors.

The social media company expects to start seeing revenue from the deal in 2026.

“Snap’s strategic partnership with Perplexity AI represents a meaningful step toward building out alternative revenue streams, as similar to Pinterest, large advertisers in the US seem to be pulling back from advertising on the platform,” Deutsche’s Benjamin Black said in a note Thursday.

Snap posted solid third-quarter results, reporting revenue of $1.51 billion, which beat LSEG estimates of $1.49 billion.

The company’s daily active users increased 8% year over year to 477 million, surpassing StreetAccount’s projection of 476 million.