AI-powered search engine Perplexity AI has reported a sevenfold increase in monthly revenue and usage since the beginning of the year, following a substantial $250 million funding round.
This development marks a notable rise in the competitive AI search landscape, particularly as Google steps up its AI integration efforts to maintain its dominance.
Rapid expansion and market position
Perplexity AI, which commenced operations shortly before OpenAI launched ChatGPT in November 2022, has quickly emerged as one of the fastest-growing generative AI platforms post-ChatGPT. Despite controversies surrounding its data collection methods, Perplexity answered approximately 250 million queries in July alone—an impressive leap from the 500 million queries processed throughout the previous year. According to Dmitry Shevelenko, the Chief Business Officer of Perplexity, this momentum reflects the platform’s effectiveness and growing user trust.
Financial insights from the Financial Times reveal that Perplexity began in 2024 with $5 million in annualized revenues. However, recent performance metrics suggest the company now generates over $35 million, catapulting its valuation to $3 billion, up from $1 billion. This was further propelled by a new $250 million investment led by SoftBank’s Vision Fund 2.
Strategic shift to advertising
In a strategic pivot, Perplexity AI is transitioning its revenue model to include advertising subscriptions. It is positioning itself as a formidable contender in the $300 billion search ads industry, a realm long dominated by Google. “Our users and team focus solely on making Perplexity a reliable answer hub, which sharpens our competitive edge,” stated Shevelenko.
This shift signifies a major strategic realignment, with the platform planning to introduce advertising by the end of the following month. Shevelenko also highlighted new revenue-sharing initiatives with publishers, with plans to allocate significant revenue from sponsored content. Renowned publishers like Fortune, Time, and Der Spiegel have already entered agreements with Perplexity, signalling a robust start to its advertising venture.
Addressing challenges and plans
Despite its rapid ascent, Perplexity has faced criticism and accusations of plagiarism from media giants such as Forbes and Wired, which have challenged the platform’s content reproduction practices. Perplexity has refined its user interface to enhance the visibility of citations, aiming to mitigate these concerns and uphold content integrity.
About 50 publishers have expressed interest in joining Perplexity’s revenue-sharing model, a testament to the platform’s potential for fostering collaborative growth. As the company continues to innovate and expand its reach, the backing of industry stalwarts like Nvidia and Amazon’s Jeff Bezos, alongside luminaries such as Andrej Karpathy and Yann LeCun, underscores its robust positioning in the AI-driven search arena.