Perplexity AI, a start-up in the field of artificial intelligence, has increased its monthly revenue and usage figures eightfold since the beginning of the year. This occurred in the wake of a new financing round of 250 million USD, in which existing investors such as SoftBank’s Vision Fund 2 also participated. The company's valuation rose from 1 billion USD in April to 3 billion USD.
The San Francisco-based company, founded by Aravind Srinivas, a former Google intern, answered around 250 million questions last month – more than half of all inquiries in the entire year of 2023. These figures highlight Perplexity's position as one of the fastest-growing generative AI applications since the launch of OpenAI’s ChatGPT in November 2022, although the company is controversial due to its data collection methods.
Perplexity started the year with $5 million in projected annual revenues based on the extrapolation of recent monthly sales. Currently, the company is generating more than $35 million on the same basis. This success is due to the company's shift in business model from subscriptions to advertising, putting it in direct competition with Google, which dominates the $300 billion search advertising market.
At the end of the day, the smaller player in this field has two advantages: speed and focus," explained Dmitry Shevelenko, Chief Business Officer of Perplexity. "Our users and our team focus on only one thing: providing answers to questions.
Despite its growing success, Perplexity faces criticism. In June, publications like Forbes and Wired accused the company of plagiarism for reproducing stories without clear citation and scanning websites that explicitly blocked its crawlers. Shevelenko acknowledged the accusations and stated that the company had made changes to its user interface to make citation clearer and to ensure that its responses do not summarize websites.
While the company focuses on advertising as its main source of revenue, it plans to share a double-digit percentage of its revenue from sponsored articles with the mentioned news publishers. Partners include, among others, Time, Der Spiegel, and Fortune. Since the start of the revenue-sharing program, 50 publishers have already joined.
Perplexity AI operates in a highly competitive market where giants like Google and OpenAI are also active. Unlike its competitors, however, Perplexity does not develop its own AI models but licenses systems from companies like OpenAI. Additionally, Perplexity has developed its own search indexing and ranking system to reduce its reliance on Microsoft’s Bing.
We have our own proprietary search index and ranking system," emphasized Shevelenko. "We use signals from all kinds of search engines, but we have our own crawlers and our own ranking system.
