Perplexity, an AI search engine startup has achieved a significant milestone by surpassing $100 million in annualized revenue, just 20 months after launching its premium subscription service, Perplexity Pro. This remarkable growth reflects a staggering 6.3 times increase year-over-year despite being “under-monetized,” according to CEO Aravind Srinivas on LinkedIn.
Founded in 2022 by Srinivas, Andy Konwinski, Denis Yarats and Johnny Ho, the AI startup started out in San Francisco, California and is currently challenging AI search giants like OpenAI and Google.
Perplexity’s annual recurring revenue (ARR) had previously been around $50 million as of October 2024, indicating a rapid acceleration in its financial performance. Perplexity has integrated its search capabilities with platforms like Shopify, enhancing the discovery experience for users by providing real-time and relevant product information across Shopify-powered businesses in the U.S.
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The startup’s valuation has seen explosive growth, tripling from $1 billion to $3 billion and then to $9 billion within a year. From an initial valuation of $520 million in early 2024, Perplexity AI reached $9 billion by December 2024. As of March, Perplexity is in discussions to raise between $500 million and $1 billion in funding, potentially boosting its valuation to $18 billion.
Perplexity’s innovative AI model Sonar has demonstrated superior performance compared to competitors such as OpenAI’s GPT-4o mini and Anthropic’s Claude 3.5 Haiku. It is reported to be 10 times faster than Google’s Gemini 2.0.
Perplexity’s search tools enable users to get instant answers to questions with sources and citations. It is powered by a variety of large language models (LLMs) that can sum up and generate information, from OpenAI to Meta’s open-source model Llama.
Buoyed by its success in the U.S. market, Perplexity had also expanded its shopping assistant to new markets, aiming to redefine the e-commerce search experience further by partnering with Shopify.
In November 2024, the company also revealed it would begin experimenting with advertising to support its mission of fostering curiosity globally. The ads will be designed to ensure that content quality remains unaffected by advertising influence. This comes in after publishers like the New York Times alleged the AI startup of “kleptocracy” in a cease-and-desist notice in October 2024.
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In February, the company launched a new web browser named Comet, which leverages AI not only for information retrieval but also for understanding complex queries and executing tasks. As competition intensifies in the AI-powered search space, Perplexity is positioning itself as a formidable player against established giants like Google and Microsoft-backed OpenAI in a short span of time.
The startup has attracted high-profile backers, including NVIDIA, SoftBank Group, and Amazon founder Jeff Bezos, reflecting investor confidence in its AI-driven approach to search.
With AI becoming an increasingly popular industry for innovation, startups like Cursor AI have reached $100 million in ARR (annual recurring revenue) in just 21 months since its inception.