Perplexity’s Valuation Keeps Soaring

According to a recent report, OpenAI’s ChatGPT commands nearly 60% of the GenAI chatbots market in 2025. Microsoft’s Copilot comes a distant second with 14.4% market share, competing closely with Google’s Gemini’s 13.5% share. Perplexity AI is a rapidly growing GenAI engine that accounted for 6.2% of the market.

Perplexity’s Offerings

Perplexity AI was founded in August 2022 by Aravind Srinivas, Denis Yarats, Johnny Ho, and Andy Konwinski. Prior to founding Perplexity, the founders had worked as researchers and technical experts at OpenAI, Meta, Quora, and Databricks. At OpenAI, Srinivas saw the limitations of traditional search engines and wanted to build a more intuitive, AI-driven approach to information retrieval. He collaborated with Denis Yarats, a former AI research scientist at Meta, Johnny Ho, an engineer at Quora, and Andy Konwinski, a founding team member at Databricks. Together, they leveraged their expertise in artificial intelligence, machine learning, and backend systems to set up Perplexity AI with the vision of revolutionizing the way users access and interpret information.

Perplexity offers an AI-native conversational search engine that responds directly to user queries with synthesized answers and cited sources. Unlike other search engines that require users to click through multiple links, Perplexity’s responses stand apart because it generates concise, factual responses drawn from real-time web data. The product is available via browser and mobile apps and has gained a following for its reliability, speed, and clear sourcing. 

In December 2024, Perplexity acquired Carbon, a Seattle-based startup focused on retrieval-augmented generation. This acquisition strengthened Perplexity’s ability to search across private data sources like Google Docs, Notion, and Slack, as it moves toward serving both individual and enterprise users.

Perplexity operates in a highly competitive environment, competing directly with some of the largest players in AI and search. OpenAI’s ChatGPT, particularly with real-time browsing features, serves a similar purpose for conversational question answering. Traditional tech powerhouses offer their own similar offerings. Google’s Gemini delivers an AI integrated search experience, Microsoft’s Copilot is embedded in Bing and across Office apps.

Earlier this year, Perplexity made headlines when it submitted a proposal to acquire TikTok’s U.S. operations, a bid that drew attention to its ambitions beyond search. The surprising proposal to acquire TikTok U.S. could suggest that Perplexity is not just building a search engine but looking to reshape how people interact with information at scale. TikTok’s future remains in the doldrums, and there is no confirmation on whether Perplexity is looking to make another bid for the popular app. 

Perplexity’s Financials

Perplexity AI operates on a freemium SaaS model. The core search functionality is free, while users can pay for a Pro subscription to access advanced features such as the ability to choose among multiple LLMs, upload documents for querying, and increase usage limits. As of August 2024, the company reported annualized revenues of $35 million, up sharply from $5 million in January 2024, reflecting strong product adoption and monetization. A more recent report pegs its revenue at under $100 million. Its profitability status is not known, though the company has indicated that revenue growth is outpacing early expectations. 

Perplexity has raised $915 million in funding so far in seven rounds. In December 2024, it raised $500 million in a round led by Institutional Venture Partners, with participation from Jeff Bezos, SoftBank, and Nvidia. It was valued at $9 billion, triple its $3 billion valuation in June 2024. Last month, there were reports that the company was in talks to raise an additional $0.5-$1.0 billion at a potential $18 billion valuation. 

Photo Credit: Rupert Kittinger-Sereinig from Pixabay