Perplexity Enterprise Debuts Alongside New Funding Round and $1B Valuation
$40 per user per month for search
Perplexity announced a new enterprise service today, two new partnerships, and a new funding round. The enterprise service is already in use by Zoom, Bridgewater, Databricks, Snowflake, and others. Softbank and Deutsche Telekom will begin marketing Perplexity to their broadband users.
Perplexity also closed an incremental $62.7 million investment at a valuation of $1.04 billion, according to a LinkedIn post by company CEO Aravind Srinivas and a company blog post. In March, Sythedia laid out the key reasons why Perplexity had already reached Unicorn status.
50 million users, including rapid growth since January 2024
$10 million annualized revenue run rate, reflecting about a 0.1% conversion rate to paid, with significant revenue upside for improvements
New availability of Perplexity Pro to 32.5 million SK Telecom users
Slow introduction of robust generative AI search from Google and OpenAI
The potential for advertising revenue to cover the cost of free users
These factors helped propel Perplexity to a $500 million valuation in January 2024 and began lifting expectations. The recent rise in valuation is driven by:
A rise from 52 million queries in all of 2023 versus 75 million year-to-date in 2024 and a current run rate of 169 million monthly queries.
Deals with Softback and Deutsche Telekom “to market Perplexity's capabilities to consumer and business customers,” totaling more than 335 million.
Srinivas told CNBC in an interview that over 10% of customers engage with answer citations, which provides a platform for advertising revenue.
Perplexity Enterprise
Perplexity’s Enterprise Pro edition was casually referenced at the Imagination in Action conference last week at MIT. Details released today confirm the new product will meet several common enterprise requirements, such as Single Sign-On (SSO), SOC2 compliance, user management, and enhanced security and privacy. Perplexity also commits to a seven-day user query retention policy before deleting user query interactions.
Perplexity Enterprise offers unlimited search for $40 per user per month for companies with up to 250 employees. It also offers custom quotes for larger companies that presumably include volume discounts.
This sum is more than what Microsoft and Google are charging for generative AI solutions for 365 and Workspace. It is less than the $50 per user base charge for OpenAI’s ChatGPT Enterprise. However, in each of those instances, companies can use the solutions with their own corporate data. Perplexity enterprise is only for web search use cases today. There is no retrieval augmented generation (RAG) option. The absence of RAG means that Perplexity is essentially asking its customers to double their generative AI application investment by paying for two solutions—one for accessing internal data and another for internet data.
New Funding
Perplexity’s funding roster is a gaggle of well-known Silicon Valley investors. The funding will be used for overseas expansion.
The new investment was led by Daniel Gross (former head of AI at Y Combinator) with participation from new investors Stanley Druckenmiller, Garry Tan (CEO of Y Combinator), Dylan Field (CEO of Figma), Brad Gerstner (Founder & CEO of Altimeter Capital), Laude Capital, Lip-Bu Tan (former CEO of Cadence), and Jakob Uszkoreit (co-inventor of Transformers). Many of our existing investors, including Jeff Bezos, NVIDIA, Tobi Lutke, Elad Gil, Nat Friedman, Naval Ravikant, Andrej Karpathy, IVP, and NEA, also doubled down on their support.
With this funding, global expansion is a top priority. We’ve inked new partnerships with two of the world’s largest telecommunications firms — Japan’s SoftBank Corp. and Germany’s Deutsche Telekom — to market Perplexity's capabilities to consumer and business customers. With a combined user base of more than 335M customers across mobile and broadband, these partnerships will significantly extend Perplexity’s reach.
When asked by CNBC how Perplexity is going to compete with Google in search, Srinivas commented that a subscription business can be meaningful for a company like Perplexity. However, it may be too small for a company of Google’s size with such a robust advertising model.
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