What’s Helping Perplexity’s 60% Gross Profit Margin

Earlier today we published a deep dive on Perplexity’s financials. The three-year-old startup’s AI powered search engine has made it one of the most highly valued and fastest growing AI startups. Supporting that growth is expensive. 

As a sign of its growing popularity, the number of questions people have asked the search engine increased five-fold, to 460 million, in December from the year-earlier period, the company has told investors. Perplexity had just under 260,000 paying consumer subscribers at year-end, although many users don’t pay. The company generated $34 million in revenue, including sales from business customers. 

The San Francisco startup spent at least $57 million last year on AI models, Amazon Web Services expenses and other web services, Perplexity’s financial statements show. That includes $33 million on web services to support users who are not paying, either because they’re on Perplexity’s free tier or they’re on a trial subscription.