OpenAI’s Soaring Revenue Shadowed by Billion-Dollar Losses, NYT Report Reveals

Monday, September 30, 2024, 10:56:00 AM

Artificial intelligence giant OpenAI is experiencing rapid revenue growth but facing significant financial challenges, according to financial documents reviewed by The New York Times.

The San Francisco-based startup’s monthly revenue reached $300 million in August, marking a 1,700% increase since the beginning of 2023. OpenAI projects annual sales of $3.7 billion for this year, with expectations to reach $11.6 billion in 2025.

The NYT got ahold of docs from the OpenAI funding round.
– 350 million people used Chat in Aug
– huge user growth after anon login
– 10 mill active subscribers
– sub going up to $2 by the end of the year, the sub will scale up to $44 by 2029
– projected yearly rev by 2029: $100B pic.twitter.com/mD1lNCfhr4
— Andrew Curran (@AndrewCurran_) September 27, 2024

However, the company is grappling with substantial losses. OpenAI anticipates losing approximately $5 billion this year after accounting for operational costs, employee salaries, and office expenses. This figure doesn’t include equity-based compensation and other major expenses not fully detailed in the documents.

The financial data reveals that ChatGPT is the primary driver of OpenAI’s growth. The company expects the chatbot to generate $2.7 billion in revenue this year, up from $700 million in 2023. Additionally, about 10 million ChatGPT users are paying a $20 monthly subscription fee, with plans to increase this to $44 over the next five years.

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OpenAI’s user base has also seen significant expansion, with approximately 350 million monthly users as of June, a substantial increase from around 100 million in March. The company attributes much of this growth to allowing access to ChatGPT without requiring account creation or login.

Despite these positive indicators, OpenAI faces challenges in managing its costs. A huge chunk of the company’s expense, understandably, is computing power, primarily sourced through its partnership with Microsoft, which has invested over $13 billion in the company. OpenAI is currently seeking additional funding, with ongoing discussions to raise $7 billion at a valuation of $150 billion.

Information for this story was found via the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.