8 ms·
OpenAI and Anthropic Revenue Breakdown
- spwa4 2y agoWOW. These figures put the OpenAI valuation in perspective. OpenAI: $3.6B revenue - people paying $2.7B for personal subscription (growth rate of 285% per year) - rest is AI This would mean the latest OpenAI valuation of $156B is a P/E of about 43. For a company growing 285% per year ... that actually doesn't sound horrible. In fact, that's pretty good.
- raincole 2y agoThe "E" in P/E isn't revenue. That being said, $3.6B is quite a lot of revenue, considering it's mostly from a $20/mo subscription model.
- flakeoil 2y agoBut a revenue of $3.6B is peanuts compared to a company valuation of $156B.
- s1artibartfast 2y agoThere must be some other big whales in that category. Hard to believe they have 150 million paid subscribers
- loufe 2y agoHow much of the "people willing to pay" market has already been exploited? I cannot see 285% growth continuing for more than a year or two more, at most, even with huge step-ups in quality.
- rib3ye 2y agoWhen you pay for ChatGPT, you’re not just buying a model, you’re buying the UX wrapper around a series of models, and that wrapper has been improving at a very rapid clip making it more accessible to a wider audience. Example: a week ago the natural conversation feature sucked. Now it doesn’t. That’s huge for creating a D0 positive engagement.
- HeatrayEnjoyer 2y agoD0?
- HarHarVeryFunny 2y agoThe question is, how many people are willing to pay for it, when there are free alternatives available. There are only ~1M developers in the US, who are perhaps the main market, and developer market for AI is changing rapidly, with the current best solution being Cursor + Sonnet 3.5, or Cursor Pro where you don't even need to bring your own Sonnet API key. As AI gets more tightly integrated into IDEs, and office suites, then stand-alone products like ChatGPT become less relevant, and the underlying provider more of a replaceable commodity. Would anyone really notice or care if Github CoPilot switched overnight to use a Microsoft/Anthropic/Meta model rather than an OpenAI one ?!
- fizzbuzz-rs 2y agoP/E is based on profit, aren't you conflating earnings and revenue? As their earnings are negative, so would be their P/E ratio.
- devjab 2y agoIt’s kind of hard to really calculate the P/E for OpenAI as there are more factors in it than usual. Companies like Microsoft and Nvidia likely don’t care too much about their returns considering huge parts of their investments go directly back into their own companies through sales. It’s fairly easy to invest 10B into a company which will then spend almost all of that money on your Azure services. Meanwhile giving your own co-pilot AI products able competition to avoid antitrust lawsuits.
- onlyrealcuzzo 2y agoIt's not hard to calculate P/E. You divide the price by earnings. OpenAI has negative earnings. It doesn't have a P/E.
- raincole 2y ago> OpenAI has negative earnings. And how do you know that?
- djbusby 2y agoArticle says: > they are expected to lose about $5B this year on about $3.7B of revenue
- tempusalaria 2y agoIt’s more than $5bln. That’s their adjusted loss which excludes stock based comp. Real loss is probably 8-10
- deleted 2y ago[deleted]
- lrae 2y agoP/E is based on the net income, and they aren't even profitable yet. Also, isn't Microsoft getting paid back 75% of the profits first, up to their investment, so $13 billion and then 49% for another ~100 billion?
- TrainedMonkey 2y ago> Also, isn't Microsoft getting paid back 75% of the profits first, up to their investment, so $13 billion and then 49% for another ~100 billion? That is roughly true, but also only matters if Microsoft can influence OpenAI policy and chooses violence^1 (taking profit over investment in technology). Otherwise I would expect OpenAI to keep investing all of their income into more AI. Meanwhile OpenAI is hellbent on reaching effective AGI / pushing towards singularity, as long as they keep making progress and having cheap access to capital profitability is not required. So my personal conclusion is to invest in people selling AI shovels because the madness will continue. Note 1: in my humble opinion Microsoft choosing violence is highly unlikely with Nadella in change.
- mrtksn 2y agoAs others said, E is for Earnings but it's kind of understandable for it to be negative and use the Revenue metric as they are spending huge amount on R&D. IMHO the bigger risk is the "AI" ending up not doing that much after all or their R&D not paying off(which is a risk, their SORA is nowhere to be found when Chinese AI companies are having its alternative in production. Maybe OpenAI isn't that far ahead and it's the language barrier that gives that impression? I don't know I don't speak Chinese but things are happening outside of the Anglosphere).
- m3kw9 2y agoAI not doing much is a massive underdog, galaxy massive
- wokwokwok 2y ago> "AI" ending up not doing that much after all or *their R&D not paying off* Emphasis added. You spend money on R&D. The expectation: You make money. The AI company reality: The value of your propitiatory models drops to LITERALLY ZERO after they are superseded by a new generation of models, or worse, open inference models. The risk isn't that the models don't work. The risk is that it increasingly appears that the 'moat' these companies have is only as good as the amount of money they continue to pour into it. and when the moat is gone, so is the company. I can also run a business where I create a moat by pouring money into it (remember MoviePass?), eg. literally paying people to use your service; but usually you have to have some kind plan that does not involve magical fairies (eg. AGI) in at the very least your pitch deck, to convince people you have a plan which goes from scale -> mega profit.
- m3kw9 2y agoI would use factory automation as the analogy, it’s actually a direct analogy
- tomp 2y agoYeah the latest Pika model is mindblowing. Out of this world (though surprisingly creepy ad!). https://x.com/pika_labs/status/1841143349576941863 https://x.com/pika_labs/status/1841143349576941863 Where's Sora?
- elorant 2y agoSo 75% of the revenue is from subscriptions? Where are the enterprise users? Are they in Microsoft’s revenue through Azure?
- mppm 2y agoYour math is a bit off. As per the article, estimated earnings for 2024 are about -5 billion, so P/E should be around -30. This is actually fairly typical for hot startups like WeWork.
- apsec112 2y agoThat's price to sales, not price to earnings. OpenAI's price to earnings, strictly speaking, is negative since it loses money. For comparison, Amazon's price to sales ratio is around 3.
- malthaus 2y agoyou can't argue the valuation like that the only way the valuation is put "in perspective" is if you estimate that we gonna have a race of heavy investments now to get to a point where the models are "good enough" and you no longer need to invest in training new ones, at which point you switch from running a immensely unprofitable business to a immensely profitable one. the issue is that nobody knows when that will be the case (if ever) and it currently looks like whoever player is best equipped with capital to fund that race will have a winner takes all future ahead so you just place all your chips and hope for the best
- moralestapia 2y ago>ChatGPT is by far the dominant prosumer product Some people prefer to delude themselves in order to not admit this. Just yesterday [1], I argued ChatGPT was a strong brand just to be downvoted to the bottom. Lol. Imagine being so blatantly wrong at something you are supposedly a specialist at. Turns out it's only a 3BnUSD / year brand, two years after its inception. Also, who is "Claude"? [2]. In terms of tech, nothing even comes close to "GPT-4o mini" for the same price/performance. OpenAI will continue to dominate the market for the next decade, at least. 1: https://news.ycombinator.com/item?id=41723208 https://news.ycombinator.com/item?id=41723208 2: https://trends.google.com/trends/explore?date=now%201-d&geo=CA&q=chatgpt,claude&hl=en https://trends.google.com/trends/explore?date=now%201-d&geo=...
- HarHarVeryFunny 2y agoOpenAI's weird contract with Microsoft, whereby Microsoft has rights to their IP/artifacts up until OpenAI's board unilaterally declares they have achieved "AGI" (meaning whatever they choose it to mean), may come back to haunt them. Microsoft is living with the possibility of OpenAI cutting them off at any time of their choosing, as well as not being in control of a technology which is becoming increasingly important, and they are feeling it. Microsoft is trying to build their own SOTA model internally, and there is every reason to expect they will succeed - they have the GPUs, money, desire, paranoia and talent required to do it, and as we have seen from many players there is no moat. So, what happens to OpenAI when (not if), Microsoft end their relationship? How do OpenAI sell their product, other than directly, to what extent does it cut them off from enterprise customers, can they financially handle building their own $100B datacenters if they are forced to?
- moralestapia 2y ago>So, what happens to OpenAI when (not if), Microsoft end their relationship? I don't know, but @sama should know (and most likely he does). I'm not his fan. But am a fan of reality and that's what it is. It's also not like "some guy" suddenly has to build $100B datacenters and whoops that's an issue. This is a 150BnUSD company, with millions of users and a brand that's recognized worldwide, they have plenty of options to choose from.
- kwikiel 2y agoIf you assume that the costs of inference would continue to decrease while they would be able to get billion people hooked on 42 per dollar plan.. That’s $0.5 trillion revenue rate
- patrickmcnamara 2y agoOh, just a billion? Why not 100 billion while we're at it?
- moralestapia 2y agoBecause there's only 6-7Bn people in the planet? Come on, man.
- deleted 2y ago[deleted]
- blitzar 2y agoYou are not thinking intergallactially.
- lewhoo 2y agoWith 3.6B people in the workforce I'd argue there isn't a billion people in need of a computer, not to mention an ai subscription plan. I'm of course assuming most subscriptions for ai are work related.
- rimeice 2y ago2.7b / 240 = 11.25m paid users. Feel like they’re just scratching the surface of potential users.
- andro_dev 2y agoThe most hyped technology in the history of the mankind only got 11 million users after compulsive and expensive branding and campaigns. Something doesn't add up here.
- greg_V 2y agoOr another way to look at it, is that everyone and their mother has heard of them, and in 2 years they've only convinced that many people to pony up cash. Plus they have a massive churn problem with people quitting premium after 1-3 months.
- dgellow 2y agoThat’s just for ChatGPT, a single product
- preommr 2y ago> Plus they have a massive churn problem with people quitting premium after 1-3 months. Because, tbf, the free version is really good. I feel like a lot of AI companies are in the stage where they're still trying to gain massive marketshare and convince people of it's value. The real test is going to be when they pull the plug to force people to transition to premium.
- mettamage 2y agoIs there any way to invest in companies related to it?
- falcor84 2y agoI think that the best way is still to do so indirectly by buying NVDA
- dgellow 2y agoThat's assuming future growth isnt already priced in, which is pretty unlikely at that point in time, no?
- m3kw9 2y agoEvery investment is sort of like that, you betting it’s more than what’s priced in(current price set by market)
- alexpetralia 2y agoFocus on the data centers, and the inputs into them (the really boring ones).
- falcor84 2y agoThat's a good point - the biggest thing to invest in might be power generation
- HeatrayEnjoyer 2y agoYou can bet on second order companies. Thomson Reuters, Intuit, Palantir, Teledoc, Twilio, ServiceNow, Axon, WPP. All stand to benefit from sophisticated language and vision processing.
- mettamage 2y agoI think when it comes to NVDA, a slow DCA strategy makes sense
- HyprMusic 2y ago"Futuresearch estimates that their API business actually has ~50% gross margins, and that most of the losses come from operating costs (R&D, etc) and their ChatGPT business, which gives basically unlimited usage for ~$20/month." I would have assumed there's more profit in the subscriptions than the API. $20 is roughly 2 million output tokens a month through the API. Given the 50% margin they claim, each user would have to be generating 3-4 million output tokens a month for OpenAI to be at a loss. Is that likely? Seems like a lot of words to me.
- re-thc 2y ago> Seems like a lot of words to me. Pretty easy when you start having it search websites, documents, code references etc. Before caching, lots of people used up $20 in a day or 2.
- TwoCent 2y agoThey're selling a commodity product in a Red Queen's Race. OpenAI, Anthropic, and whatever others get spun up while the gold rush is on are each building costly models at a vast cost to try to get a bit ahead of each other. The economics of this are ugly. The business of building massive LLMs looks more like air transport than the dot com gold rush in the '90s. There will probably be much useful stuff in the wreckage when it's all over, but I've not seen much to inspire confidence that the useful stuff will include profitable companies. This looks like it has all the makings of another WeWork, only this time with an epochal AI winter as the aftermath.
- serf 2y agothis whole thing produced some useful tools, if nothing else. I'll be able to use a few of them to keep warm during the next AI winter -- much like every other AI winter. did anything good come from wework?
- edm0nd 2y ago>did anything good come from wework? Adam and Rebekah Neumann got exposed for being the frauds that they are.
- cj 2y ago> did anything good come from wework? More coworking spaces.
- MangoCoffee 2y agoTequila sales have increased
- itsoktocry 2y ago>This looks like it has all the makings of another WeWork, only this time with an epochal AI winter as the aftermath. I'm as cynical as it gets on this forum, as evidenced by my comment history. But you're comparing these AI companies to WeWork? Really? WeWork was a real estate company operating in a historically favourable environment (0% interest rates) pretending to be a tech company. They literally rented office space. What do they have in common? I notice there's a new generation of "grey beard" programmers constantly talking about how "useless" AI is for programming, and they can do everything faster. Meanwhile, there are tons of us out there who are paying $20, $30, $50 per month and upwards for these tool as they are, and wouldn't want to go without. Ever. And we have no idea where it's going to go. Maybe you're missing something?
- AlanYx 2y agoI'm skeptical of this analysis simply because it doesn't appear to include any revenue from the Microsoft deal. Many corporate customers are using the Azure ChatGPT service rather than OpenAI's API directly. There has to be some accounting for that.
- tomp 2y agoWhat makes you think OpenAI makes any money on people using Microsoft's technology (i.e. Microsoft owns all OpenAI IP up to AGI) running on Microsoft's servers in Microsoft's cloud?
- AlanYx 2y agoI'd be astonished if Sama didn't negotiate royalties. Microsoft is even using OpenAI's trademarks for the service.
- throwaway314155 2y agoWhat revenue from the Microsoft deal?
- enragedcacti 2y agoFrom my understanding the $1 billion referred to as "API" revenue is inclusive of revenue from licensing the model to Microsoft [1]. This adds up given that subscription revenue will be $2.7 billion and total revenue will be $3.7 billion. Bloomberg reported that Azure usage will generate $200 million this year. [2] [1] "[...] with $1 billion coming from other businesses using its technology." https://www.nytimes.com/2024/09/27/technology/openai-chatgpt-investors-funding.html https://www.nytimes.com/2024/09/27/technology/openai-chatgpt... [2] https://www.bloomberg.com/news/articles/2024-06-12/openai-doubles-annualized-revenue-to-3-4-billion-information https://www.bloomberg.com/news/articles/2024-06-12/openai-do...
- nojs 2y agoThis kind of analysis misses the fact that they will find other ways to monetize. Given that almost every other major tech company makes billions from ads (not subscriptions or API usage), it seems reasonable to price this into their valuation.
- enragedcacti 2y agoOther tech companies have extremely low marginal costs compared to OpenAI. If you look at a compute intensive product like Twitch you'll see that despite 100s of millions of active users, extensive advertising, multiple subscriptions types (Turbo/individual streamer subs), 10% on bits, and likely lower AWS rates they still have never turned a profit. OpenAI doesn't have to pay out streamers but they also have considerably higher compute costs per ad opportunity than delivering video does.
- akrymski 2y agoGoogle's AdWords business is worth about 10X that of Open AI ($1.5T) and does $250B of revenue. P/S of about 6X. If everyone stops googling and starts talking to ChatGPT instead, and GPU costs continue to fall such that ad-supported ChatGPT becomes feasible, it's not unreasonable to assume that Open AI can grow revenues by 100X from here. Which assumes that Google will stand still, instead of cannibalizing its own business model.
- andro_dev 2y ago"GPU costs continue to fall" laughable prediction. They need more powerful GPUs not less as time goes by. These companies need monster GPUs with monster clusters that need monster energies. OpenAI is a bankrupt company as of now, their valuation means nothing as long as they keep loosing money as they do now.
- __loam 2y agoThe numbers look extremely bad if you're expecting OpenAI to take a significant chunk of Google's business. It's a rounding error compared to the numbers search does.
- siliconc0w 2y agoHot take is that until we get level 5, we are in a similar place as automotive where humans are pretty bad at sustained supervision and are biologically lazy. Employers will see too much delegation to flawed models - codebases will swell with ai-slop that eventually seizes the business. Skills will atrophy. Internal comms will be similarly impacted, with flooding of generic memos and strategy docs from people pretending to work dripping with that RLHF sheen.
- vessenes 2y agoInteresting splits. I, too, find that the bulk of the money I give OpenAI is for ChatGPT+, and the bulk of the money I give Anthropic is for Sonnet API access. This month I spent more with Anthropic actually. Although, to be fair, I’d like to give OpenAI money for gpto-preview API access, I just don’t have the option. This is such an interesting new industry —- so many comments here about race to the bottom / commodification, and I tend to think that way too, but in practice, I’m very very often like “Meh, ChatGPT is bad at this, I’ll ask Claude”, or vice-versa. We may actually be entering a world where we have different personalities and strengths in very large frontier models. I don’t think it’s easy to confidently predict where all this goes.
- deleted 2y ago[deleted]
- Maro 2y agoA lot of people are claiming that OpenAI has no moat, but so far they are clearly the market leader, and "chatgpt" has become an everyday word for LLMs, similarly to how "google" became an everyday word for search 20 years ago. Why is Google still printing money on Search 20 years later? Surely at this point the know-how to build a search engine at scale is out there. It is a 2-sided marketplace, first they captured people's habits, then advertiser dollars. It could be that in the end LLM usage will also be ad-driven, in which case this will be captured by OpenAI most likely, similar to the Google case. Another case. Why is Outlook the market leader for corporate email, even though email protocols are open standards, and there is no shortage of open source alternatives, etc. The reason is bundling of course and various other IT considerations, such as trainig/certs/control/security. Imo we don't really know yet how the LLM space will play out, what will enable (or not) OpenAI to win beyond the first years. Of course there _were_ cases when the moat wasn't there, or was quickly disappeared, eg. Netscape's business melted away as soon as Microsoft bundled Internet Explorer with Windows. Personally I think OpenAI still has a good 10x growth ahead (eg. 100M paid users for ChatGPT at the $20/mo-ish pricepoint) if they just maintain the current lead on the rest of the pack, and probably the API income can similarly be scaled up. At the slow-moving Retail company I work at, all the execs have been talking about AI for the last 2 years, but we still don't have a single AI feature in production in any of our apps, so we're not yet contributing to OpenAI revenues. But we will soon, as will 1000s of other slow-moving BigCos.
- cedws 2y agoLLM subscriptions are such a scam. You’re paying up front $20 to use an LLM when you could just be paying fractions of a penny per use. Majority of users probably do not get their moneys worth by racking up $20 worth of tokens in a month. I’d really like to see as “pay as you go” gateway for popular LLMs. As Bezos said: “your margin is my opportunity.”
- perfect-blue 2y agoI think the most consumer friendly options would be a pay as you go model or a pay for tiers of use (e.g., $X for 500 queries, $XX for 1000 queries, etc.). However they really are banking on the idea that people pay a bunch up front and use it fairly minimally. This allows them to make profit on the subscribers to pay for queries by free users. I have no idea where the pricing model will go in the future but it wouldn’t surprise me if pricing models become the primary method for fighting for market share as opposed to the AI’s actual ability.
- deleted 2y ago[deleted]
- metadat 2y agoSee also related recent submissions: The investors behind OpenAI's historic $6.6B funding round https://news.ycombinator.com/item?id=41726370 https://news.ycombinator.com/item?id=41726370 - Today (2 comments) OpenAI wants to build 5-gigawatt data centers, nobody could supply that power https://news.ycombinator.com/item?id=41726970 https://news.ycombinator.com/item?id=41726970 - Today (3 comments) Why OpenAI burns through billions https://news.ycombinator.com/item?id=41729038 https://news.ycombinator.com/item?id=41729038 - Today (0 comments, informative article) OpenAI's bankruptcy flames linger on as Apple wiggles out of $6.5B funding round https://news.ycombinator.com/item?id=41726224 https://news.ycombinator.com/item?id=41726224 - Today (0 comments, informative article) OpenAI is now valued at $157B https://news.ycombinator.com/item?id=41727947 https://news.ycombinator.com/item?id=41727947 - Today (0 comments, informative article)