7 ms·
Anthropic tells investors it will be profitable for second straight quarter
- jqpabc123 2mo agoYes, but --- using something they call "adjusted operating income". This is reportedly a sort of "Enron" accounting which excludes some really big expenses like revenue sharing, the cost of model training and hardware deploymments which are kept off the corporate balance sheet using "special finance vehicles". https://www.msn.com/en-us/technology/artificial-intelligence/the-very-big-caveat-to-the-report-that-anthropic-is-profitable-for-a-second-straight-quarter/ar-AA2cbhG0 https://www.msn.com/en-us/technology/artificial-intelligence...
- mixdup 2mo agoIt's really easy to be profitable when you exclude all of your expenses
- sigmar 2mo ago>This is reportedly a sort of "Enron" accounting which excludes some really big expenses like revenue sharing, the cost of model training and hardware deploymments source? this seems false. reportedly the adjusted profitability includes inference and amortized training costs
- jqpabc123 2mo agosource? Listed at the end of my post. this seems false. Source showing this in accordance with GAAP (Generally Acceptable Accounting Practices)?
- sigmar 2mo agothat says only that the gross margin calculation excludes profit sharing and training. You should read it more carefully edit: def not gaap profitable or they would have said that to investors. and their stock-based comp is surely astronomically high on paper.
- exabrial 2mo ago[flagged]
- deleted 2mo ago[deleted]
- throwaway85825 2mo agoGAAP or non GAAP profitable?
- datadrivenangel 2mo agonon GAAP. If they were GAAP profitable they either wouldn't be sharing or would be IPOing already.
- JumpCrisscross 2mo ago> If they were GAAP profitable they either wouldn't be sharing or would be IPOing already They'd be in their quiet period...
- altmanaltman 2mo ago> Anthropic's gross margins are above 80% before accounting for revenue shared with distribution partners, including Amazon (AMZN.O), opens new tab, and the cost of training its model, the newspaper said. Yes the company known for famously training 1 model
- sobiolite 2mo agoWell fortunately now we're gonna be Pacing the Frontier.
- unreal6 2mo agoI cynically wonder how much of this "pacing" is a mutual decision to reduce training expenditure costs as OpenAI and Anthropic plan to IPO.
- stackskipton 2mo agoMy guess is a ton. According to https://www.thebignewsletter.com/p/monopoly-round-up-just-stop-the-anthropic https://www.thebignewsletter.com/p/monopoly-round-up-just-st..., they are asking for exception to anti trust as this type of collaboration would normally be massive anti trust violation.
- thewebguyd 2mo agoOr they've hit diminishing returns that will collapse their valuation, so saying "this is a threat to humanity" sounds better than "This is about as good as the tech is going to be for a long time" to investors.
- deleted 2mo ago[deleted]
- layer8 2mo agoThe “opens new tab” sometimes drives me insane when using TTS to listen to Reuters articles. I’m assuming they are using the wrong CSS/markup for the purpose.
- nemomarx 2mo ago"profitable without COGS" doesn't actually mean anything at all does it?
- JumpCrisscross 2mo agoProfitable without Capex, i.e. gross margin. Inference is included in COGS. Capex (training) is not. That's reasonable.
- cmdli 2mo agoThis also includes revenue sharing with distribution partners, which should probably be in COGS.
- freejazz 2mo agoIsn't training necessary for the end-product? How is it not a cost to generate the output if you can't generate the output without having done the training? Seems more like saying that a car is profitable product when you don't have to account for the steel that its made from. Seems completely disingenuous.
- icedchai 2mo agoIt's an accounting trick.
- seizethecheese 2mo agoIn what case is capex (for any company) not required for the end product? Are you arguing capex is disingenuos as a concept? In your car example the training is much like setting up the manufacturing line. I think the issue here is that the capex depreciates super fast since the models obsolete really fast.
- freejazz 2mo agoIf my company sells widgets and dongles, capex for the dongle line does not figure into widget COGS
- darkwizard42 2mo agoSeeing a lot of tricks similar to how ridesharing companies tried to be "profitable" before going to IPO. Caveat: Thing have materially improved but really Uber is carried by its insane Ads margins The idea of removing model training from your costs is a little wild tbh. The profitability of being able to serve a query wasn't really under question (nor is the margin expected to be anything less than 80%+) I think.
- sphinxterai 2mo agoWell then you haven't listened to Ed Zitron or any of the other AI bubble doomers. His contention is that its worthless and they lose money on every query.
- embedding-shape 2mo agoBut isn't he taking all the costs into account, that created the experience? Rather than just literally the inference/serving infrastructure? Bananas way of calculating things if so, doesn't match reality at all.
- JumpCrisscross 2mo agoZitron is worthless–lying about numbers and not correcting the record when you're called out means you aren't trustworthy. Worse than that if you directionally agree with him, which I do.
- rowanG077 2mo agoHe makes his money and fame by spewing bulshit as many grifters before him. Which unfortunately probably hides the real truth. That large labs do have potential problems with long term profitability.
- freejazz 2mo agoisn't that when the training costs are actually accounted for?
- ChrisBland 2mo agoGAPP or ACSOI? Adjusted Consolidated Segment Operating Income from the groupon days....
- GiorgioG 2mo agoThis is Enron-level fraud. What would Ford/GM/Toyota's gross margins be without the cost of manufacturing vehicles?
- judge2020 2mo agoMore similar to if they took out the cost to design the cars and all the many levels of corporate overhead they have in the form of middle management.
- maerF0x0 2mo agoThat's a bit hyperbolic. It's closer to using EBITDA as your "earnings" and bucketing model costs in a rapid depreciation model (which is fair, I'd assume a model is good for more than just 1 year...
- JumpCrisscross 2mo agoIt's gross margin. Not including training in gross margin is perfectly reasonable.
- lovich 2mo agoThe models don’t exist without training. I don’t see how excluding the training cost from the thing they are selling(inference) is perfectly reasonable and not just an accounting trick. If I am building a widget and have a widget factory that cost money to build and operate, is it reasonable to only use the cost of shipping my widgets to my buyer as the costs for my gross margin?
- maerF0x0 2mo agoGenerally speaking, IDK about Anthropic specifically, they don't train purely from scratch though. A good chunk of the setup is reused previous models can serve as a basis for the next model. Plus there are methods that also use the previous model as a warm start. Just taking a wild guess, but I'd assume the .5 releases are built on the previous and the Majors (3, 4, 5) are more extensive retrains?
- cdrnsf 2mo agoI imagine there are many other businesses that would be profitable if they excluded all of their largest costs from their reporting.
- throwaway_95283 2mo agoTurns out building houses is super profitable once you remove the cost of building materials, labor, and land.
- csbrooks 2mo agoOk, but a more honest comparison here would be removing the cost of hiring architects and hiring lawyers to draft contracts, not all the per-house costs.
- JumpCrisscross 2mo ago> removing the cost of hiring architects and hiring lawyers to draft contracts For multi-unit houses, sure. The actual analogy is closer to removing the cost of the cement plant from every house. Fixed versus variable costs.
- stymaar 2mo agoFun fact: most, if not all, tech startups are actually “profitable” under this assumption.
- jimmydoe 2mo agovery convoluted, number game but probably works for casual investors who just want to put money in something.
- ufish235 2mo agothese are not casual investors - anthropic is not public
- maherbeg 2mo agoIs this community adjusted EBITDA?
- burgerboii 2mo agoI believe that their desire to slow down AI development is just for profits. Active competition requires constant reinvestment and does not allow them to milk their trained models long enough (except poor Haiku maybe).
- winfredJa 2mo agosurprised by 80% margin that doesn't include training cost.
- dr_faustus 2mo agoPathetic! At my company, we have a 100% margin before accounting for cost!
- surgical_fire 2mo ago> before accounting for revenue shared with distribution partners, including Amazon (AMZN.O), opens new tab, and the cost of training its model, the newspaper said. "We are profitable when we ignore our costs". I wonder what other funny strategy they may employ to claim 80% margins.
- KevinMS 2mo agoBlockbuster was profitable if you only considered its Milk Duds sales.
- Haven880 2mo ago"will be"? Is it fully and openly audit or more like trust-me-bro 30T usd TAM? Reminds me of Worldcom, Enron and Groupon.