According to internal documents obtained by media sources, OpenAI's revenue has surged by 1700% since the beginning of 2023, projecting annual revenue of $100 billion by 2029, comparable to current annual sales of companies like Nestlé or Target. However, OpenAI anticipates a $5 billion loss for the year. The company is planning a new $7 billion funding round, elevating its valuation to $150 billion.
The New York Times reported that OpenAI's August revenue reached $300 million, up 1700% from the start of 2023, with expected annual revenue of about $3.7 billion for the year. OpenAI is sharing these financials with potential investors as it seeks a $7 billion funding round, which could conclude as early as next week. Despite rapid growth, the company has seen the departure of several key executives and researchers in recent months.
The documents reveal OpenAI's financial performance, showing how it presents itself to investors without clearly explaining the specific amount of losses. The company expects a $5 billion loss this year, largely due to operational costs, employee wages, and office rent, excluding significant but unexplained expenses like equity compensation. With increasing user numbers, OpenAI's expenses are rising, indicating a need for continued fundraising next year.
OpenAI's August revenue was three times higher than the same period last year. By June, around 350 million people used its services monthly, up from 100 million in March this year. This growth is primarily driven by ChatGPT, which was launched in November 2022. User numbers soared after ChatGPT allowed people to use the service without creating accounts or logging in. ChatGPT is expected to generate $2.7 billion in revenue this year, up from $700 million in 2023, with other revenue streams bringing in $1 billion.
About 10 million ChatGPT users pay a $20 monthly fee. OpenAI plans to increase this fee by $2 later this year and substantially to $44 over the next five years. Additionally, over 1 million third-party developers use OpenAI's technology to support their services. OpenAI predicts that by 2029, annual revenue will reach $100 billion.
OpenAI is also working on cost control, with its biggest expense stemming from its partnership with Microsoft, its major investor. OpenAI has invested heavily in Microsoft's cloud computing system, which supports its products.
In addition to Thrive Capital, OpenAI is in talks with other investors, including Microsoft, Apple, Nvidia, Tiger Global, and UAE-controlled tech investment firm MGX. Thrive Capital has invested $750 million into OpenAI's latest funding round. The company plans to use special purpose vehicles (SPV) to raise an additional $450 million.
As the lead investor, Thrive has a unique privilege: the option to invest up to $1 billion at a $150 billion valuation by 2025. However, other investors didn’t receive the same terms, causing some dissatisfaction. OpenAI's fundraising discussions might also be influenced by the recent departure of three senior executives, including CTO Mira Murati, Chief Research Officer Bob McGrew, and VP Barret Zoph.
OpenAI is striving to become profitable, with its funding potentially converting to debt if it fails to achieve profitability within two years.
