OpenAI, a global leader in artificial intelligence, is expected to generate $3.7 billion in revenue this year while incurring losses of approximately $5 billion.
Financial documents reveal that OpenAI's monthly revenue reached $300 million in August, marking a 1700% increase since the start of 2023. The company predicts its annual revenue will rise to $11.6 billion next year.
Despite this rapid growth, escalating operational costs, employee wages, and office rents contribute to the projected losses. The losses exclude stock-based compensation and other significant expenditures that remain unexplained in the documents.
As one of the fastest-growing startups in history, OpenAI faces challenges in managing soaring operational costs while achieving its remarkable milestones.
Financial Details
The documents provide a detailed look at OpenAI’s finances, though the exact loss figures remain unclear. OpenAI did not comment on these documents. It was noted that August revenue more than doubled compared to the same period last year.
By June, approximately 350 million people used OpenAI’s services monthly, up from around 100 million in March. Most of the traffic came from ChatGPT, with user numbers surging after it allowed access without account creation or login.
ChatGPT is expected to generate $2.7 billion in revenue this year, up from $700 million in 2023, with $1 billion coming from other businesses using its technology.
Additionally, about 10 million ChatGPT users pay a $20 subscription fee each month. OpenAI plans to increase this fee by $2 by the end of this year and further to $44 within the next five years. Over 1 million third-party developers use OpenAI's technology for their services.
Projected Revenue
OpenAI estimates its revenue will reach $100 billion by 2029, on par with current annual sales of Nestle or the second-largest US retailer, Target.
Burning Cash
The documents indicate that OpenAI will need to continue raising funds next year as operating expenses rise with user growth. Sources suggest OpenAI is in talks to raise $6.5 billion at a $150 billion company valuation, led by Thrive Capital. Microsoft, another major investor, is expected to participate, with Apple and Nvidia also in investment discussions. Nvidia reportedly intends to invest $100 million in OpenAI's new funding round.
OpenAI CFO Sarah Friar mentioned to investors that the current funding round is oversubscribed and will conclude next week.
Recently, several key figures have left OpenAI, including CTO Mira Murat, who departed this week after six and a half years with the company.
Plans are underway to restructure OpenAI’s core business into a for-profit entity, no longer controlled by its non-profit board. The non-profit will retain a minority stake, and Sam Altman will receive equity in the for-profit company for the first time. This restructuring could value the company at $150 billion, making it more appealing to investors and easier for employees to monetize their shares.
