Leaked docs: OpenAI's adjusted operating margin improved from -150% in Q2 to -109% in Q3; its estimated Q3 adjusted operating losses rose from $10.1B to $10.9B
The company improved its adjusted operating margin but remains far off from profitability — OpenAI grew revenue by roughly 50% to $10 billion from the second to the third quarter …
The comparison is sharpened by prior reporting that Anthropic more than doubled Q2 revenue and reached a small operating profit. OpenAI's improved ratio therefore matters not just as a growth marker, but as evidence of whether a frontier lab can make expanding sales absorb its cost base.
First-order effects
OpenAI's adjusted operating loss fell from $1.50 to $1.09 for every dollar of revenue between Q2 and Q3, improving its efficiency while leaving the company materially unprofitable.
The Q3 figures give OpenAI a stronger financial narrative for investors and customers evaluating whether its faster revenue growth is beginning to offset the cost of operating and developing models.
Second-order effects
Anthropic's reported Q2 operating profit becomes a more consequential competitive benchmark: OpenAI must show that its improved margin trajectory can close the profitability gap as well as sustain sales growth.
Enterprise AI buyers gain a clearer reason to compare vendors on economic durability alongside model capabilities, particularly when committing workloads that may expand inference usage.
Third-order effects
If frontier labs continue to pair rapid sales growth with deeply negative operating margins, access to capital and the ability to spread compute costs across a large customer base will increasingly separate leading model providers from smaller rivals.
The sector is moving toward financial scrutiny centered on revenue quality and inference-linked cost discipline, rather than growth alone.
The trend: Frontier AI is entering a margin-accountability phase in which revenue scale must increasingly demonstrate a path toward absorbing model-development and serving costs.
scoop - openai continued to suffer heavy losses in the third quarter, though it grew revenue by roughly 50% to $10 billion its operating margin improved from -150% to -109%, though that is still a long ways off from profitability story below: https://www.wsj.com/...
@edzitron
Ed Zitron on x
no info on costs [embedded post]
@amir
Amir Efrati on x
openai revenue hitting $10b in Q3 is ~actually~ much faster than many people expected
@berber_jin1
Berber Jin on x
we've updated our story with more details on openai's third quarter numbers and how it compares to anthropic oai operating loss when *including* stock based compensation is around -$13.5 billion in q3 anthropic's operating loss was -$567 million in q3 https://www.wsj.com/...
@borrowed_ideas
@borrowed_ideas on x
Take out the ~$85 Bn of new money and Anthropic's IPO midpoint works out to ~$1.25 Tn pre-money, pretty much where OpenAI raised last week. Given the difference in revenue (let alone margins), I'm not sure both numbers can be right.
@markdistef
Mark Di Stefano on x
Good lord
@puppyeh1
Jeremy Raper on x
I will repeat, for the umpteenth time, my contention that not only will OpenAI never IPO, but that it will bring SoftBank almost down for the 5th time in Son's storied career
@edzitron
Ed Zitron on x
Absolute dog of a company that has now raised at a suicidal $1.25 trillion valuation, but could only scrape together $11bn, or around half of what it needed to get through this quarter. I do not see how OpenAI IPOs at anything close to this valuation, if at all.
@borrowed_ideas
@borrowed_ideas on x
“OpenAI told investors Tuesday that its adjusted operating margin improved from -150% to -109% from the second to the third quarter...Even so, the company's adjusted operating losses ticked up slightly from $10.1 billion to $10.9 billion” https://www.wsj.com/...
@edzitron
Ed Zitron on x
Also how much of this revenue was from distillation?
@bobeunlimited
Bob Elliott on x
OpenAI's $13.5bln in operating losses (inc. stock comp) on $10bln in revenue is not a particularly compelling business model. https://www.wsj.com/...
r/OpenAI
r on reddit
Over or under Open AI does not survive the next three years? I think OAI will be purchased and there will be just two main frontier models Anthropic and Google. …