Docs: OpenAI had $300M in monthly revenue in August, up 1,700% since early 2023, 350M MAUs in June, and expects ~$3.7B in annual sales but $5B in losses in 2024

As the company looks for more outside investors, documents reviewed by The New York Times show consumer fascination with ChatGPT and a serious need for more cash.

New York Times 2024-09-28

Context & Ripple Effects

OpenAI’s reported revenue trajectory had already accelerated from roughly $1.3 billion annualized in October 2023 to more than $1.6 billion annualized by year-end. The new documents put that growth alongside a far larger projected 2024 loss, making monetization progress and operating cost inseparable parts of the same story.

The figures also extend an earlier pattern: OpenAI’s 2022 losses were reported to have roughly doubled to about $540 million as the company contemplated exceptionally large fundraising. The company’s scale in users and revenue now gives that capital need a much clearer commercial context.

First-order effects

OpenAI can present substantial consumer reach and rapidly growing revenue to prospective outside investors, but its projected 2024 loss makes additional financing materially urgent rather than optional.
The gap between expected sales and losses puts immediate pressure on OpenAI to convert usage into paid products and enterprise revenue while containing the cost of serving its models.

Second-order effects

Rival AI providers will face a sharper benchmark: consumer adoption alone is insufficient if the cost base grows faster than monetization, increasing the importance of pricing, paid conversion, and enterprise distribution.
Compute and infrastructure partners gain leverage from OpenAI’s need to sustain service at scale, while investors will scrutinize the company’s long-running funding appetite through the lens of AI unit economics.

Third-order effects

If this revenue-and-loss pattern persists across leading model developers, frontier AI is likely to remain a capital-intensive market where access to infrastructure financing helps determine which firms can keep improving and distributing models.
The sector’s valuation logic may increasingly turn on durable revenue per user or task, rather than user growth alone, as companies must demonstrate that scale can narrow rather than widen operating losses.

The trend: Generative AI is moving from a breakout adoption phase into a test of whether massive usage can support the compute, product, and financing costs of frontier-model businesses.

Discussion

@gruber John Gruber on threads
Yeah what a miss. Tim Cook and his dumb focus on profitable (and carbon neutral) products and services.
@paul_rietschka Paul Rietschka on threads
It's not a company. It's not a cult. It's...an incinerator for cash with no future prospects whatsoever. $44/per user for ChatGPT Pro, btw, for those of you who enjoy making poor decisions.
@kalihays1 Kali Hays on threads
Several new deets in here based on info OAI sent to potential investors. Including! Plans to charge individual users $44 to use ChatGPT plus — RE: https://www.threads.net/...
@benedictevans Benedict Evans on threads
OpenAI hit $300m of monthly revenue in August Accenture booked $1bn of ‘generative AI’ work in the 3 months to August.
@amir Amir Efrati on x
@MikeIsaac & @eringriffith today have additional reporting supporting this. https://www.nytimes.com/...
@annmlipton @annmlipton on x
This is interesting - OpenAI, and Anthropic before it, are using SPVs to raise money. https://www.nytimes.com/... The purpose of that is the securities laws. If OpenAI/Anthropic have too many investors, they'll have to make public filings. But -
@modestproposal1 @modestproposal1 on x
The good news is that OAI predicts $100B in 2029 revs. The bad news is if scaling laws hold that's less than a training run will cost. [image]
@jason_kint Jason Kint on x
Wow. Spending $8.7B to get $3.7B. [image]
@jason_kint Jason Kint on x
Here is the full report. And remember they're not paying for nearly all of the content they're arguably “stealing” to train their LLMs. https://www.nytimes.com/...
@garymarcus Gary Marcus on x
updating with a slight softening, 7 hours later: If it doesn't fall apart, investors will demand unusual conditions. some hint of that already, here: https://www.nytimes.com/...
@grady_booch Grady Booch on x
“For every dollar we make it costs us a dollar and thirty cents, but don't worry, we'll make it up in volume.” — OpenAI
@ccm_brett Brett on x
triple digit negative profit margins Just a little more scale and we get there, I promise
@modestproposal1 @modestproposal1 on x
I know they have to have forecasts but if you build God who knows but it's probably more than $100B and if you don't $44/mo consumer subscription product seems unlikely? https://www.nytimes.com/...
@mikeisaac Rat King on x
sorry, 350 million Monthly users! didnt mean to short change em! more numbers here [image]
@zerohedge @zerohedge on x
*OPENAI MONTHLY REVENUE HIT $300M IN AUGUST: NYT how much of it is from high school/college students?
@modestproposal1 @modestproposal1 on x
Honestly thought God would cost more $44/month [image]
@eringriffith Erin Griffith on x
Scoop w @MikeIsaac: A detailed look at OpenAI's financials as part of its latest fundraise. One key detail: Lead investor Thrive Capital gets to invest up to $1bn more at the same $150bn valuation through the end of 2025. No other investor gets that term.
@mikeisaac Rat King on x
NEW: OpenAI expects $3.7 billion in revenue in 2024 and has 300 million monthly users but it expects to lose at least $5 billion in 2024, and needs to continue raising money to deal with its mounting costs story w @eringriffith https://www.nytimes.com/...
r/Economics r on reddit
OpenAI Is Growing Fast and Burning Through Piles of Money
r/singularity r on reddit
Gift Article: OpenAI Is Growing Fast and Burning Through Piles of Money
@fluxandflow.bsky.social @fluxandflow.bsky.social on bluesky
I cannot articulate how happy it makes me that he was shot down and ridiculed by TSMC. [embedded post]
@lifewinning.com Ingrid Burrington on bluesky
I promise once we spend 1/10th of the GDP of the fuckin planet this tech that currently loses billions of dollars will be profitable!! What a clown [embedded post]
@stevelohr Steve Lohr on x
Tracking the Sam Altman road show to drum up global support for a massive data-center and chip-factory investment plan. @CadeMetz + @trippmickle https://www.nytimes.com/...
@edzitron Ed Zitron on x
This article is really good, but also shows that Altman lacks the juice and know-how to actually turn the wheels of power beyond money. https://www.nytimes.com/... [image]
@edzitron Ed Zitron on x
Oh yeah Altman's truly full of shit if the TSMC people are laughing him off. He hasn't got any substance.
@rahll Reid Southen on x
For those who don't know, TSMC manufactures over 90% of leading-edge chips, and are crucial to the AI boom. If this is what TSMC thinks of Altman, then you can rest assured he has no idea what he's doing and is completely full of sh*t.
@buccocapital @buccocapital on x
Sounds like TSMC executives weren't too fond of Mr. Altman [image]
r/singularity r on reddit
Behind OpenAI's Audacious Plan to Make A.I. Flow Like Electricity (Gift Article) (2024-09-25)
r/OpenAI r on reddit
Behind OpenAI's Audacious Plan to Make A.I. Flow Like Electricity
@firerock31 Andy Cheng on threads
Apple rarely invests in other companies, so their decision to drop out of investing in OpenAI is a clear sign that something might be off, especially with OpenAI expecting to close this funding round next week. It's also concerning that Apple lags so far behind its competitors i…

Chronicles