OpenAI, the San Francisco startup behind ChatGPT, has told investors it has made billions of dollars from chatbots and expects to make even more in the coming years. But it’s less clear how much loss is occurring.
OpenAI’s monthly revenue hit $300 million in August, an increase of 1,700% from the start of 2023, and the company expects annual revenue to be about $3.7 billion this year, according to financial documents reviewed by The New York Times. I’m here. OpenAI expects its revenue to grow to $11.6 billion next year.
But an analysis by financial experts who also reviewed the documents shows the company will lose about $5 billion this year as it pays costs associated with operating its services and other expenses such as employee salaries and office rent. It is expected that These numbers do not include stock-based compensation payments to employees, among several large costs that are not fully accounted for in documentation.
OpenAI is circulating documents to potential investors for an investment round that would raise $7 billion and value the company at $150 billion, the highest ever for a privately held technology company. There is a possibility. The round, which could close as early as next week, comes at a critical time for OpenAI, which has been growing rapidly but has lost a number of key executives and researchers in the past few months.
The document provides the first detailed look at OpenAI’s financial performance and how the company is represented to investors, but it doesn’t really explain how much it’s losing money. The funding document also indicated that OpenAI would need to continue fundraising next year, as its expenses would increase in proportion to the number of people using its product.
OpenAI declined to comment on the document.
OpenAI’s August revenue more than tripled from a year ago, and as of June, about 350 million people used its service each month (up from about 100 million in March), according to the document. did.
Most of that is due to the continued popularity of ChatGPT, which was released in November 2022. Documents show a sharp increase in growth after ChatGPT. It started The company expects ChatGPT to bring in $2.7 billion in revenue this year, up from $700 million in 2023, with $1 billion of that coming from other companies using the technology. be.
Approximately 10 million ChatGPT users pay a monthly fee of $20 to the company, according to the document. According to the document, OpenAI plans to increase its price by $2 by the end of the year and aggressively increase it to $44 over the next five years. More than 1 million third-party developers use OpenAI’s technology to power their own services.
OpenAI predicts its revenue will reach $100 billion in 2029, roughly comparable to the current annual sales of Nestlé and Target.
Like other high-profile tech startups over the past few decades, OpenAI has struggled to control costs.
The biggest cost is the computing power gained through a partnership with Microsoft, which is also a major investor in OpenAI. Microsoft pumped more than $13 billion into the San Francisco company. But OpenAI is spending much of its money on Microsoft’s cloud computing system, which hosts OpenAI products.
In addition to Thrive Capital, the lead investor in the new round, OpenAI is also in talks with Microsoft, Apple, Nvidia, Tiger Global and UAE-controlled technology investment firm MGX, according to three people familiar with the discussions. It is said that there is
OpenAI offers investors an unusual trading structure. Thrive Capital invested $750 million in OpenAI’s latest funding round, according to people familiar with the deal. In addition to putting in its own capital, the company plans to raise an additional $450 million from other investors using a financial instrument called a special purpose vehicle, the people said.
As the deal’s lead investor, Thrive also has the unusual perk of the option to invest up to an additional $1 billion in OpenAI through 2025 at the same $150 billion valuation, according to the documents. This could benefit Thrive, given that OpenAI’s valuation has risen rapidly to $150 billion from just $30 billion a year ago.
Other investors in OpenAI were not given the same terms, and some investors were unhappy with the preferential treatment, according to two people familiar with the discussions.
(The Times sued OpenAI and Microsoft in December for copyright infringement of news content related to AI systems.)
OpenAI’s acquisition talks could be affected by the departure of three high-profile people from the company this week. Chief Technology Officer Mira Murati resigned Wednesday night, followed closely by Chief Research Officer Bob McGrew and Vice President of Research Barrett Zoff.
The funding talks come as OpenAI is working to reorganize itself into a for-profit company. The company’s current CEO Sam Altman, tech mogul Elon Musk and several other technologists founded the AI Institute as a nonprofit organization in late 2015, and its board of directors currently maintains management control of the company.
But in 2018, after Mr. Musk and his money left, Mr. Altman turned the business into a so-called restricted-profit company so he could raise the billions needed to build out artificial intelligence. Although the organization generated profits for investors, the profits were limited. And it has been governed by a nonprofit board that doesn’t answer to investors.
As part of the investment round, OpenAI has two years to convert into a commercial business or the funds will be converted to debt, according to deal documents.
Cade Metz contributed reporting from New York.
