OpenAI foresees huge revenue over the next five years despite accumulating $5 billion in losses.
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Most of the AI research company OpenAI’s losses were the result of the computing power costs it owes to its primary investor and partner Microsoft, which hosts OpenAI’s products on its cloud services.
The New York Times has reportedly reviewed financial documents that were also sent to OpenAI investors, including Microsoft, Nvidia, Thrive Capital, Tiger Global Management and MGX, as it seeks to raise $7 billion in a fundraising round that would value the company at $150 billion.
The document points to revenue expectations of $3.7 billion for 2024, with growth being projected to more than triple in 2025 to $11.6 billion. By 2029, OpenAI is forecasting for it to reach $100 billion.
The technology news publication ‘The Information’ arrived at the same conclusion back in July this year: “OpenAI has built one of the fastest-growing businesses in history. It may also be one of the costliest to run.
“The ChatGPT maker could lose as much as $5 billion this year, according to an analysis by The Information, based on previously undisclosed internal financial data and people involved in the business.
“If we’re right, OpenAI, most recently valued at $80 billion will need to raise more cash in the next 12 months or so.”
Higher ChatGPT Fees
In spite of its recent losses, the report stated that last month OpenAI achieved $300 million in revenue, representing an increase of 1700 percent since the beginning of 2023.
Future gains will allegedly come from increasing the fee for ChatGPT users, which the Times believes will first be raised to $22 per month by the end of the year from the current rate of $20. Over the next five years, the fee will be adjusted to $44.
OpenAI has not yet commented, but CNBC said it has confirmed the annual revenue and loss forecasts.
Apple was another potential OpenAI investor, but Wall Street Journal sources have since revealed that Apple is no longer interested.
There is another economic layer of activity going on at OpenAI, which is a restructuring to make its for-profit business arm independent from the board of the non-profit foundation.
Following the shift to a for-profit business, Altman may be given a 7 percent equity stake in the company, which could translate to a $10 billion cash injection for the CEO.
Bret Taylor, Chairman of OpenAI, told the global business magazine ‘Fortune’ last week that these figures were spurious, however:
“The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made.”
OpenAI began in 2015 as a nonprofit research organisation, but it shifted to a ‘capped profit’ enterprise in 2019. Now, it seems, the company is about to transform its earnings status yet again.
AI Today’s Rebekah Carter recently explored the relationship between OpenAI and Microsoft, including the developments, challenges, and opportunities.
