OpenAI annualized revenue $20 billion less than previously reported

OpenAI's annualized revenue is $50 billion, about $20 billion less than previously reported figures, a discrepancy related to how different AI companies account for overall sales.

The big picture: The $70 billion figure, widely reported in September by Axios and other media outlets, was based on information shared with investors in an attempt to create a more direct comparison to rival Anthropic, Axios has learned.

• Anthropic includes revenue from cloud partner sales in its tally.

Zoom in: Both companies are GAAP compliant, but they account for revenue through partner sales differently.

• If a customer pays $100 for an AI service through a cloud provider, Anthropic's accounting method allows it to record the full $100 as top-line revenue, per Francine McKenna, accounting professor and author of the newsletter The Dig. The cloud provider's cut is then listed as an expense.
• OpenAI records only its share of certain partner sales.
• The difference comes down to how each company views its role in the transaction — including who controls the customer relationship and is responsible for delivering the product, according to McKenna.

Between the lines: The $70 billion ARR figure for OpenAI was an attempt to "gross up" its revenue number based on an interest from investors in having an apples-to-apples figure using Anthropic's methodology, sources said.

Reality check: Annualized revenue, when sales from a given period are projected out for a year, is a commonly used figure in Silicon Valley. But in public markets, investors will prefer actual revenue rather than financial constructs that are far more appropriate for early-stage startups.

What to watch: Anthropic has reportedly told investors it realized an operating profit in the second quarter, per the Financial Times, but those figures have excluded stock-based compensation.

• They also largely preceded an array of computing deals signed by the company that are set to cost hundreds of billions of dollars, according to The Information.
• Beware of claims about "profit" as well, at least until they come with the financial documents typical in an earnings release.