OpenAI, Anthropic Highlight Revenue Gains as IPO Hype Builds
With both OpenAI and Anthropic preparing IPOs later this year, the stakes are high, and the companies may try pushing the envelope when measuring their financial metrics. The contentious dynamic between the firms is ratcheting up, especially around the public—and investor—perception of their businesses.
The rivalry has spilled onto a new battleground: annual recurring revenue. OpenAI accused Anthropic of overstating its revenue metric in an internal memo obtained by The Verge. With private companies’ ARR reporting methodology being so opaque, it’s easy to attack the metric.
In the memo, OpenAI chief revenue officer Denise Dresser claims that Anthropic’s revenue-share arrangements with Amazon and Google—both strategic investors and cloud distribution partners—are being accounted for in ways that artificially boost the company’s headline numbers. She argues that if you strip that out, Anthropic’s run rate looks meaningfully smaller.
Despite Dresser’s claim that OpenAI’s metrics are much more in line with what the firm “would be held to as a public company,” it’s not quite there.
“Essentially, both companies are in an ARR accounting arms race ahead of their IPOs, and neither is reporting on a basis that would survive a Big Four audit,” says Harrison Rolfes, PitchBook’s senior research analyst focusing on these companies.
Over the past year or so, both firms have seen astronomical growth, bringing more attention and scrutiny to the nuances of their businesses. A year ago, Anthropic reportedly had roughly $1 billion in ARR, while OpenAI had $6 billion. At the time, OpenAI’s revenue was seen as impossible for Anthropic to catch.
But things have changed. Not only has Anthropic reached a reported $8 billion in ARR, but it’s widely seen as having built a bigger and more durable enterprise business than its rival. While OpenAI found initial success with direct-to-consumer AI and video applications, it’s been winding down many of its side projects lately, including its generative image and video app, Sora. Dresser’s memo lays out the company’s shift in focus to its enterprise business.
“OpenAI’s enterprise sales motion has an Anthropic problem, and the Dresser memo is the internal acknowledgment of it, dressed up as competitive intelligence,” Rolfes said.
The companies’ IPOs are expected to be among the largest ever. OpenAI is currently valued at about $852 billion, while Anthropic is at $380 billion. Both are expected to seek much bigger valuations when they go public. Investors will be scrutinizing the numbers.
