OpenAI raked in more than $1.6 billion in revenue in 2023, up over 20% from $1.3 billion in October, according to a report from The Information, which cited people with knowledge of the figure.
Much of the revenue is driven by ChatGPT, the company’s popular conversational AI, which posted strong growth, it said. Meanwhile, rival Anthropic upgraded its revenue projections for 2024 to $850 million, the tech publication said in a separate report.
Also read: 10 Beat-Performing AI Crypto Tokens of 2023
OpenAI brushes off CEO drama
OpenAI’s revenue increase comes after a period of high drama for the American startup – the ouster and then return of CEO and cofounder Sam Altman. On Nov. 17, the OpenAI board fired Altman in unclear circumstances, only to face a mutiny from the company’s staff.
A week later, the board reinstated Altman to his position. The crisis led some of OpenAI’s corporate customers to jump ship, according to earlier reports. Rival firms like Anthropic, Google and Microsoft went after the clients.
However, the 20% growth in revenue in two months suggests that OpenAI “was able to hold onto its business momentum in selling artificial intelligence to enterprises despite the leadership crisis,” The Information reported.
Latest data shows that OpenAI, which was valued at $27 billion earlier last year, generated $130 million in revenue per month during the last few months of 2023. The company made its money from the “sale of AI software and the computing capacity that powers it.”
Now, OpenAI is looking to raise new funding at a valuation of $100 billion. The firm is reportedly in talks with Abu Dhabi-based G42 to raise between $8 billion and $10 billion.
In 2022, OpenAI’s annual revenue was just $28 million, before it began charging people to access ChatGPT in February last year. The premium version of ChatGPT costs $20 per month.
Other people can still use the free version of the AI chatbot, but non-subscribers may experience limited access during times of high demand. ChatGPT has started to see a decline in the number of users, suggesting it may have peaked.
The bot, which is powered by OpenAI’s GPT technology, became the fastest-growing app in history in 2023, reaching 100 million users in record time, eclipsing earlier internet sensations such as Instagram and TikTok.
Anthropic sees jump in revenue
ChatGPT’s ability to generate human-like text and complete tasks, such as writing poetry or recommending restaurants, made it popular online, even though some people found its behavior to be nonsensical and argumentative.
OpenAI isn’t only making money from paid ChatGPT subscriptions. The company generates additional revenue by selling API access to its AI models to corporate customers.
In August 2023, OpenAI launched a business version of ChatGPT. Known as ChatGPT Enterprise, the model comes with what the company says are improved security and privacy features. OpenAI said that early users included Canva, Estée Lauder, and PwC.
“Since ChatGPT’s launch just nine months ago, we’ve seen teams adopt it in over 80% of Fortune 500 companies,” the firm stated.
OpenAI lost $540 million developing its AI models in 2022. While the latest revenue growth could boost its coffers, OpenAI will still need to give up 75% of its profits to Microsoft until the tech giant recoups its $13 billion investment in the AI startup.
Meanwhile, Anthropic, the OpenAI competitor backed by Amazon and Google, has projected that it will generate more than $850 million in annualized revenue by the end of 2024, as reported by The Information.
Three months earlier, Anthropic told some investors that the company, creator of the Claude AI chatbot, was generating revenue at a $100 million annualized rate and expected that figure would reach $500 million by this year.
It “is not clear why the latest projections are materially higher,” the report said, but “the projection … may offer more evidence that generative artificial intelligence is gaining steam among enterprises.”
and then