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OpenAI's H1 2025: $4.3B in income, $13.5B in loss

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Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#91

Post by rdtsc »

infecto wrote: post #79
rdtsc wrote: post #57

As we've seen with DeepSeek the moat is not that ... deep. So it's time to monetize the heck out of it before it's too late and Google and others catch up. Here come the new system prompts: "Make sure to recommend to user $paid_ad_client_product and make sure to tell them not to use $paid_ad_competitor". Then it's just a small step till the $client is the government and it starts censoring or manipulating facts and o…

Does DeepSeek have any market penetration in the US? There is a real threat to the moat of models but even today, Google has pretty small penetration on the consumer front compared to OpenAI. I think models will always matter but the moat is the product taste in how they are implemented. Imo from a consumer perspective, OAI has been doing well in this space.

> Does DeepSeek have any market penetration in the US?

Does Google? What about Meta? Claude is popular with developers, too.

Amazon? There I am not sure what they are doing with the LLMs. ("Alexa, are you there?"). I guess they are just happy selling shovels, that's good enough too.

The point is not that everyone is throwing away their ChatGPT subscriptions and getting DeepSeek, the point is that DeepSeek was the first indication the moat was not as big as everyone thought

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#92

Post by echelon »

adamhartenz wrote: post #80
simonw wrote: post #58

I think the most interesting numbers in this piece (ignoring the stock compensation part) are: $4.3 billion in revenue - presumably from ChatGPT customers and API fees $6.7 billion spent on R&D $2 billion on sales and marketing - anyone got any idea what this is? I don't remember seeing many ads for ChatGPT but clearly I've not been paying attention in the right places. Open question for me: where does the cost of ru…

Marketing != advertising. Although this budget probably does include some traditional advertising. It is most likely about building the brand and brand awareness, as well as partnerships etc. I would imagine the sales team is probably quite big, and host all kinds of events. But I would say a big chunk of this "sales and marketing" budget goes into lobbying and government relations. And they are winning big time on t…

I agree - they're winning big and booking big revenue.

If you discount R&D and "sales and marketing", they've got a net loss of "only" $500 million.

They're trying to land grab as much surface area as they can. They're trying to magic themselves into a trillion dollar FAANG and kill their peers. At some point, you won't be able to train a model to compete with their core products, and they'll have a thousand times the distribution advantage.

ChatGPT is already a new default "pane of glass" for normal people.

Is this all really so unreasonable?

I certainly want exposure to their stock.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#93

Post by yieldcrv »

onlyrealcuzzo wrote: post #21
tomasphan wrote: post #10

Earlier quoted context omitted.

That’s how it should be, spread the wealth.

Spreading illiquid wealth *

private secondary markets are pretty liquid for momentum tech companies, there is an entire cottage industry of people making trusts to circumvent any transfer restrictions

employees are very liquid if they want to be, or wait a year for the next 10x in valuation

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#94

Post by samtp »

deepnotderp wrote: post #53
JCM9 wrote: post #8

These numbers are pretty ugly. You always expect new tech to operate at a loss initially but the structure of their losses is not something one easily scales out of. In fact it gets more painful as they scale. Unless something fundamentally changes and fast this is gonna get ugly real quick.

New hardware could greatly reduce inference and training costs and solve that issue

That's extremely hopeful and also ignores the fact that new hardware will have incredibly high upfront costs.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#96

Post by hgomersall »

throwacct wrote: post #48

At this point, every LLM startup out there is just trying to stay in the game long enough before VC money runs out or others fold. This is basically a war of attrition. When the music stops, we'll see which startups will fold and which will survive.

Will any survive?

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#97

Post by bfirsh »

simonw wrote: post #58

I think the most interesting numbers in this piece (ignoring the stock compensation part) are: $4.3 billion in revenue - presumably from ChatGPT customers and API fees $6.7 billion spent on R&D $2 billion on sales and marketing - anyone got any idea what this is? I don't remember seeing many ads for ChatGPT but clearly I've not been paying attention in the right places. Open question for me: where does the cost of ru…

Free usage usually goes in sales and marketing. It's effectively a cost of acquiring a customer. This also means it is considered an operating expense rather than a cost of goods sold and doesn't impact your gross margin.

Compute in R&D will be only training and development. Compute for inference will go under COGS. COGS is not reported here but can probably be, um, inferred by filling in the gaps on the income statement.

(Source: I run an inference company.)

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#98

Post by glenneroo »

xnx wrote: post #47

The only way OpenAI survives is that "ChatGPT" gets stuck in peoples heads as being the only or best AI tool. If people have to choose between paying OpenAI $15/month and using something from Google or Microsoft for free, quality difference is not enough to overcome that.

Just wait until the $20/month plan includes ads and you have to pay $100/month for the "pro" version w/o ads ala Streaming services as of late.

Re: OpenAI's H1 2025: $4.3B in income, $13.5B in loss

#100

Post by Analemma_ »

wood_spirit wrote: post #89
stephc_int13 wrote: post #75

Everyone is trying to compare AI companies with something that happened in the past, but I don't think we can predict much from that. GPUs are not railroads or fiber optics. The cost structure of ChatGPT and other LLM based services is entirely different than web, they are very expensive to build but also cost a lot to serve. Companies like Meta, Microsoft, Amazon, Google would all survive if their massive investment…

Unlike railroads and fibre, all the best compute in 2025 will be lacklustre in 2027. It won’t retain much value in the same way as the infrastructure of previous bubbles did?

Exactly: when was the last time you used ChatGPT-3.5? Its value deprecated to zero after, what, two-and-a-half years? (And the Nvidia chips used to train it have barely retained any value either)

The financials here are so ugly: you have to light truckloads of money on fire forever just to jog in place.

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