OpenAI Projects $5 Billion Loss Amid Surging ChatGPT Revenue and Upcoming Fee Increases

OpenAI expects a significant loss of $5 billion in 2024, despite skyrocketing ChatGPT revenue and planned fee increases. Documents reveal the AI startup anticipates tripling its income by 2025, with users facing rising subscription costs as OpenAI expands its generative AI services.

OpenAI Forecasts $3.7 Billion in 2024 Revenue Despite Anticipated $5 Billion Loss

OpenAI, an artificial intelligence startup, anticipates substantial losses this year. However, revenue will continue to explode over the next five years as the company increases fees on its signature chatbot.

The New York Times has obtained documents that indicate the organization anticipates generating $3.7 billion in revenue in 2024. ChatGPT, which initiated the present generative AI frenzy in 2022, is expected to generate $2.7 billion this year, with $1 billion coming from other businesses.

However, the Times reported that OpenAI anticipates a $5 billion loss, which excludes equity-based compensation. Its most significant expense is the computing capacity it obtains from Microsoft, its partner and top investor, whose cloud services host OpenAI's products.

The report further stated that the losses were incurred even though monthly revenue in August exceeded $300 million, a 1,700% increase since the beginning of 2023. OpenAI forecasts that revenue will triple to $11.6 billion in 2025 and reach $100 billion in 2029, indicating that growth will continue to soar.

Increases in ChatGPT users' charges would contribute to a portion of the future revenue gains. As reported by the Times, the monthly fee will increase from $20 to $22 by the end of the year and then to $44 over the next five years.

OpenAI declined to comment to the Times and did not immediately respond to Fortune's request for comment. Separately, CNBC verified the annual revenue and loss projections.

The documents obtained by the Times were presented to prospective OpenAI investors as the startup endeavors to raise $7 billion in a fundraising round that could potentially value the company at $150 billion.

OpenAI's Funding Talks with Major Tech Firms Face Uncertainty as Apple Backs Out, Reports Say

According to reports, OpenAI has been discussing the funding round with tech titans such as Apple, Nvidia, and Microsoft, and it is anticipated to conclude within the next week.

Tiger Global Management and MGX, a UAE-backed corporation, are also in discussions. Thrive Capital is the primary investor.

However, sources informed the Wall Street Journal that Apple is no longer in discussions about participating in fundraising. Apple did not promptly address a request for comment.

OpenAI is currently announcing a new organizational structure that will result in its for-profit subsidiary no longer being subordinate to the board of its nonprofit foundation.

The sudden resignation of Chief Technology Officer Mira Murati on September 25 was the latest executive departure that signals OpenAI’s coming shift in the wake of the 2023 attempt to oust CEO Sam Altman.

Amid the transition to a for-profit business, sources told Bloomberg that OpenAI could grant Altman a 7% equity stake in the company, potentially leading to a $10 billion infusion of wealth for the 39-year-old CEO. Nevertheless, the organization refuted the allegation.

“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,” Bret Taylor, chairman of OpenAI, said in a statement to Fortune on September 27.