Those numbers intentionally exclude the single largest operating expense that Anthropic has: model training. [1]
So yeah, if they stop training models forever, Anthropic will probably start making a profit... until someone else with better models comes along to eat their lunch.
I am not even sure that is true. We don’t know everything that is included or excluded from their calculation. I suspect there is a lot of funny math going on to get to profitability. Remember there was a lot of similar talks and reports about SpaceX and how profitable they were. The reality was much worse. I just don’t believe it until I see it in the S1. Even then they can hide quite a bit.
Or if model training is more of a rollercoaster, where spending gets you to the top of the hill where you create a massive internal model which can then build the next version of itself for cheaper and cheaper amounts relative to human R&D costs. If Anthropic is first over that hill, they can race far ahead.
They have found a path to “profitability” iif you define “profitable” in a way that makes every early stage start-up that has at least one paying customer as “profitable”. Literally any start-up has a COGS lower than their income, but that doesn't mean anything at actual profitability given that the rest of their expenses dwarfs it.
If an AI company can exclude the cost of training the new models they release every three months from the business of whether they are profitable, it would be shocking if they weren't profitable. And the figure is tiny compared to the valuation they appear to be seeking, and may only be positive because of a short term boost.
Steve Eisman said the other day that he suspects part of Anthropic's rush to get to IPO is that their third quarter figures are terrible.
I loved how Dario used to AIsplain to credulous interviewers that AI labs had invented an entirely new business model where they were always highly profitable for their current commercially available model, but training the next bigger model made it look like they were losing money.
And suggesting that maybe accounting norms should be changed so they could pretend that they were actually profitable despite the minor detail that they were consistently spending way more than they earned at any given point in time.
This was back in 2024 or so and the zeitgeist was still focused on the idea of the labs racing to AGI instead of building and selling products, with Sam Altman opining about whether money would even exist under AGI and his laughable suggestion that OpenAI might decide to give every American citizen shares in OpenAI for some reason.
If nothing else at least now they seem to be scrutinized more like regular tech megacorps instead of a sort of private yet benevolent Manhattan project of ascetic technopriests building a utopia machine.
And now they spend more time talking about building a doomsday machine that will kill you all and also show you ads.
I believe the entire basis of their profitable quarter was getting a discount on compute from Musk.
All these figures are so utterly weaselly. AAR is a made up measure to make them look good. If they cannot show GAAP numbers, they are hiding something. Full stop. While as private companies they are under no legal obligation to show us their books, their PR and intent to go public requires it.
I'm insanely profitable each month if you exclude my mortgage and bills and shopping too.
My low level conspiracy theory is AI is encouraging habits of people not to read so noone can read statements like "we excluded our costs from our profit calculation"
