Anthropic's Q3 $17B revenue comes with $567M loss
What's the story
Anthropic, the AI firm behind Claude, has reported an operating loss of $567 million for the third quarter. The company's financial performance took a sharp turn from the previous quarter's profit of $974 million. The decline is mainly due to rising computing costs and other expenses ahead of its planned initial public offering (IPO).
Financial challenges
Revenue growth slows down significantly
Anthropic's revenue for the third quarter stood at $17 billion, marking a sharp decline in growth rate to 47% from 144% in the previous quarter.
The company attributed its operating loss mainly to $5 billion in computing capacity acquired through expensive short-term commitments instead of cheaper multiyear agreements.
Another contributing factor was $2 billion in noncash charges related to its donation-matching program.
Profit adjustments
Adjusted operating profit rises to $2.5 billion
When excluding certain expenses like stock-based compensation and charitable contributions, Anthropic reported an adjusted operating profit of $2.5 billion for the third quarter. This is an increase from $2.2 billion in the previous quarter.
However, its adjusted operating margin fell to 15% from 19%, reflecting the impact of rising costs on profitability despite strong revenue growth.
Revenue adjustments
Net loss of $23.3 billion for the 3rd quarter
Anthropic's third-quarter revenue was also impacted by price reductions and contractual discounts, which cut the figure by about $600 million. This offset some of the growth from increased usage.
The company reported a net loss of $23.3 billion, mainly due to a $21.9 billion accounting charge from revaluing convertible notes and related instruments due to its enterprise valuation increase.
Future commitments
Anthropic's looming commitments and upcoming IPO
Anthropic revealed $895.4 billion in computing and infrastructure-related purchase and lease commitments over several years, including contracts signed after September 30.
About $69.8 billion is due within a year of that date.
The company filed for an IPO on October 26, with pricing expected in mid-November despite these financial challenges and future commitments that could pose risks to its public offering prospects.