r/singularity • u/ResultBackground2450 • 6h ago
AI Anthropic revenue jumps to $16.8 billion in third quarter, FT reports
https://www.reuters.com/technology/anthropic-revenue-jumps-168-billion-third-quarter-ft-reports-2026-10-14/22
u/Competitive_Okra2846 5h ago
Nice - what’s net profit?
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u/RabidHexley 3h ago edited 3h ago
What this ignores is the actual reason. They aren't net profitable almost solely because of how fierce the competition and drive for market share is.
If they didn't need to push expansion so hard to maintain a competitively viable product, they could achieve profitability without changing anything about their underlying business model, inference is sold at pretty decent margins. And the notable majority of their revenue is enterprise API.
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u/Eliv_nurotic 2h ago
Subscriptions are profitable too semianalysis.com/p/anthropic-subscriptions-offer-5x
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u/RabidHexley 44m ago
Yeah, was mainly referring to API since the majority of their revenue also comes from the most inherently profitable income source.
Subs are indeed profitable too, especially given that costs are amortized across the userbase, which is the main point of "generous" subs. Light users pay for heavy users.
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u/space_monster 1h ago
they are net profitable, they have been for a while.
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u/Frank_JWilson 1h ago
If you remove expenditures like training then they are “net profitable”, but if training is needed so you remain SOTA so people would use your models instead of the competition, then it doesn’t make sense to remove it.
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u/R1pNa 3h ago
ARR was 65B end of July right? So are the reports that ARR growth the past few months have been stagnant true?
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u/chockeysticks 3h ago
I think that’s my read of it, it’s not the results that’d you want to see here from investors.
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u/csAxer8 6h ago
Makes zero sense to me why Anthropic is 'turning a profit'. They need to be spending as much as they can. Poaching talent from third rate labs like Deepmind and Meta, more data center commitment, etc.
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u/microdosingrn 6h ago
Uh... that's gross revenue...
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u/subdep 5h ago
$16.8 billion gross revenue while costs were close to $50 billion
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u/Eliv_nurotic 2h ago
But profitable on inference. They would be making a profit if they stopped expanding compute
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u/Frank_JWilson 51m ago
They would be making a profit for like six months if they stopped expanding compute. Afterwards, everyone will be using better or cheaper models from competitors.
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u/New_World_2050 6h ago
It's funny you say that because I'm having arguments with morons who are saying they are making massive losses even when they are already profitable
If they don't turn a profit , those people control the narrative.
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u/Recoil42 6h ago
Both of those things are true. Anthropic is gross profitable, not net profitable. It is still burning tons of money on research and development as well as data center build-outs because it expects to grow and eventually become net profitable.
Gross profitability is a big deal but you're talking past one another.
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u/ChuckVader 5h ago
...."gross profitable not net profitable" is a silly way of saying not profitable.
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u/Inevitable_Tea_5841 5h ago
it's a legit thing in accounting/finance that's used all the time
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u/ChuckVader 3h ago
Lol, oh I know what it is. I've been in enough boardrooms to know when the finance guy starts deviating from GAAP because actual metrics paint a less than rosy picture.
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u/Eliv_nurotic 2h ago
It’s meant to show profitability of inference and what to expect once the data center buildout craze is satiated
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u/ChuckVader 1h ago
Except their costs are currently lower because of that build out. Anthropic currently gets a computer discount as a consequence of all the infrastructure deals.
Now explain how training new models isn't an operating cost given that were swapping frontier models every week
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u/Recoil42 5h ago
No it isn't. There are different types of profitability, the one kind of profitability is objectively correct; they just signal different things.
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u/Legitimate_Concern_5 4h ago
Right yeah this is the kind where you exclude your costs, also known as “not,” or the kind where you’re spending way more than you’re bringing in every year.
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u/Recoil42 1h ago edited 1h ago
Some costs are amortizable. If you're too stupid to understand that, that's a you problem, not an economics problem. Go open... literally any Economics 101 textbook ever written.
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u/ChuckVader 3h ago
"Profitable except for the things that make me unprofitable" is boardroom speak for "we're not profitable, but we made up a metric that lets us say we're profitable".
Don't worry, there's a long history of making up metrics when the real metrics are less than flattering, like EBITDA, ARR, and operating profit.
All of them make a number seem better because you justify counting stuff that makes it seem worse.
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u/Recoil42 1h ago
Profitable except for the things that make me unprofitable" is boardroom speak for "we're not profitable, but we made up a metric that lets us say we're profitable".
This simply isn't true, and there's literally a thousand finance books written about why that is. Capex and opex are amortizable. Gross profitability is profitability.
This edgelord logic isn't going to work out for you. Pay attention when people teach you things.
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u/ChuckVader 1h ago
I appreciate you have no clue what you're talking about, but the one thing we can agree on is that anthropic is not profitable in the GAAP sense.
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u/Recoil42 1h ago
Gross-profitability is literally GAAP, my dear.
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u/ChuckVader 1h ago
My deer, the formula for gross profit is total revenue - cost of goods sold.
The cost of the goods includes training costs.
I don't disagree anthropics books are likely gross, but anthropic is definitely not profitable (net or gross).
Bambi, what else do you got?
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u/TheWesternMythos 6h ago
Crazy how many people I have run into who seem fine messaging the idea the only thing that matters when considering if doing something is worthwhile is immediate profit. Well I guess perceived profit since actual profits do not matter that much lol
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u/Traditional_Cold_243 5h ago
Since you’re calling them morons, what is the difference between net and gross profit, and where does Anthrophic sit on both? I’m a moron that needs enlightenment - please help me
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u/Howdareme9 5h ago
they are profitable when you remove everything that makes them unprofitable, yes
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u/Due_Ask_8032 5h ago
If a lot of their expenses is infrastructure build out, one can infer that they will be in a good spot once that infrastructure is in place.
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u/RickMoronic 2h ago
Capital investment isnt reflected in a P&L except as depreciation or amortization, which presents a real picture of the periodic cost to the business over the useful life of whatever was invested in.
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u/New_World_2050 5h ago
I can't remember if you were one of those losers. I'm blocking you just in case.
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u/uiucthrowaway420 5h ago
The only funny thing is how ironic it is you're calling other morons cause they are only profitable considering compute costs and subtracting out all other costs which makes them lose massive amounts of money. They have extremely negative free cash flow losing billions per quarter.
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u/Recoil42 6h ago
They have gross profitability not net profitability. Net profitability is the one that includes all the things you're talking about.
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u/csAxer8 5h ago
But they’ve had positive gross margins for a while now? That’s not news
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u/Gullible-Stress-9791 4h ago
Every lab and inference provider has positive GM, The issue is, without a global slowdown, they will have to continue spending massively to outcompete competitors for market share
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u/CallMePyro 6h ago
Hopefully the "turning a profit" reports are just that operating profits are > 0. Not that they aren't spending significantly more.
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u/larrytheevilbunnie 6h ago
I think it’s cuz they’re bottlenecked by data center capacity. 90%+ profit margins on token spend, and probably overall profit on subscriptions means they just need more compute (tho any ai researcher would tell you compute is what you need)
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u/Delicious-Schedule-4 6h ago
Because if they don’t show a capacity to turn a profit they will run out of money. Do you think they have unlimited resources? And that people will continue to invest in them with no financial return?
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u/csAxer8 5h ago
The financial returns are coming in 2027 brev now’s the time to accelerate
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u/Delicious-Schedule-4 5h ago
Think quantitatively and more long term. You have to balance the probability and timing of financial returns with the timeline of how much money you have to spend. Of course if financial returns are 100% guaranteed by X date then you can burn basically all of your money by X date and then start generating massive profits. But if you don’t know when and how much that profit will be due to macro factors, competition, regulation, safety issues then you can’t afford to burn all your cash.
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u/FarrisAT 6h ago
Providing subsidized computes as free dollars does tend to grow revenue quickly.
What happens when you try charging real rates for that compute though?
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u/123789dftr 5h ago
Saying they provide subsidized compute would mean they're charging less than it costs to serve queries, which is false. They have high gross margins. Yes they're losing money overall because of compute spend, but they're not "subsidizing" compute
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u/FunLilThrowawayAcct 5h ago
They have really high margins on inference. They're burning all of it and more on model training, buildout, etc. The accurate danger for the business is if they can't lower the relative amount spent on training costs at some point without sacrificing their lead
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u/FarrisAT 4h ago
Which is part of the business. You cannot simply stop training for better models.
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u/FuriaDePantera 2h ago
I guess the idea is that if you sell 5 times inference of what you are selling now and your training costs is constant or grows a little you will eventually hit the sweet spot where you can keep training and improving and making enough money. But they need to sell tokens for this.
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u/DLRevan 21m ago edited 2m ago
There is no evidence they have high margins in inference and a lot of evidence that it isn't, even when taking out training costs. I've only ever seen convoluted math stating how with a certain amount of GPU load, certain electricity pricing, etc etc, it might be profitable. You also cannot extrapolate inference costs from on-device models, especially when modern frontier models make use of an extensive harness to work. Them cutting pricing also damages the high margin theory, not helps it.
I wish people would stop stating this as a given. The business really is worse than everyone thinks. Everyone in this thread, or this forum really, are just parroting unsubstantiated claims about both gross and net profitability about inference, the whole company, everything. Claims made by ai boosters and anthrophic themselves.
It baffles me that people treat this in ai circles like there's no debate about how authentic it is.
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u/Specialist-Abroad751 5h ago
The thing is it takes more compute than before to make the model smarter.
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u/FunLilThrowawayAcct 5h ago
Oh yeah definitely. Just tired of the "losing money giving away inference" narrative. The actual danger is they can't get training costs down without dying. Kind of a big game of chicken as far as who is willing to burn the most money locking up compute for training.
This week I've even seen people speculating that Google basically doesn't want people buying its inference with its current (apparently terrible) plan limits because they want to focus all of their compute on training and serving search results atm
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u/kingjdin 4m ago
I'm not saying you're wrong, but where is the proof that inference is profitable / highly profitable?
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u/ppooooooooopp 5h ago
Amazon subsidized cloud usage for over a decade Anthropic subsidizes inference for subscribers
Both companies print money when selling compute to businesses.
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u/the_pwnererXx FOOM 2040 5h ago
"Anthropic told investors its third-quarter revenue jumped to $16.8 billion and that it turned a profit in the quarter, the Financial Times reported on Wednesday."
(Emphasis mine, from the link).
That is 2 quarters in a row of profit.
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u/FernandoMM1220 5h ago
just because you pay more than them for the same compute doesnt mean its subsidized
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u/Fusifufu 5h ago
It's very high of course and growth is huge, but doesn't yet seem obvious to me that it's high enough to imply the winner takes it all market. I personally almost feel like software development, at least as done today, is saturated by Opus 5.5-tier models. It will be too mundane of a task for Fable 5.5 and future models.
Now of course Anthropic will justifiably say that our ambitions are too small and we need new models for even more autonomous undertakings, don't even think about software design yourself anymore, etc., but will people really switch their workflows and adapt quickly enough? Or will they just keep at it the "old-fashioned" way and switch to cheaper models for intelligence at a given level?