Anthropic’s Financials Revealed — The Losses Are Stunning

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Ed Elson (1:46)

Welcome to Prof G Markets. I'm Ed Elson. It is September 30th. Let's check in on yesterday's market vitals. The major indices declined as the bond sell-off continued. The yield on 30-year treasuries hit its highest level since 2002 The 10-year also climbed towards 5.3%. Brent Crude fell to around $102 per barrel, as the Trump administration ordered an emergency reserve release. And finally, Apple shares fell nearly 3% on reports that the new CEO, John Ternes, is planning to slim down the company.

OK, what else is happening? Anthropic's IPO prospectus just leaked and the numbers are staggering. According to Reuters, which obtained the draft of the S1, the company reported $4.6 billion in revenue last year, up more than 1000% from the year prior. But they also reported an operating loss of $8 billion and a net loss of $42 billion. Anthropic devoted almost a third of the S1 to explaining its risk factors. Those included customer concentration, with close to a coarser of revenue last year coming from just two clients, and then, of course, the existential threat to humanity. Still, the company is expected to go public at a record $2 trillion valuation in November, making it the most highly valued IPO of all time. Joining us to discuss Anthropic's financials is at least what little we know. We are speaking with Paul Kedrosky, managing partner at SK Ventures. Paul, great to see you. Thank you for joining us.

I heard some of your laughter as I went through the numbers.

SPEAKER_5 (3:29)

We finally got some numbers.

Ed Elson (3:31)

And to be clear, these are 2025, but what do you make of them?

Paul Kedrosky (3:34)

Honestly, most of those numbers, in one form or another, had already leaked, and we can go through them one at a time. But specifically, the one, as a long ago equity analyst, the one that catches my attention the quickest, is customer concentration, because customer concentration is nothing for a small company. You expect a small company to have really high levels of customer concentration, meaning that a small number of customers is a material fraction of revenues. But to see a company at this size, where two customers are on the order of 25% of revenues, and there's been some other leaks of whatever you want to call it, something like six customers are 60% of revenues, these are absolutely, to use the technical term, bananas numbers. And why they matter is because it shows how unusual their earliest customers are. They are so consequential, and they're using it in such unusual ways that they're such a material chunk of revenues. And one of the things you always have to watch with young companies, well, it's strange to say to a company this size, is if they are able to jump across and succeed with later customers who are nothing like the early ones. And specifically in this case, Facebook is a good example. Meta is one of their largest customers. We know that from other data. And they're wildly unrepresentative of how, I don't know, Goldman Sachs pick up a standard industrialist company or someone else is going to use these tools. So we've got a pretty open question here in terms of two kinds of risk. One is the level of customer concentration, and the second is how representative these early customers are of later customers.

Ed Elson (5:01)

Let's look at the numbers as well though that we know from 2025 There was the $42 billion in net losses. To be clear, roughly $34 billion of that was a non-cash charge tied to revaluing their financing instruments. So it's a big asterisk on that number. Still big, but maybe there's a caveat there. But $8 billion in operating losses. So that's the amount of money that they're losing from the day-to-day operations. Granted, it's from last year.