Bleeding Run Ahead of Trillion-Dollar IPO: OpenAI Spent $34 Billion Last Year, Losses Widened Nearly Eightfold Year-on-Year

TradingKey - At a time when the wave of artificial intelligence is sweeping global capital markets, OpenAI, the creator of ChatGPT, is attempting to secure its industry dominance ahead of its planned initial public offering in a near-"cash-burning" posture.

According to audited financial documents disclosed by the Financial Times, the San Francisco-based AI giant's full-year expenditures reached as high as $34 billion last year, with its net loss reaching $38.5 billion, widening nearly eightfold year-on-year compared to $5.1 billion in 2024.

Although the company achieved full-year revenue of approximately $13 billion last year, and monthly revenue had soared to $2 billion by year-end, demonstrating a historically rare explosive growth trajectory, its self-sustaining capability still faces a severe test in the face of capital consumption that easily runs into the tens of billions.

Reasons behind OpenAI's massive losses

To understand the composition of OpenAI's $38.5 billion net loss, it must be viewed against the backdrop of the company's structural transformation. In 2025, OpenAI completed its transition from a non-profit entity to a public benefit corporation, a shift that not only altered the company's governance structure but also had a profound impact on its financial statements.

Prior to the transition, OpenAI's investors held convertible interests rather than traditional equity. Under U.S. accounting standards, these interests are treated as liabilities and regularly revalued as the company's valuation rises.

As OpenAI's valuation continued to climb, changes in the fair value of investor interests generated approximately $30 billion in book expenses. Financial documents show that losses related to changes in the fair value of convertible interests and warrant liabilities totaled approximately $41.5 billion.

After factoring in other elements such as interest income and expenses, OpenAI's total net loss for 2025 reached $60.4 billion. However, by allocating approximately $17.9 billion to "net loss attributable to non-controlling member interests" and about $4 billion to "net loss attributable to redeemable non-controlling interests," the final net loss attributable to the company was narrowed to $38.5 billion.

People familiar with the matter said that these structural charges are not expected to recur after the transition is complete, meaning that OpenAI's future financial statements will more accurately reflect its actual operating performance.

However, even after stripping out non-cash items, OpenAI's operating losses were equally staggering. Financial data shows that the company's actual operating loss in 2025 reached $20.9 billion, more than doubling from $8.8 billion in 2024.

Specifically, research and development expenses jumped from $7.8 billion in 2024 to $19.2 billion, a year-over-year increase of 146.2%; sales and marketing expenses grew from $1.1 billion to $5.7 billion, up 418.2% year-over-year; and cost of revenue expanded from $2.7 billion to $7.5 billion, up 177.8% year-over-year. These data indicate that OpenAI increased its investment in technology R&D, marketing, and infrastructure construction in 2025 to support the rapid expansion of its business.

Microsoft becomes the largest source of cost, maintaining a close partnership.

Among OpenAI's various expenses, Microsoft ( MSFT) is the largest single source of costs. Financial documents show that OpenAI's payments to Microsoft in 2025 will total approximately $17.2 billion, accounting for a substantial portion of its total expenses.

Of this, research and development expenses account for $10.6 billion, primarily attributed to model training costs; cost of revenue is approximately $6 billion, mainly for the use of cloud computing resources; sales and marketing expenses total $527 million for joint promotional activities; and general and administrative expenses are $42 million for administrative service support.

Meanwhile, Microsoft paid $303 million to OpenAI, and SoftBank paid $867 million. This revenue mainly stems from technology licensing and partnership projects, reflecting the close commercial ties between OpenAI and partners like Microsoft and SoftBank. This collaborative model not only provides OpenAI with essential financial support but also enables it to leverage Microsoft's cloud computing resources and global market channels to accelerate technological R&D and market promotion.

OpenAI to IPO as Early as This Autumn

Earlier this year, OpenAI completed a massive $122 billion funding round, reaching a post-money valuation of $852 billion and setting a new record for private financing in the global tech industry.

Following the completion of the funding, OpenAI's IPO process has also entered an accelerated phase. Earlier this month, the company formally submitted confidential filing documents for an initial public offering (IPO) to the U.S. Securities and Exchange Commission (SEC).

Regarding the IPO, OpenAI CEO Sam Altman stated that this is merely to preserve the option for the company to enter public markets, not a plan that must be executed. He added that, considering the current market environment and the company's development strategy, remaining private might be a better choice.

However, other OpenAI executives and investors hold a more positive attitude toward the IPO. They expect the company could go public as early as the fall of 2026, with its valuation expected to surpass $1 trillion at that time.