Anthropic Just Released Updated Numbers Ahead of Its Nov. IPO. Revenue Growth Slowed Sharply.

Anthropic, the company behind the AI model Claude, is about to go public in what could be one of the biggest public listings of all time, following the record-setting debut of Space Exploration Technologies Corp (NASDAQ:SPCX) in June.

The company could be valued at around $1.5 trillion, down from earlier talk of $2 trillion. That's a lot to ask, and justifying it relies, in part, on continuing to deliver the blistering growth revealed in its S-1, filed with the SEC last week. But the frontier lab just amended its prospectus, adding Q3 numbers into the mix, and they reveal something that could be a concern.

Here's what investors need to know ahead of the much-anticipated IPO.

Anthropic's revenue growth slowed sharply in the third quarter

Anthropic is growing at an incredible pace for any company, but for a company that's already dealing in quarterly revenues measured in double-digit billions, it's extraordinary. Third-quarter revenue reached just shy of $17 billion, up 1,127% year over year.

It's also up about 47% from the previous quarter.

That seems impressive, and again, at this scale it certainly is, but context matters a whole lot here. The company delivered sequential growth of 144% in Q2, up from 132% in Q1, which was up from 48% in Q4 of last year.

One of the cornerstones of Anthropic's pitch to investors heading into its IPO is that improving AI models will drive broader adoption and continued rapid revenue growth. Investors considering a valuation in the trillions are betting there's a lot more growth ahead.

A sequential slowdown in growth -- a very substantial one at that -- challenges expectations that the earlier pace can continue.

Is Anthropic's slowdown temporary, or is its pricing power slipping?

Now, I want to be clear: there are potential explanations that are relatively benign. Anthropic's filing describes capacity constraints, seasonal slowdowns in business activity during the summer, and restrictions on customers who violated its terms, though it doesn't quantify how much each contributed to Q3's slowdown.

Image source: Getty Images.

The company also disclosed that price reductions on new models and contractual discounts reduced Q3 revenue by about $600 million. Simply adding that back would put sequential growth at roughly 52%, still well below Q2's 144%, although that calculation assumes customers would have used just as much at higher prices.

It's more than possible that these factors are sufficient, that this is basically a temporary dip, and growth will reaccelerate. But I think it's also possible that there's more going on here. I think it's possible that we are seeing the beginnings of Anthropic losing its pricing power as businesses see diminishing returns on using the latest model and AI moves toward becoming a commodity -- something I've been saying for some time now.

I'm not sure Anthropic has a real moat: Claude doesn't need to lose its technological lead for the business to face serious pressure. Competing models only need to be good enough for the work customers actually need done. The truth is, Anthropic could see AI demand keep growing while still seeing revenue growth decelerate or reverse as pricing power erodes.

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.