OpenAI "No IPO plans yet"…"Growth and R&D are the priority" [Stocks+]

OpenAI CFO "IPO is not on the cards right now"

"If we only adjust the pace of investment, profitability is achievable immediately"

OpenAI said it has no plans to pursue an initial public offering (IPO) in the short term. Sarah Friar, OpenAI's chief financial officer (CFO), said, "OpenAI is still in a growth phase and is prioritizing research and development over profitability."

Friar said on the 5th (local time) at The Wall Street Journal (WSJ)-hosted Tech Live conference,

"An IPO is not on the cards right now," and "we are focused on growing OpenAI to an appropriate scale." He said the company's organizational restructuring should not be interpreted as a sign of IPO preparation and added, "We don't want to get drawn into IPO discussions."

Friar said OpenAI is unprecedentedly expanding investment in data center infrastructure for AI model training and hopes the U.S. government will guarantee financing related to future AI chip purchases.

He explained that, with depreciation rates for AI chips uncertain and corporate financing becoming difficult, government guarantees could reduce borrowing costs and increase financing capacity.

He said, "We are envisioning an ecosystem in which banks, private equity, and the government can participate together," adding, "If government guarantees are implemented, they can lower financing costs while increasing debt relative to equity." Friar said OpenAI's enterprise and consumer businesses both maintain a "healthy margin structure," and that by adjusting aggressive investments it could reach the break-even point in the near term.

OpenAI is considered one of the companies with the largest losses among Silicon Valley startups due to the high cost structure of generative AI businesses. OpenAI is expected to pay about 600 billion dollars in computing resource usage fees to Oracle, Microsoft (MS), Amazon, and others. Friar projected that OpenAI's revenue this year will reach 13 billion dollars.

Friar said OpenAI is focusing on expanding new revenue sources beyond the ChatGPT subscription service.

In particular, enterprise service revenue accounts for 40% of the total, a figure that has rapidly increased from 30% earlier this year. He said, "Many enterprise customers are moving from pilot phases to actual commercial service stages."

OpenAI's technology adoption is spreading across various industries including finance and healthcare. OpenAI is competing with Anthropic in this market. Friar explained, "OpenAI is a leader in the consumer market, but the massive computing costs for free users are squeezing margins."

Friar said OpenAI will secure 2 gigawatts (GW) of computing power by the end of this year. This is ten times the level of two years ago. OpenAI leases most of its compute capacity from MS, Oracle, and CoreWeave, while also pursuing its own data center construction.

Recently, OpenAI signed a large-scale chip leasing agreement with NVIDIA, and NVIDIA is reportedly discussing guaranteeing part of the loans in the process of financing OpenAI's new data center construction. Friar said, "The computing power OpenAI intends to build now corresponds to a national-level scale."

New York=Shin-young Park, correspondent nyusos@hankyung.com