[jmalicki]

Revenue is an integral over the past year or past quarter.

Run-rate is taking a recent measurement and multiplying it out so it will span a year. Basically, it assumes they keep all of their current contracts, and don't gain any new ones.

Forward-looking revenue is an estimate of what the integral will be from now to a year from now.

For a growing company, run rate is between past revenue and estimates of future revenue.

Forward-looking revenue estimates are often made up from whole cloth so are highly untrustworthy. But a run-rate is saying "we've already been making this much money, we just need to maintain where we are and that's how much we'll bring in". Backward-looking revenue for something like Anthropic is meaningless because almost all of their customer base is recently acquired - they're growing like crazy, not 20% per year.

[mrandish]

Sometimes it can be year-to-date extrapolated to full year (which might be calendar or fiscal). The tricky part is the timing of the cutoff period can yield true but misleading numbers, especially in the case of seasonal sales, a major order or just prior to some revenue's recognition period ending.

So, it's saying something but without more details it's also vague and always partially forward looking. I prefer the TTM metric (Trailing Twelve Month revenue).

[parliament32]

Is it qualified at all? Or can you measure anything and multiply it through to get whatever number you want at the end?

Along the lines of "in the 4.75 hours starting at 02:35 yesterday we collected invoices worth $X so our run-rate revenue is now $Y"?

[jmalicki]

I'm not an accountant, but afaik run rate is not a GAAP recognized metric. Presumably investors who care want it to be more precisely defined. In practice usually I've seen it be extrapolating the previous month. E.g. if you have per month revenue, that's what you want to extrapolate - I've only really seen run rate with SaaS where you have recurring revenue.

Occasionally it can be a snapshot if you've just completed a big contract - but it's what you expect to get per month if you're not growing or shrinking for the typical SaaS that charges per month (and assuming yearly pre-paid contracts renew etc.)

[sophiebits]

Collecting invoices is cash accounting, whereas revenue is realized only over the length of the contract and doesn’t care when the customer pays. (Of course sometimes you have a short-term contract including for professional services and such, but not to the point where a single day would likely be particularly inflated.)

[jmalicki]

For Anthropic in particular, that we're talking about, API token costs are revenue that is earned in real-time not on a contract - so hypothetically a giant spike in token use on an API use contract could spike revenue. But I don't think most expect that to randomly fluctuate enough to be material.

[sophiebits]

People building applications that use AI do have longer contracts. Not sure how the split is vs Claude Code etc.

[jmalicki]

Sure, but the moment they use the token the revenue is earned.

[anomaly_]

Are you trying to be deliberately obtuse? Obviously, you can fudge the number with assumptions around churn rates/etc, but of course an investor would want a view of the rough 12m state of the business.

[parliament32]

...which is why we have GAAP-recognized metrics, right? To prevent fudge-ability? And those metrics.. they're deliberately not publishing? Makes you think.

[jmalicki]

GAAP is basically a standards body to recognize practices.

When there are interesting stories that can't be told with GAAP metrics, accountants derive new metrics. Just because they haven't gone through the standardization process yet doesn't mean they're bullshit - investors in Anthropic can hire auditors to ensure the Anthropic metrics are still meaningful. There are a very small number of deep pocketed investors in Anthropic - they're not a public company like Enron trying to sell to the WSB crowd, or like 2007 CDOs being sold to dentists.

And run rate has been a widely recognized metric for SaaS as long as it has existed - it has meaning and can be audited.

[Hendrikto]

So it is essentially a made up number. Like everything Dario claims.