I think that is correct, and exactly why these purported margins are nonsensical. If Anthropic's reported $50 billion in revenue is majority per-token billing, and tokens have a margin of 80%, that would put Anthropic's profit at $30 billion on per-token usage. Where is that $30 billion going?
And conversely, let's look at the amount Anthropic are spending on compute. Anthropic has just started paying SpaceX $1.25 billion per month for compute. At an 80% profit margin that would mean Anthropic is going to be bringing in $6.25 billion per month... that's more than their current reported revenue.
And that's just one contract for compute. We know that Anthropic also pay Google ~$3 billion per month for compute (based on their committed spend of $200bn over 5 years) which is $36 billion per year. At $36 billion per year on compute with 80% margins that would put revenue at... $180 billion.
Add in their spend with Amazon and Microsoft, Anthropic are spending at least $4 billion per month on compute, or $48 billion per year, all but equal to their revenue. If margins on tokens are 80% and an estimated $37.5 billion of revenue is per-token revenue, that needs just $7.5 billion of compute per year, less than $1 billion per month.
The numbers just don't add up. If margins are 80% and they have $48 billion per year in compute spend, revenue should be over $200 billion.
If the 80% margin made any sense whatsoever, Anthropic would be printing money, yet they're losing money, and have only been profitable for one month based on some financial engineering (pre-commitments billed after the fact to reduce their costs during one month).
My guess is margins are closer to 20% than 80%. That's the only way any of the numbers can make sense.
Whatever the actual net margins, I’m guessing any “80%” kind of figure is calculated as of full utilization of the hardware / capital, which of course they’ll rarely if ever even approach.
Even if margins are “only” 20% though, the magic beans are still real: If you could build (or rent) a box, fill it with magic beans, and get 20% margins against demand stretching out to the horizon, Wall Street would rob their grandmothers to give you cash to build or rent more boxes.
And conversely, let's look at the amount Anthropic are spending on compute. Anthropic has just started paying SpaceX $1.25 billion per month for compute. At an 80% profit margin that would mean Anthropic is going to be bringing in $6.25 billion per month... that's more than their current reported revenue.
And that's just one contract for compute. We know that Anthropic also pay Google ~$3 billion per month for compute (based on their committed spend of $200bn over 5 years) which is $36 billion per year. At $36 billion per year on compute with 80% margins that would put revenue at... $180 billion.
Add in their spend with Amazon and Microsoft, Anthropic are spending at least $4 billion per month on compute, or $48 billion per year, all but equal to their revenue. If margins on tokens are 80% and an estimated $37.5 billion of revenue is per-token revenue, that needs just $7.5 billion of compute per year, less than $1 billion per month.
The numbers just don't add up. If margins are 80% and they have $48 billion per year in compute spend, revenue should be over $200 billion.
If the 80% margin made any sense whatsoever, Anthropic would be printing money, yet they're losing money, and have only been profitable for one month based on some financial engineering (pre-commitments billed after the fact to reduce their costs during one month).
My guess is margins are closer to 20% than 80%. That's the only way any of the numbers can make sense.