Anthropic's IPO Explained

Anthropic made its IPO prospectus public just the day before yesterday. And of course, we had to read it and break it down for you. So, in today’s Finshots, that’s exactly what we do.

Everyone knows how Anthropic makes money. It develops AI models, including Claude, and sells access to them to users like you and me.

But that isn’t enough to build a commercial business. For that, it has built an ecosystem of products that feed into a business model where everything works in a loop.

In its own words, Anthropic is a “research lab”. It starts by developing AI models and selling access to them. Then there’s the Claude Platform, which allows businesses and developers to use these models to build their own products and workflows. And finally, there are ready to use applications such as Claude Code and Claude Cowork. While Claude Code helps with software development, Claude Cowork handles professional tasks such as researching and analysing information.

Put together, these offerings encourage users and businesses to weave Claude into their everyday operations. They can build products around it and even delegate entire workflows to it. And as customers discover more use cases for Anthropic’s products, they tend to spend more on its services. This growing adoption also gives Anthropic more opportunities to understand how its products are being used and improve them, which creates a flywheel.

Better products attract more users and encourage existing customers to use Claude for more tasks. That drives more spending, giving Anthropic more resources to develop its products further and keep the cycle going.

And Anthropic makes money from all this in two ways. First, there’s usage-based revenue, where customers pay according to how much they use Claude, measured in tokens. For the uninitiated, a token is a unit of text or other information that an AI model processes. The more information Claude processes and generates, the more tokens it consumes. Then there’s subscription revenue, where individuals and businesses pay recurring fees for specified levels of access and usage.

In FY25 (January to December 2025), Anthropic made $4.5 billion in revenue from these sources, over 1,000% more than the previous year. In the first half of FY26, revenue jumped to $16 billion, up around 1,300% from the same period a year earlier. And currently, roughly 80% of its revenue comes from usage-based payments, while the remaining 20% comes from subscriptions.

But these enormous revenue numbers aren’t translating into profits just yet. For context, in FY25, Anthropic reported an operating loss of $8 billion and a net loss of $41 billion. And in the first half of FY26, its operating loss narrowed to $693 million, but its net loss ballooned to $80 billion. That’s almost twice the net loss it reported in the whole of FY25, in just six months!

Of course, one reason is that running advanced AI models is expensive. Anthropic spent nearly $9 billion on computing and infrastructure in the first half of 2026 alone. It also spent around $3 billion each on employees, including researchers, and fees to partners such as cloud service providers. That’s a lot of money to keep the business running, let alone expand it. This is also one of the reasons Anthropic is raising money. Despite having a cash balance of over $130 billion, it needs to fund its ambitious growth plans and can’t rely on investor money alone to keep expanding.

But another reason its net loss looks so enormous is an accounting adjustment. To put that in perspective, over the years, investors have put money into Anthropic through contracts that can eventually convert into shares. When these contracts were signed, Anthropic was worth much less. As the company’s valuation rose, the shares investors could eventually receive became more valuable. And accounting rules require Anthropic to reflect that increase as an expense, even though no cash leaves the company. To give you a sense of scale, this contributed $72 billion to its net loss in the first half of FY26 alone.

The silver lining though, is that its operating loss was much smaller than the $2 billion it reported in the first half of FY25. So, despite the scary net loss, its underlying operating economics appear to be improving.

As for whether Anthropic is worth the valuation it’s rumoured to be seeking, it’s hard to say from the prospectus alone because it doesn’t disclose the IPO size or price range. But if you’re interested in that debate, we’ve explored it in a separate story, which you can read here.

So for now, let’s move on to the risks. Now, we have to tell you that Anthropic’s IPO document has over 90 pages dedicated to risks. But here are three important ones.

The first and perhaps most important risk is that buying Anthropic shares won’t necessarily give you much of a say in how the company is run, no matter how many shares you own. That’s because Anthropic is incorporated as a Public Benefit Corporation (PBC), with a governance structure that gives shareholders less control than they might expect.

Essentially, its founders and a separate trust will retain most of the control. Anthropic has seven co-founders, including CEO Dario Amodei and President Daniela Amodei. They’ve created an entity called Founder LLC, which will hold 50.1% of the voting power on matters put to shareholders generally. That leaves holders of regular shares with the remaining 49.9% of the votes.

Now, we know you’re wondering why a company would set things up this way. Anthropic says it wants to focus on developing AI responsibly over the long term, including making it safer, rather than being pressured into delivering short-term financial results.

For instance, imagine Anthropic decides to spend billions on AI safety research. Investors might prefer it to spend that money on products that generate revenue more quickly. By retaining control, the founders can stick to their strategy even if some shareholders disagree.

Sure, this could work well if the founders make good decisions and stay true to the company’s mission. But it also leaves investors with fewer ways to challenge them if anything goes wrong.

Another risk is the revenue concentration. Two customers accounted for a quarter of Anthropic’s revenue last year. And nearly half of its revenue in the first half of FY26 came through cloud marketplaces. Some of these marketplaces belong to major investors such as Amazon, Google and Microsoft, which also supply the computing power Anthropic needs to run its AI models. That means Anthropic depends on companies that have a stake in its success but also have their own business interests to protect.

That brings us to the third and final risk. Some of Anthropic’s biggest investors are also its suppliers. As we mentioned, Amazon, Google, Microsoft and Broadcom have financial ties with Anthropic, but they also supply the computing power and chips it needs to run its AI models. And that creates a potential conflict of interest.

For instance, Amazon, Google and Microsoft also develop their own AI models. So, when computing capacity is scarce, they could prioritise their own products over Anthropic’s. In fact, Anthropic has admitted that it has asked for more computing capacity than some of its partners were willing to provide.

There’s also the fact that some of the money these companies invest in Anthropic can flow right back to them through payments for computing capacity and chip leases. This makes it harder for investors to tell how much of Anthropic’s growth comes from genuine customer demand. And if Anthropic runs into trouble, these suppliers could focus on protecting their own investments and contracts, rather than looking out for public shareholders.

So yeah, that was a quick look at the Anthropic IPO and a few things you should keep in mind if you’re excited about investing in it. Until next time…

If you liked this story, feel free to share it with your friends, family, or even strangers on WhatsApp, LinkedIn, or X.

This week, we’re hosting a free 2-day Insurance Masterclass that helps you build real financial security by understanding health and life insurance the right way.

📅 Thursday, 29th October at 6:30 PM: Life Insurance: How to protect your family, choose the right cover amount, and understand what truly matters during a claim.

📅 Friday, 30th October at 6:30 PM: Health Insurance: How hospitals process claims, common deductions, the mistakes buyers usually make, and how to choose a policy that won’t disappoint you when you need it most.

👉🏽 Click here to register while seats last.