Gross vs Net Revenue: How OpenAI and Anthropic Count Partner Sales Differently

OpenAI counts cloud-partner sales net and Anthropic counts them gross, according to a CNN source and Reuters. For founders who sell through marketplaces, resellers or app stores, this guide covers the accounting test that decides it, the effect on revenue and margins, and what to show investors.

On October 8, a source familiar with the documents at issue told CNN that OpenAI’s revenue figure “is based on net revenue,” while Anthropic’s numbers fold in gross revenue from cloud providers. Reuters added the same day that Anthropic “pays cloud partners about 16% of every dollar earned through them,” and its analysis found those channels brought in half of Anthropic’s revenue last year. That split is the gross vs net revenue question. Any startup selling through a cloud marketplace, a reseller, an app store or a channel partner has to settle it for its own contracts.

Where it stands: Axios reported on October 8 that OpenAI and Anthropic both follow GAAP yet handle partner sales differently. A CNBC source said the $68 billion OpenAI number circulating in September had included partners’ gross revenue; OpenAI’s own end-of-September number, as told to investors, was roughly $50 billion. OpenAI declined to comment to CNN.

Gross vs net revenue: the principal-versus-agent test

The rule sits in ASC 606, the U.S. revenue standard, as clarified by the Financial Accounting Standards Board in ASU 2016-08. When another party helps deliver what your customer buys, you decide whether your promise is to provide the good or service yourself, which makes you the principal, or to arrange for someone else to provide it, which makes you the agent.

That decision sets the top line. Under the update, a principal “recognizes revenue in the gross amount of consideration to which it expects to be entitled,” while an agent recognizes only “the amount of any fee or commission” due to it for setting up the deal. Control is what separates them: “An entity is a principal if it controls the specified good or service before that good or service is transferred to a customer.”

Deloitte’s revenue recognition roadmap quotes the standard’s definition of control as “the ability to direct the use of, and obtain substantially all of the remaining benefits from, the asset.” It warns that the principal-or-agent call “can significantly affect the amount of revenue recognized,” and that “An entity must use judgment when assessing whether it is acting as a principal or as an agent.”

The $100 example, and what moves on the P&L

Axios borrowed a simple case from Francine McKenna, who teaches accounting and publishes The Dig. Picture a $100 purchase of an AI service, made through a cloud provider. Anthropic’s method puts all $100 on the top line, and “The cloud provider’s cut is then listed as an expense.” Under the approach OpenAI applies to certain partner sales, only its own portion counts as revenue. In McKenna’s telling, the split reflects how each company views its own role, including who controls the customer relationship and who is on the hook for delivering the product.

For a startup, one partner sale can produce two quite different income statements:

  • Revenue: gross shows what the customer paid; net shows what you keep after the partner’s cut.
  • Partner fees: gross carries them as an expense; net leaves them out of both revenue and costs.
  • Gross margin: if the fee sits in cost of revenue, the gross presentation shows a lower margin percentage, because the same gross profit sits on a larger top line.
  • Metrics built on revenue: run rate, ARR, growth rates and revenue multiples all inherit the basis. Our guide to annualized revenue vs ARR shows how that plays out in a run rate.

Net does not mean a smaller business, and gross does not mean an inflated one. They describe the same cash from two vantage points. If you are still building your margin model, our walkthrough of AI startup unit economics covers the cost side.

Why two honest companies can report very different revenue

Nothing in the coverage suggests either company broke a rule. Axios wrote that both are GAAP compliant, and Benzinga stressed that the gap “does not mean OpenAI lost $20 billion in sales.” Reuters described OpenAI’s side this way: it “does not include, for instance, revenue from sales via cloud partners such as Amazon’s AWS and Alphabet’s Google Cloud.” Axios said OpenAI keeps only its share of certain partner sales, without naming which ones.

Three things let two startups with similar products land far apart. First, their contracts differ, so the control analysis differs. Second, the call is made narrowly: the FASB update says it applies “for each specified good or service promised to the customer,” and Deloitte adds that “an entity could be a principal for certain aspects of a contract with a customer and an agent for others.” One company can carry gross and net lines side by side. Third, the more of your sales that run through partners, the more the conclusion moves your top line, which is why a partner-heavy mix like Anthropic’s makes the comparison so sensitive.

Marketplaces, resellers and app stores

The standard does not sort sales channels into gross and net piles. It looks at your contract. A cloud marketplace listing, a reseller agreement, an app store distribution deal and a channel partnership can each, in principle, land on either side, depending on who the customer contracts with, who sets the price and who stands behind the product.

Marketplace founders know this pattern as GMV. The a16z startup-metrics guide notes that GMV and revenue often get used as if they were the same thing, then adds: “But GMV does not equal revenue!” In its framing, revenue is only the share of GMV the marketplace keeps. A partner-sold contract raises the same question from the other side of the table.

The questions the standard asks

ASC 606 offers indicators to help with the control question. They are prompts, not a scorecard: the FASB says they “should not be considered a checklist of criteria to be met in all scenarios.” Work through them with your accountant, contract by contract.

Question to ask Why it matters
What exactly is the customer buying? The test runs on each specified good or service, not the whole contract
Do you control it before the customer gets it? Control before transfer is what makes you the principal
Who is responsible for fulfilling the promise? Primary responsibility, including for acceptability, points toward principal
Did you commit to obtain it before you had a customer? Taking on that risk up front can indicate control
Who sets the price the customer pays? Setting the price can indicate control, but agents sometimes have pricing discretion
Do the indicators settle it? No; they support the control assessment and can weigh differently by contract

Two details trip founders up. The fulfillment indicator “typically includes responsibility for the acceptability of the specified good or service,” so owning quality and support counts. And pricing power alone does not decide it: “an agent can have discretion in establishing prices in some cases.”

What to put in your deck so investors can compare

An investor comparing you with a rival faces the OpenAI-Anthropic problem in miniature. Make the basis impossible to miss:

  • Label revenue as gross or net wherever partner sales are material, on the slide itself rather than only in the appendix.
  • If a meaningful share runs through partners, show both views: revenue as recognized, plus gross customer spend through partners with the partner fees beside it.
  • Footnote which channels are gross, which are net, and the one-line reason.
  • Show partner fees as their own cost line. The a16z guide tells founders to “be prepared to break down what’s included in—and excluded—from that gross profit figure.”
  • Use the same basis for run rate, ARR and growth as for revenue.
  • Have your accountant or auditor confirm the conclusion before the number goes into a fundraising deck.

The SEC’s 2020 guidance on key performance metrics (Release No. 33-10751) was written for public-company filings, but its logic carries over to a private deck. It expects a metric to come with “A clear definition of the metric and how it is calculated” and asks companies to weigh disclosing the estimates or assumptions behind it. If you change how you count partner sales, it points toward explaining the change and considering whether to “recast prior metrics to conform to the current presentation” so old and new periods line up.

In OpenAI’s case, both counting methods reached the public within ten days of each other, through reporters’ sources rather than a published definition.

Frequently Asked Questions

How is gross revenue different from net revenue?

Gross revenue is the full amount the customer pays, recorded when you act as the principal. Net revenue is only the fee or share you keep, recorded when you act as an agent arranging for another party to provide the good or service. Under ASC 606 the deciding question is whether you control the good or service before it reaches the customer.

When should a company report revenue gross instead of net?

When it is the principal, meaning it controls the specified good or service before transfer. Indicators include being primarily responsible for fulfilling the promise, committing to obtain the product before a customer contract exists, and setting the price. The FASB says the indicators are not a checklist, so confirm the conclusion with your accountant or auditor.

Are cloud marketplace and app store sales counted gross or net?

It depends on the contract, not the channel. The standard looks at who controls the product before the customer gets it, who is responsible for delivering it and who sets the price, so channels that look alike can lead to different answers. Work through each arrangement with your auditor.

Does OpenAI report revenue gross or net?

Net, according to a source familiar with the documents who spoke to CNN; the same source described Anthropic’s as counting gross revenue from cloud providers. Axios reported that for certain partner sales, OpenAI books just its own portion. OpenAI declined to comment to CNN.

Can two companies follow GAAP and report revenue differently?

Yes. Per Axios, OpenAI and Anthropic both comply with GAAP while treating partner sales differently. The principal-or-agent call rests on judgment about each contract, as Deloitte points out, so different contract terms can lead to different revenue figures for similar products.

Sources

This article is general information for founders and is not accounting, legal or investment advice. Revenue recognition depends on the facts of each contract; work through it with your accountant or auditor. Figures are as reported by the sources cited on the dates shown; several come from people who spoke to reporters on condition of anonymity.