That's only true once they become public. As a private entity they can calculate COR any reasonable way that their investors are okay with.
(For tax purposes for most businesses it doesn't matter whether an expense is CORS or not.)
(For tax purposes for most businesses it doesn't matter whether an expense is CORS or not.)
There are arguments for and against this - awareness is an issue for startups, but most large companies continue to market. It is true that it is fairly easy to change the amount a company spends on marketing.
Either way, as the parent says - provided the investors understand it there is nothing weird about doing it this way.
If the marketing and promotions and discounts stopped tomorrow, that revenue will drop.
On top of that, oil wells decline, slowly but surely, just like... customers churn.
If you spend $100 mill on sales and marketing and get zero customers, I'd agree it should expensed. If you get a bunch of customers, it's hard to argue against the capex treatment idea.
Cost of revenues Research and development Sales and marketing General and administrative
Take it up with the SEC I guess?
[1] https://s206.q4cdn.com/479360582/files/doc_financials/2026/q...
But for all practical intents and purposes, you can't just fire all your sales people and shut off your marketing firehose, and stop giving discounts, and expect revenue to remain steady in either the short, or the long-term.
You can shut down your R&D, and it will remain steady, at least in the short term.
I am clearly mincing terms that mean specific things, and I'm very sorry to do so. I am simply trying to communicate that generally speaking, OpenAI is currently spending ~$1.05 to make a dollar, and is also on top of that, spending ~$3.00 in R&D.
Now, I do think that it's likely that they can increase their prices to close that 5-cent gap.
(To explain: It's basically saying they are spending $X now to get them as a customer which will yield a lifetime value which is some multiple of $X. That's a very valid thing to do - see the whole field of cohort analysis for SAAS)