“adjusted” doing some heavy lifting here.

I mean… If you don’t count most of your costs, then sure you can be “profitable (adjusted)”.

Presumably they mean they’re profitable if you only count operational costs. Which is funny because for an AI company, R&D isn’t exactly optional.

Ed can shine some light on it, perhaps: https://youtu.be/CudIfoRiVYQ?t=715

Usually companies will publish an “earnings before interest, taxes, depreciation, and amortization” or EBITDA as a way to show whether their core business is actually profitable (even if shareholders aren’t the ones to get the benefit of that business’s operating profit). But that’s not a standardized metric, and Generally Accepted Accounting Practices (GAAP) won’t define earnings in that way.

The big problem is that the more a company has to deal with high cost of borrowing and huge capital expenditures, the more disconnected EBITDA is from actual GAAP earnings. I can build a hotel for a billion dollars and rent out a bunch of rooms, while each room transaction brings in way more money than it costs for me to have a guy at the front desk give them a key and housekeeping to clean their room, I need to actually make a lot more in order to cover the cost of all the furniture I put in the room, the construction costs on the building, and the interest payments to the bank that financed the whole thing. And if the furniture and the building won’t actually last long enough to where I made all my money back before I have to reinvest a bunch of money into renovations and new furniture, then I don’t have a profitable business. Or if it can be profitable on those numbers but I can’t cover the interest payments to the bank, then the bank will eventually take it over and I’ll lose the business entirely, so owning stock in that company isn’t worth all that much.

So if they’re saying they’re barely profitable when you take out the very expensive costs of training new models, entering big expensive deals with data center companies to build out infrastructure, the stock they keep issuing to employees and partners, etc., that might keep things going a bit longer, but it’s still not actually a path to true GAAP profitability.

It’s technically true but not the whole truth. Those calculations leave out certain costs such as the value of the stocks given to employees, the cost of training new models and revenue shared with partners like Amazon. It’s not that uncommon practice with technology companies when wanting to show inverstors a cleaner picture of the core business but it does not mean that the company as whole has become profitable.