OpenAI says its advertising business has hit $1B in annualized revenue run rate, touting its "diversified business model" ahead of an expected IPO (Ashley Capoot/CNBC)

OpenAI announced on Monday that its ChatGPT Ads advertising business has hit an annualized revenue run rate of $1 billion. The company began testing ads in the U.S. ChatGPT earlier this year and has since expanded to include advertisers in India, Europe, the Middle East, and North Africa. OpenAI's Ads Manager, a tool already available in the United States, will now allow advertisers in these regions to purchase ChatGPT ads directly through the platform.

SMBs have become a significant portion of OpenAI's ad business, accounting for a substantial share. The company stated that advertisers outside the U.S. represent an increasing share of revenue, though specific details were not disclosed. OpenAI has displayed ads to users on ChatGPT's free tier and the lower-priced Go plan. In April, OpenAI reported that its U.S. ad pilot had reached $100 million in annualized revenue within six weeks of its launch.

Competing in the advertising industry, OpenAI aims to challenge the dominance of Alphabet's Google and Facebook parent Meta, which together generate hundreds of billions in ad revenue annually. Earlier this year, OpenAI confidentially filed for a U.S. initial public offering, with the company expected to go public in 2027 or sooner.