Artificial intelligence startup Cohere has reported approximately $240 million in annual recurring revenue (ARR) for 2025, exceeding its internal target of $200 million, according to a February 2026 investor memo obtained by CNBC. The performance highlights the company’s strong momentum in the enterprise AI segment, marking a significant achievement in a highly competitive market.
Cohere achieved quarter-over-quarter revenue growth of more than 50% throughout the year, demonstrating consistent execution as larger rivals expand their enterprise footprints. The company noted, “Our thesis is clearly resonating in the market. Our sales pipeline continues to grow as global organizations across regulated sectors choose Cohere as their trusted partner for secure AI adoption at scale.”
Founded in Toronto in 2019 by former Google Brain researchers Aidan Gomez, Ivan Zhang, and Nick Frosst, Cohere has established itself in the development of large language models and software tools aimed at business use cases. With backing from notable investors such as Nvidia and Salesforce Ventures, the company’s valuation has reached approximately $7 billion in recent funding rounds, signaling sustained confidence from both strategic and financial backers.
The current performance of Cohere occurs amid a crucial period for the generative AI industry. While consumer-focused chatbots like ChatGPT and Claude command significant media attention, enterprise adoption is quickly becoming the primary battleground. OpenAI reported in November 2025 that over 1 million businesses worldwide utilize its technology, while Anthropic revealed in September that it serves over 300,000 businesses.
This growing customer base poses significant scaling challenges for emerging players like Cohere. However, the company has differentiated itself through a capital-efficient business model that emphasizes flexibility and security. Cohere primarily earns revenue through software licenses and services, enabling customers to run its models via managed cloud services or directly on their own hardware. This strategy avoids the substantial infrastructure costs faced by competitors that operate their own data centers, allowing Cohere to invest aggressively in customer acquisition, product development, and research.
Consequently, Cohere’s gross margins averaged around 70% in 2025, reflecting a year-over-year increase of 25 basis points. The company stated, “By scaling compute resources proportionally to customer demand, we remain insulated from the speculative excesses surrounding the broader AI market, positioning Cohere for more sustainable growth.”
This operational efficiency has proved particularly appealing to regulated industries—including financial services, healthcare, government, and legal—where data privacy, auditability, and on-premises deployment are essential requirements. Cohere has targeted these sectors, offering models that can be customized and deployed in secure environments without compromising sensitive data.
CEO Aidan Gomez highlighted the company’s growth ambitions, indicating in October 2025 that Cohere aims to make its public market debut “soon,” which he suggested would provide investors with a “pure play AI investment opportunity” focused on enterprise applications. The robust results for 2025 and a clear roadmap for 2026 appear to set the stage for a potential initial public offering.
For 2026, Cohere has outlined plans for accelerated expansion in Europe, a region with stringent data protection regulations that favor privacy-conscious AI providers. The company anticipates another year of rapid growth, driven by deeper enterprise penetration and continuous improvements to its models. These results contrast with the broader AI funding landscape, where some high-profile startups face scrutiny over high burn rates and uncertain paths to profitability. In this context, Cohere’s focus on capital efficiency and recurring revenue from enterprise software positions it as a more pragmatic player in a market often criticized for speculative ventures.
Despite this progress, Cohere faces competition from OpenAI and Anthropic, which continue to expand aggressively in the enterprise sector, leveraging their advanced model capabilities and ample resources. Cohere must demonstrate that its specialized focus on security, customization, and deployment flexibility can secure and retain large accounts amidst stronger, better-funded rivals.
The strong performance of Cohere in 2025 and its clear momentum within the enterprise market suggest the company is effectively executing its strategy to build a sustainable, high-margin AI business. As the generative AI sector matures and moves toward practical deployment, organizations that provide secure, efficient, and enterprise-ready solutions are likely to attract increasing attention from both clients and public market investors. Cohere’s achievements position it as a serious contender in this evolving landscape.
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