Global battle royale, world-building, survival shooter Fortnite has been outrageously successful since it was released in 2017, bringing in more than $10 billion in revenue for its owner, Epic Games.
But despite that eye-watering figure, Epic Games, which was founded in 1991, has never turned a profit.
Epic Games heads a list of prominent tech companies that have never been profitable, in data released by procurement tech platform Approve.com, that includes well-known businesses including Airbnb, Reddit and Deliveroo.
Epic, which also owns the popular first-person shooter series Gears of War and the Unreal Engine, the world's most successful video game engine, recorded $3.85 billion in revenue in 2020 but is yet to declare a maiden profit.
How can a company not be profitable?
At first glance, it might seem odd that any company, particularly such large ones, can exist without turning a profit.
But it's more common than you might think. The AFL, for example, posted a $43 million operating loss for 2021, while tech darling Afterpay, which was acquired by Block earlier this year, lost $156 million. (And, of course, this goes without mentioning not-for-profits, which are, by their very nature, not-for-profit. Any revenue generated is reinvested or used to pay costs.)
In its simplest terms, revenue is the money generated by a company, usually through sales of its products, whereas profit (or loss) gives an overall financial picture of a company - when all income and spending is balanced, did the company come out ahead?
So in the above example, Fortnite generated $10 billion in revenue for Epic Games, but Epic Games's outgoings, including investments, mean that overall, the company has always run at a loss.
"This is largely due to investment expenditure. Companies that plow all their earnings and outside investments back into their company can “lose money” each and every year," Approve said.
"This is because, technically, they are spending more than they are making. However, this investment later sees the company grow into something far greater."
So as long as a company does not fall into being financially insolvent - i.e. they aren't generating any money to pay their staff or run its services - a company can theoretically operate forever without ever turning a profit.
What is the plan of these companies?
Every company is different. For a company like Epic Games, it has always preferred to invest the revenue it has generated in further development of its assets.
Some, like early stage mining and biotech companies, don't even generate revenue, relying on the funding people provide them in the hope they can generate revenue and eventually a profit.
"Spend analysis is one of the keys means through which a company can track their revenue and profit," Approve said.
"Spend analysis involves taking account of all expenditure within your company and how this spending has changed over the last year.
"This is important in calculating profit and profit is what income you have left after you account for all of your expenditure.
"Expenditure doesn't just include buys raw goods or paying salaries, but investment into your company is all a spending, and can be quite expensive too."
Who's not making money?
Epic Games, through documents released by Apple lawyers as the company fights to have Fortnite on the App Store, has been revealed to have yearly losses of $100-200 million between 2019 and 2021.
"This is, however, another example of a company investing serious money now with the hope of future growth, and Epic is determined to build their Epic Games Store to Rival Apple’s App Store one day," Approve said.
Reddit, founded in 2005, is another.
It is generating a modest amount of revenue, but has never reported an annual profit.
"Reddit has, however, begun heavily investing in the ad platform, which may see the company become profitable as soon as 2022," Approve said.
"Ads and premium membership plans are the primary methods that Reddit uses to make money, however, have historically not been a focus of the platform until recently.
"Investing in a company is a strategy used by almost every company wanting to grow their business. Investments often surround the improvement of products or services, but can also be directed at reducing production costs or spreading brand awareness."
Airbnb is perhaps the most surprising example; it generates more than $5 billion a year in revenue, but its costs remain astronomical, and it continues to invest in its technology and staff.