The enterprise AI race is accelerating, and Cohere is positioning itself as a serious contender.
According to a February investor memo, the Toronto-based artificial intelligence startup reached approximately $240 million in annual recurring revenue last year, exceeding its $200 million target. The company reported more than 50 percent quarter-over-quarter growth throughout 2025 and emphasized expanding momentum across regulated enterprise sectors.
“Our thesis is clearly resonating in the market,” the company wrote to investors, pointing to a growing global sales pipeline and increased adoption among organizations seeking secure AI deployment at scale.
Founded in 2019, Cohere builds large language models and enterprise software tools designed specifically for business use cases. Backed by Nvidia and Salesforce Ventures, the company’s valuation has climbed to roughly $7 billion.
Enterprise AI Is the Battleground
Cohere’s positioning is deliberate. Rather than competing primarily in the consumer chatbot market, the company has focused on enterprise deployments, especially in regulated industries that require data security, compliance, and controlled infrastructure environments.
CEO Aidan Gomez previously stated that Cohere hopes to pursue a public listing soon, describing the potential IPO as an opportunity to offer investors a pure-play AI exposure.
However, the competitive landscape is formidable.
OpenAI announced in November that more than one million businesses globally use its technology. Anthropic reported serving over 300,000 businesses. Both companies are also reportedly evaluating eventual IPO paths.
Enterprise AI adoption is scaling rapidly, but customer concentration and platform dominance remain real risks for smaller players.
A Capital-Efficient Model
Cohere has emphasized what it calls a capital-efficient operating model.
Unlike some competitors that absorb significant infrastructure costs, Cohere allows customers to run models through managed cloud services or directly on their own hardware. This reduces balance sheet exposure to large-scale compute commitments and allows capital to be allocated more aggressively toward research, development, and customer acquisition.
The company reported gross margins of approximately 70 percent in 2025, with modest year-over-year expansion.
By scaling compute proportionally to demand rather than overbuilding infrastructure, Cohere argues it is insulated from speculative excesses in the broader AI market.
That positioning is notable as AI infrastructure spending has surged globally, particularly in data center expansion and GPU procurement.
2026: Europe and AI Agents
Looking ahead, Cohere plans to expand further into Europe and invest in its AI agent platform, North. AI agents represent the next evolution of enterprise automation, enabling workflow execution rather than simple conversational responses.
If enterprise AI shifts toward integrated agent ecosystems, platform stickiness and recurring revenue durability could increase materially.
The company has told investors it anticipates another year of rapid growth in 2026.
Private Market Implications
Cohere’s performance reinforces a broader trend in private markets. The most aggressive revenue growth in artificial intelligence continues to occur before companies access public capital.
With valuations in the multi-billion-dollar range and substantial recurring revenue already in place, AI leaders are increasingly reaching scale while still private.
For investors focused on innovation cycles, the enterprise AI category represents one of the most dynamic segments of the private market landscape. Revenue velocity, margin profile, capital discipline, and enterprise adoption will determine which companies ultimately command premium valuations in public markets.
Cohere’s $240 million ARR milestone signals that the enterprise AI race is no longer speculative. It is operational, revenue-driven, and accelerating.
The next question is not whether enterprise AI will scale. It is which platforms will dominate and who will gain access to that growth before IPO.
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