My guess is that it's your second scenario there (avoid running at a loss). In the start-up game scale/growth is the most important thing and profits really aren't that important. you want to show to later stage VCs that your idea has traction and there's a large addressable market.

Whilst profits aren't important you also can't burn all your current capital, so if the burn rate gets too high you have to put up prices, which seems likely to be what Cursor is doing.