JP Morgan analyst Pinjalim Bora maintained an Underweight rating on C3.ai, Inc AI with a price target of $27, down from $28.C3.ai reported a third-quarter revenue of $98.8 million, up 26%. The revenue total beat a Street consensus estimate of $98.1 million.Also Read: EchoStar Q4: $3.97 Billion Revenue, Narrows Pay-TV Subscriber Losses, Focuses On High-Quality Users, Wireless GrowthThe company had an adjusted net loss of 12 cents per share, which beat a street consensus estimate of 25 cents per share.C3.ai e ...

Core Viewpoint - C3.ai has experienced a significant decline in stock value, losing 26.8% year-to-date, while the broader technology sector has only declined by 0.9% [1]. Despite this, the company reported strong third-quarter fiscal 2025 results, with earnings and revenues surpassing expectations [1]. Financial Performance - C3.ai reported an adjusted loss of 12 cents per share for the third quarter of fiscal 2025, which is better than the Zacks Consensus Estimate of a loss of 25 cents [2]. The company had a non-GAAP loss of 13 cents in the same quarter last year [2]. - Revenues for the third quarter reached $98.78 million, reflecting a 26% year-over-year increase and exceeding the Zacks Consensus Estimate by 0.83% [3]. Subscription revenues rose by 22% year-over-year to $85.7 million, indicating strong demand for AI-driven enterprise solutions [3]. Client Engagement and Partnerships - In the third quarter of fiscal 2025, C3.ai secured 66 agreements, including 50 pilot projects, marking a 72% year-over-year increase [6]. The company also finalized 47 agreements through its partner network, a 74% year-over-year increase [7]. - Partnerships with major companies like Microsoft, Amazon Web Services, and McKinsey QuantumBlack have accelerated sales cycles and expanded the company's global reach [8]. C3.ai and Microsoft closed 28 agreements across nine industries, representing a 460% quarter-over-quarter increase [8]. Growth Prospects - C3.ai expects revenues for the fourth quarter of fiscal 2025 to be between $103.6 million and $113.6 million, and for the full fiscal year, revenues are projected to be between $383.9 million and $393.9 million [13]. - The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is $108.64 million, indicating a growth of 25.46% year-over-year [14]. For fiscal 2025, the consensus estimate for revenues is $388.16 million, reflecting a 29.57% year-over-year growth [15]. Market Position and Valuation - C3.ai's stock is currently trading at a forward Price/Sales ratio of 7.36X, which is higher than the sector average of 6.32X, indicating a stretched valuation [16]. - Despite strong demand for its solutions, C3.ai faces stiff competition in the enterprise AI sector, which may hinder its market share growth [19]. The company plans to invest aggressively in its offerings to secure market share, although this may pressure margins in the near term [19].

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Financial Data and Key Metrics Changes - Total revenue for Q3 increased 26% year-over-year to $98.8 million, with subscription revenue growing 22% to $85.7 million, representing 87% of total revenue [16][34] - Non-GAAP gross profit was $68.2 million, resulting in a gross margin of 69% [16][37] - Non-GAAP operating loss improved to $23.1 million, better than the guidance of $38.6 million to $46.6 million [17][38] - Free cash flow for Q3 was negative $22.4 million, an improvement from negative $45.1 million in the same quarter last year [40] Business Line Data and Key Metrics Changes - Revenue from software licenses was $28.6 million, while professional services revenue was $13.1 million, accounting for 13% of total revenue [34][36] - Subscription and professional engineering services revenue combined was $91.4 million, representing 93% of total revenue, an increase of 18% compared to the previous year [37] Market Data and Key Metrics Changes - The partnership with Microsoft resulted in closing 28 agreements across nine different industries, marking a 460% increase quarter-over-quarter [18][22] - The joint qualified sales pipeline with Microsoft surged 244% year-over-year, targeting 621 eligible customer opportunities [19] Company Strategy and Development Direction - The company is focusing on expanding its strategic alliances with Microsoft, AWS, and McKinsey QuantumBlack to enhance global reach and execution speed [20][29] - The emphasis on Generative AI and Agentic AI is expected to drive innovation and customer traction, with plans to ensure proper organization for expanding direct sales and services [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on the growing enterprise AI market, with fiscal years 2026 and 2027 expected to focus on expanded growth and market share [31][32] - The company anticipates continued moderation in gross margins due to a higher mix of pilots in the near term, but expects to be free cash flow positive for Q4 [43][44] Other Important Information - The company closed 50 pilots during Q3, with 245 still active, indicating strong customer engagement [42] - The company ended the quarter with $724.3 million in cash, cash equivalents, and marketable securities, indicating strong capitalization [40] Q&A Session Summary Question: Can you provide more color on the total number of pitches and pipeline? - Management indicated involvement in over 600 engagements with Microsoft, with 28 agreements closed in the last quarter [49][56] Question: Can you discuss remaining performance obligations trends? - Management noted that the total remaining performance obligations (RPO) at the end of the quarter was around $208 million, with expectations of some decline in RPO in the near term [62] Question: What drove the outperformance in professional services this quarter? - The outperformance was attributed to an uptick in revenue from consulting services, paid implementation services, and training services [78] Question: Why are demonstration licenses outperforming? - The increase in demonstration licenses was driven by the need to equip sales teams with effective tools to engage customers independently, resulting in higher revenue recognition [84][85]

Core Insights - C3.ai reported strong earnings in Q3 FY2025, with revenue of $98.8 million, a 26% increase year-over-year, surpassing analyst expectations of $98 million [2][5] - The company achieved a non-GAAP EPS of $(0.12), better than the expected $(0.25), indicating progress despite ongoing losses [2][3] - Strategic partnerships, particularly with Microsoft, have significantly contributed to C3.ai's growth and market reach [4][6] Financial Performance - Revenue for Q3 FY2025 was $98.8 million, up from $78.4 million in Q3 FY2024, reflecting a 26% year-over-year growth [3][5] - Subscription revenue increased by 22% to $85.7 million, contributing to overall revenue growth [3][5] - Non-GAAP gross profit reached $68.2 million, a 24.7% increase from the previous year [3] Strategic Developments - C3.ai expanded its strategic partnerships, achieving a 460% increase in collaborative agreements, particularly with Microsoft [6] - The company launched 20 new pilot programs for generative AI solutions, indicating increased adoption and interest in its capabilities [7] - Collaborations with notable organizations, including the U.S. Department of Defense, highlight the scalability of C3.ai's offerings [7] Future Outlook - C3.ai projects fourth-quarter revenue guidance between $103.6 million and $113.6 million, reflecting confidence in ongoing strategic initiatives [9] - Full-year fiscal 2025 revenue guidance is set between $383.9 million and $393.9 million, indicating robust expectations for growth [9]

Core Insights - C3.ai, Inc. reported a quarterly loss of $0.12 per share, outperforming the Zacks Consensus Estimate of a loss of $0.25, marking a 52% earnings surprise [1] - The company achieved revenues of $98.78 million for the quarter ended January 2025, exceeding the Zacks Consensus Estimate by 0.83% and showing a year-over-year increase from $78.4 million [2] - C3.ai has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - The company has shown a significant improvement in earnings surprises, with a previous quarter's loss of $0.06 against an expected loss of $0.16, resulting in a 62.50% surprise [1] - C3.ai shares have declined approximately 23.5% since the beginning of the year, contrasting with the S&P 500's gain of 1.3% [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.26 on revenues of $108.64 million, and for the current fiscal year, it is -$0.63 on revenues of $388.16 million [7] - The Zacks Rank for C3.ai is currently 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Computers - IT Services industry, to which C3.ai belongs, is currently ranked in the top 32% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact C3.ai's stock performance [5]

Core Insights - C3.ai reported third-quarter revenue of $98.8 million, a 26% increase year-over-year, surpassing the consensus estimate of $98.1 million [1][2] - The company achieved a non-GAAP net loss of 12 cents per share, better than the expected loss of 25 cents per share [2] - C3.ai closed 66 agreements during the quarter, including 50 pilots, marking a 72% increase year-over-year [3] Financial Performance - Subscription revenue for the quarter was $85.7 million, up 22% year-over-year, accounting for 87% of total revenue [1] - The company ended the quarter with $724.3 million in cash and cash equivalents [4] - C3.ai is guiding for fourth-quarter revenue between $103.6 million and $113.6 million, with full fiscal year revenue expected to be between $383.9 million and $393.9 million [6] Strategic Developments - C3.ai expanded its global distribution network and strategic partnerships with Microsoft, AWS, and McKinsey Quantumblack [2][4] - The joint qualified opportunity pipeline with Microsoft increased by 244% year-over-year [4] - The company entered into new agreements with the U.S. Air Force, U.S. Navy, and U.S. Department of Defense [3] Future Outlook - C3.ai will host the C3 Transform 2025 conference from March 18-20, 2025, aimed at showcasing the value of Enterprise AI [5][6] - The CEO emphasized the company's readiness to transform the Enterprise AI landscape through its technology and partnerships [7]

C3 AI Announces Fiscal Third Quarter 2025 Financial Results 26% Year-Over-Year Revenue Growth Dramatically Expanded Strategic Partnerships with Microsoft, AWS, and McKinsey QuantumBlack C3 Generative AI Makes History with First Ever Agentic AI Earnings Call REDWOOD CITY, Calif. — February 26, 2025 — C3.ai, Inc. ("C3 AI," "C3," or the "Company") (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal third quarter ended January 31, 2025. "In the third quar ...

Core Viewpoint - C3.ai is expected to report its third-quarter fiscal 2025 results on February 26, with anticipated revenue growth driven by strong demand for its generative AI solutions and enterprise AI software [1][2][4]. Revenue Expectations - C3.ai forecasts revenues between $95.5 million and $100.5 million for the third quarter, with a Zacks Consensus Estimate of $97.97 million, reflecting a year-over-year increase of 27.96% [2]. - The consensus estimate for loss per share remains stable at 25 cents, indicating a significant year-over-year decline of 92.31% [2]. Performance Drivers - The company's performance is likely bolstered by its C3 Generative AI solutions and increased demand for enterprise AI software [4]. - C3.ai has seen growing interest in generative AI applications across various industries, including manufacturing, pharmaceuticals, and energy [5]. - The Generative AI Accelerator program is expected to facilitate new agreements and transitions from pilot projects to full-scale implementations [5]. Customer Base and Agreements - C3.ai's efforts to diversify its customer base across multiple sectors, including manufacturing and defense, are anticipated to significantly contribute to revenue growth [6]. - In the fiscal second quarter, C3.ai closed 58 agreements, including new and expanded deals with major corporations such as Exxon Mobil and Rolls-Royce, which are expected to positively impact the upcoming quarter [6]. Stock Performance and Valuation - C3.ai shares have declined by 8.3% year-to-date, underperforming the Zacks Computer & Technology sector, which has returned 0.8% [7]. - The stock is trading at a premium, with a forward 12-month Price/Sales ratio of 7.95X compared to the sector's 6.45X, indicating a stretched valuation [10]. Partnerships and Collaborations - C3.ai has established a strong partner base, including major cloud providers like Amazon, Alphabet, and Microsoft, which is expected to drive growth [12]. - Partnerships with hyperscalers contributed to 62% of the company's agreements in the second quarter, highlighting the importance of its partner network in revenue generation [13]. - Collaborations with Google Cloud resulted in a 180% year-over-year increase in agreements, showcasing the effectiveness of these partnerships [14]. Government Sector Engagement - C3.ai's expanding presence in the government and defense sectors, including new contracts with U.S. federal agencies, is expected to provide a steady revenue stream [16]. - The company secured a task order from the U.S. Army to modernize information collection management processes, indicating strong growth in its federal business [17][18].

Core Viewpoint - C3.ai is experiencing impressive revenue growth but remains unprofitable, making it a speculative investment with potential risks ahead of its earnings report on February 26 [2][7][11]. Group 1: Company Performance - C3.ai has shown accelerating sales growth over the past three years, indicated by a steepening revenue trend [3]. - Over 60% of C3.ai's business is generated through its partner ecosystem, which includes major cloud providers and consulting firms [4][5]. - Despite the growth, C3.ai has not achieved profitability, with consistent net losses and negative free cash flow [7]. Group 2: Market Position and Comparisons - C3.ai is significantly smaller than its peers, such as Palantir, which raises questions about its valuation and investment appeal [8]. - The stock typically rises before earnings reports but tends to fall immediately afterward, indicating a pattern of investor disappointment [10]. Group 3: Investment Sentiment - The company is viewed as more of a trading stock rather than a long-term investment due to its speculative nature and lack of consistent profitability [10][11]. - Analysts suggest looking for more established AI software companies that demonstrate robust revenue growth and profitability instead of investing in C3.ai [11].