Group 1 - JP Morgan analyst Pinjalim Bora maintained an Underweight rating on C3.ai, Inc with a price target of $27, down from $28 [1] - C3.ai reported a third-quarter revenue of $98.8 million, up 26%, beating the Street consensus estimate of $98.1 million [1] - The company had an adjusted net loss of 12 cents per share, which was better than the street consensus estimate of 25 cents per share [1] Group 2 - C3.ai expects fourth-quarter revenue of $103.6 million to $113.6 million, compared to the consensus estimate of $108.6 million [2] - The price target is based on approximately 7 times EV/calendar 2026E revenue, unchanged relative to infrastructure software companies growing FTM revenue over 20% [2] - The lower price target reflects subpar core growth, adjusted for demo licenses [2] Group 3 - C3.ai is expected to trade at a significant discount to its peers due to its smaller scale and higher unprofitability [3] - While C3.ai is projected to grow FTM revenue at 23%, comparable to the comps' median of 24%, it is 80% smaller than the median scale of the comp group [3] - C3.ai is expected to have a (14%) FTM free cash flow margin, resulting in a growth plus margin profile of 9%, compared to comps at +22% UFCF margin and a growth plus margin of +46% [4] Group 4 - The calendar 2025 adjusted operating margin for C3.ai is projected to be (24%), while comps are expected to have a +15% margin [4] - C3.ai stock is down 6.24% at $25.05 as of the last check [4]

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].

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]

This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Neither we nor any other person makes any representation as to the accuracy or completeness of such data or undertakes any obligation to update such data after the date of this presentation. In addition, proje ...

Financial Data and Key Metrics Changes - Total revenue for Q3 increased 26% year-over-year to $98.8 million, with subscription revenue growing by 22% to $85.7 million, representing 87% of total revenue [15][33] - Non-GAAP gross profit was $68.2 million, resulting in a gross margin of 69% [15][36] - Non-GAAP operating loss improved to $23.1 million, better than the guidance of $38.6 million to $46.6 million [16][37] - Free cash flow for Q3 was negative $22.4 million, an improvement from negative $45.1 million in the same quarter last year [39] 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 [33][35] - Subscription and professional engineering services revenue combined was $91.4 million, representing an 18% increase compared to the previous year [36] Market Data and Key Metrics Changes - The partnership with Microsoft resulted in 28 closed agreements across nine different industries, marking a 460% increase quarter-over-quarter [17][21] - The joint qualified sales pipeline with Microsoft surged by 244% year-over-year, targeting 621 accounts recognized as eligible customer opportunities [18] 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 [19][20] - The emphasis on Generative AI and Agentic AI is expected to drive innovation and customer traction, with a goal of increasing market share in fiscal years 2026 and 2027 [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, highlighting the importance of their partner ecosystem [30][31] - The company anticipates continued investments in sales, partner ecosystem, and research and development, expecting to be free cash flow positive in Q4 [42][43] Other Important Information - The company closed 50 pilots during Q3, with 310 pilots cumulatively signed, of which 245 are still active [41] - The total accounts receivable balance at the end of Q3 was $180.4 million, with a strong health of accounts receivables [40] Q&A Session Summary Question: Can you give more color on the total number of pitches and pipeline? - The company is currently involved in over 600 engagements with Microsoft, with 28 agreements closed in the last quarter [48][55] Question: Can you discuss the trends in remaining performance obligations? - 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 [61] Question: What drove the outperformance in professional services this quarter? - The uptick in professional services revenue was driven by increased revenue from consulting services, paid implementation services, and training services [78] Question: Why are demonstration licenses outperforming this year? - The increase in demonstration licenses is attributed to the need for sales teams to have effective tools to engage customers, leading to a significant rise in interest from large organizations [82][84]

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 Fiscal Third Quarter 2025 Financial Results](index=1&type=section&id=C3%20AI%20Announces%20Fiscal%20Third%20Quarter%202025%20Financial%20Results) [Q3 FY2025 Financial Highlights](index=1&type=section&id=Fiscal%20Third%20Quarter%202025%20Financial%20Highlights) C3 AI reported strong Q3 FY2025 financial results, with total revenue reaching **$98.8 million** (up 26%) and subscription revenue growing 22% to **$85.7 million** - CEO Thomas M. Siebel highlighted expanded partnerships and the invention of the model-driven agentic Enterprise AI platform, for which a U.S. Patent was awarded[4](index=4&type=chunk) Q3 FY2025 Key Financial Metrics | Metric | Q3 FY2025 | YoY Change | | :--- | :--- | :--- | | Total Revenue | $98.8 million | +26% | | Subscription Revenue | $85.7 million | +22% | | GAAP Gross Margin | 59% | N/A | | Non-GAAP Gross Margin | 69% | N/A | | GAAP Net Loss per Share | $(0.62) | N/A | | Non-GAAP Net Loss per Share | $(0.12) | N/A | | Cash, Cash Equivalents, and Marketable Securities | $724.3 million | N/A | [Business Highlights](index=1&type=section&id=Business%20Highlights) [Agreements and Customer Growth](index=1&type=section&id=Agreements%20and%20Customer%20Growth) C3 AI achieved significant commercial momentum in Q3, closing **66 agreements** (up 72% YoY) including 50 pilots, and expanding contracts with major enterprises and the U.S. public sector - Closed **66 agreements** in Q3, including **50 pilots**, marking a **72% increase year-over-year**[7](index=7&type=chunk) - Secured new and expanded agreements with key enterprise customers including New York Power Authority, Worley, Flex, Sanofi, Nucor Corporation, Holcim, Shell, ExxonMobil, Liberty Coca-Cola Beverages, GSK, Quest Diagnostics, SmithRx, and Swift[7](index=7&type=chunk) - Expanded presence in State and Local Government with **21 agreements** across **11 states**, and secured new deals with the U.S. Department of Defense, Air Force, Navy, and the Missile Defense Agency[7](index=7&type=chunk) - Achieved "Awardable" status on the DoD's Tradewinds Solutions Marketplace for C3 AI Decision Advantage and C3 AI Contested Logistics, accelerating government procurement[7](index=7&type=chunk) [Partner Network Expansion](index=2&type=section&id=Partner%20Network) C3 AI significantly expanded its partner ecosystem, driving **47 agreements** (up 74% YoY) and strengthening alliances with Microsoft, AWS, and McKinsey & Company QuantumBlack - The partner network closed **47 agreements** in Q3, an increase of **74% year-over-year**[11](index=11&type=chunk) - The Microsoft Azure alliance accelerated, closing **28 agreements** (a **460% QoQ increase**) and growing the joint qualified opportunity pipeline by over **244% YoY**, with sales cycles shortening by nearly **20% QoQ**[11](index=11&type=chunk) - A new major strategic alliance was announced with McKinsey & Company QuantumBlack to deliver AI transformation at a global scale[11](index=11&type=chunk) - The strategic alliance with AWS was dramatically expanded to jointly offer advanced Enterprise AI solutions with a robust go-to-market strategy[11](index=11&type=chunk) [Customer Success Stories](index=2&type=section&id=Customer%20Success) Customers are realizing significant value from C3 AI's platform, with GSK, Worley, and SmithRx demonstrating improved supply chain efficiency and streamlined operations - GSK is scaling the C3 AI Demand Forecasting application to enhance supply chain accuracy and efficiency for delivering medicines and vaccines[11](index=11&type=chunk) - Worley is using the C3 AI Supply Chain and Asset Performance Suites to build solutions for the complex nuclear industry, focusing initially on small modular reactors (SMRs)[11](index=11&type=chunk) - SmithRx is using C3 Generative AI to streamline call center operations, significantly reducing call handle times and improving customer service[12](index=12&type=chunk) [C3 Generative AI Developments](index=2&type=section&id=C3%20Generative%20AI) C3 AI closed **20 C3 Generative AI pilots** in Q3 and achieved a technological breakthrough with a new foundation time series embedding model for sensor data - Closed **20 C3 Generative AI pilots** with customers including Mars, Liberty Coca-Cola Beverages, and various government agencies[11](index=11&type=chunk) - Advanced its technology stack with a breakthrough foundation time series embedding model, simplifying applications using sensor data by enabling direct retrieval and reasoning on time series information[11](index=11&type=chunk) [Financial Outlook](index=4&type=section&id=Financial%20Outlook) [Q4 and Full-Year FY2025 Guidance](index=4&type=section&id=Q4%20and%20Full-Year%20FY2025%20Guidance) C3 AI provided its financial outlook for Q4 and full-year FY2025, projecting Q4 total revenue between **$103.6 million** and **$113.6 million**, and full-year total revenue between **$383.9 million** and **$393.9 million** FY2025 Financial Guidance (in millions) | Period | Metric | Guidance Range | | :--- | :--- | :--- | | **Q4 Fiscal 2025** | Total Revenue | $103.6 - $113.6 | | | Non-GAAP loss from operations | $(30.0) - $(40.0) | | **Full Year Fiscal 2025** | Total Revenue | $383.9 - $393.9 | | | Non-GAAP loss from operations | $(87.0) - $(97.0) | [Financial Statements and Non-GAAP Measures](index=5&type=section&id=Financial%20Statements%20and%20Non-GAAP%20Measures) [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) C3 AI reported Q3 FY2025 total revenue of **$98.8 million**, gross profit of **$58.3 million**, and a GAAP net loss of **$(80.2) million**, or **$(0.62) per share** Statement of Operations Highlights (In thousands, except per share data) | Metric | Three Months Ended Jan 31, 2025 | Three Months Ended Jan 31, 2024 | | :--- | :--- | :--- | | Total revenue | $98,782 | $78,401 | | Gross profit | $58,347 | $45,287 | | Loss from operations | $(87,585) | $(82,546) | | Net loss | $(80,201) | $(72,631) | | Net loss per share | $(0.62) | $(0.60) | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of January 31, 2025, C3 AI's balance sheet showed total assets of **$1.055 billion**, with **$724.3 million** in cash and marketable securities, and total stockholders' equity of **$860.2 million** Balance Sheet Highlights (In thousands) | Metric | Jan 31, 2025 | April 30, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $125,094 | $167,146 | | Marketable securities | $599,233 | $583,221 | | Total current assets | $930,903 | $904,394 | | Total assets | $1,055,141 | $1,038,225 | | Total liabilities | $194,964 | $164,872 | | Total stockholders' equity | $860,177 | $873,353 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended January 31, 2025, C3 AI reported net cash used in operating activities of **$(52.7) million** and free cash flow of **$(54.8) million**, showing an improvement year-over-year Cash Flow Highlights (In thousands) | Metric | Nine Months Ended Jan 31, 2025 | Nine Months Ended Jan 31, 2124 | | :--- | :--- | :--- | | Net cash used in operating activities | $(52,671) | $(83,705) | | Net cash used in investing activities | $(6,542) | $(92,600) | | Net cash provided by financing activities | $17,161 | $6,037 | | Net decrease in cash | $(42,052) | $(170,268) | Free Cash Flow Reconciliation (In thousands) | Metric | Nine Months Ended Jan 31, 2025 | Nine Months Ended Jan 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(52,671) | $(83,705) | | Less: Purchases of property and equipment | $(2,101) | $(22,718) | | Less: Capitalized software development costs | — | $(2,750) | | **Free cash flow** | **$(54,772)** | **$(109,173)** | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) C3 AI provided reconciliations for non-GAAP financial measures, reporting Q3 FY2025 non-GAAP gross profit of **$68.2 million** (69% margin) and a non-GAAP net loss of **$(15.8) million**, or **$(0.12) per share** Q3 FY2025 GAAP to Non-GAAP Reconciliation (In thousands, except per share data) | Metric | GAAP | Adjustments | Non-GAAP | | :--- | :--- | :--- | :--- | | Gross Profit | $58,347 | $9,860 | $68,207 | | Loss from Operations | $(87,585) | $64,441 | $(23,144) | | Net Loss | $(80,201) | $64,441 | $(15,760) | | Net Loss Per Share | $(0.62) | | $(0.12) |

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].