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For the quarter ended July 2024, C3.ai, Inc. (AI) reported revenue of $87.21 million, up 42.2% over the same period last year. EPS came in at -$0.05, compared to -$0.09 in the year-ago quarter.The reported revenue represents a surprise of +0.11% over the Zacks Consensus Estimate of $87.12 million. With the consensus EPS estimate being -$0.13, the EPS surprise was +61.54%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine the ...

Kenstocker/iStock via Getty Images AI software companies already have wild reactions to earnings reports, and C3.ai, Inc. (NYSE:AI) didn't help their case with guidance slightly below targets. The AI software company is actually reporting accelerating growth and the fastest growth rates since switching the business model to consumption-based, but the stock market isn't happy. My investment thesis is back to ultra-Bullish on the stock following the negative reaction to earnings. Finviz Big Start To FY25 C3.a ...

Core Viewpoint - C3.ai's revenue growth has improved, but the company continues to face significant losses, leading to a decline in its stock price following disappointing guidance in its fiscal first-quarter earnings report [1]. Financial Performance - In the first quarter, C3.ai reported a revenue increase of 21% to $87.2 million, surpassing estimates of $86.9 million [2]. - The company closed 71 agreements in the quarter, marking a 122% year-over-year increase, and achieved its sixth consecutive quarter of accelerating revenue [2]. - The GAAP operating loss improved slightly from $74.1 million to $72.6 million, while the adjusted per-share loss was $0.05, an improvement from a loss of $0.09 and better than the consensus estimate of a loss of $0.13 [2]. Future Outlook - For the second quarter, C3.ai expects revenue to be between $88.6 million and $93.6 million, representing a 24.4% increase at the midpoint, which aligns with consensus expectations [4]. - The company anticipates an adjusted operating loss to widen from $25 million to a range of $26.7 million to $34.7 million, indicating ongoing challenges in achieving profitability [4]. - Despite revenue growth, investor impatience is growing due to the lack of profits and share dilution [4].

Key TakeawaysShares of C3.a1 tumbled Thursday morning, pulled lower by a projected loss for the current quarter that was wider than analysts expected.The AI software maker reported a smaller loss than analysts expected for the latest quarter, but analysts said the company's subscription growth was disappointing.The morning's share-price drop extended the stock's year-to-date losses, pulling it to levels last seen in 2023. C3,a1 (AI) shares sank to their lowest point in months Thursday after the artificial i ...

Despite a double beat, C3.ai stock crashed 19% after reporting earnings.In this video, I will cover C3.ai's (AI -1.88%) latest earnings report and explain why the stock is tanking. Check out the short video to learn more, consider subscribing, and click the special offer link below.*Stock prices used were from the trading day of Sept. 4, 2024. The video was published on Sept. 5, 2024. ...

C3.ai Inc AI posted upbeat earnings and sales results for its first quarter on Wednesday.C3.ai reported first-quarter revenue of $87.2 million, up 21% year-over-year. The revenue figure beat a Street consensus estimate of $86.9 million, according to data from Benzinga Pro.Subscription revenue was $73.5 million in the first quarter, up 20%. Subscription revenue made up 84% of the company’s total revenue in the first quarter.The company reported a loss of 5 cents per share in the first quarter, beating a Stre ...

Financial Performance - Total revenue for the three months ended July 31, 2024, was $87.2 million, representing a 21% increase compared to the same period last year[149]. - Total revenue for the quarter ended July 31, 2023, was $72.36 million, representing a year-over-year growth of 11%[1]. - Gross profit for the three months ended July 31, 2024, was $52.2 million, reflecting a 29% increase from $40.5 million in the same period last year[219]. - The net loss for the three months ended July 31, 2024, was $62.8 million, compared to a net loss of $64.4 million in the same period of 2023[211]. - Free cash flow for the three months ended July 31, 2024, was $7.1 million, a significant improvement from a negative $8.9 million in the same period last year[227]. - Net cash provided by operating activities for the three months ended July 31, 2024, was $8.0 million, an increase from $3.9 million in the same period of 2023[230][231]. - The net loss for the three months ended July 31, 2024, was $62.8 million, adjusted for non-cash items including stock-based compensation of $54.7 million[230]. - Net cash used in investing activities for the three months ended July 31, 2024, was $41.6 million, compared to $84.8 million in the same period of 2023[232][233]. - Net cash provided by financing activities for the three months ended July 31, 2024, was $0.2 million, a decrease from $2.5 million in the same period of 2023[234][235]. - As of July 31, 2024, the company had cash, cash equivalents, and marketable securities totaling $762.5 million, up from $750.4 million as of April 30, 2024[241]. Revenue Breakdown - Subscription revenue grew to $73.5 million for the three months ended July 31, 2024, representing a 20% increase compared to the same period last year[149]. - Professional services revenue represented 16% of total revenue for the three months ended July 31, 2024[148]. - C3 AI's cloud-native software offerings accounted for 84% of total revenue in the three months ended July 31, 2024[146]. - Subscription revenue increased by $12.1 million, or 20%, accounting for 84% of total revenue in Q3 2024, compared to 85% in Q3 2023[214]. - Professional services revenue rose by $2.7 million, or 25%, primarily driven by an increase in prioritized engineering services[215]. Customer Metrics - Customer Engagement increased to 404 as of July 31, 2023, up from 287 a year earlier, reflecting a growth of 81%[1]. - Remaining Performance Obligations (RPO) decreased to $204.5 million as of July 31, 2024, down from $244.3 million as of April 30, 2024[2]. - The average total subscription contract value is decreasing as the company expands its market-partner ecosystem[3]. - The company aims to attract new customers in industries such as telecommunications, pharmaceuticals, and healthcare, where it currently has limited presence[3]. - Customer retention and expansion efforts are focused on increasing usage of C3 AI Software across multiple departments and divisions[3]. Market and Product Development - The global public cloud market was expected to approach $500 billion in 2023, up from less than $20 billion in 2008[128]. - The AI software market is expected to exceed $450 billion in 2023, indicating significant growth potential[128]. - C3 AI's core technology, the C3 AI Platform, enables rapid design, development, and deployment of Enterprise AI applications[126]. - The company has expanded its product offerings to include over 90 AI production applications across various industries[144]. - In Q1 FY2024, the company launched the C3 Generative AI Suite, which includes 28 new domain-specific generative AI offerings[181]. - The company achieved AWS Generative AI Competency in Q1 FY2025, recognizing its capabilities in advancing generative AI technologies[184]. Pricing and Business Model - The company transitioned to a consumption-based pricing model, which is expected to have a short-to-medium term negative effect on revenue growth[150]. - The transition to a consumption-based pricing model is expected to increase customer acquisition and accelerate growth[3]. Expenses and Investments - Total operating expenses increased by 9% to $124.8 million, with sales and marketing expenses rising by 19% to $52.1 million[220]. - The company expects to continue to invest in brand awareness and market education, particularly related to generative AI[188]. - The company anticipates that sales and marketing expenses will increase in absolute dollar amounts as it invests in brand awareness and customer acquisition strategies[203]. - Operating expenses are expected to increase as a percentage of total revenue in the near term but stabilize as the business matures[201]. - The company plans to maintain high levels of investment in product innovation, with research and development spending expected to decline as a percentage of total revenue over the long term[187]. Risks and Challenges - The company faces potential impacts from macroeconomic conditions, including labor shortages and inflation, which may affect customer budgets and consumption[193]. - Approximately 5% of sales for the three months ended July 31, 2024, were denominated in euros, exposing the company to foreign currency exchange risk[242]. - The company does not believe inflation has had a material effect on its business, but acknowledges potential risks if costs rise significantly[243]. Internal Controls - There were no changes in internal control over financial reporting that materially affected the company's financial reporting during the period covered by the report[246]. - The company has not used any derivative financial instruments to manage interest rate risk exposure as of July 31, 2024[241]. - The effectiveness of internal control over financial reporting is subject to inherent limitations, including human error and judgment in design and implementation[247]. - Management acknowledges that internal controls can only provide reasonable assurance, not absolute assurance, of achieving control objectives[247]. - Resource constraints impact the design of disclosure controls and procedures, requiring management to evaluate benefits relative to costs[247]. - Future evaluations of control effectiveness are at risk due to potential changes in conditions and compliance deterioration[247]. - The company intends to monitor and upgrade internal controls as necessary, but cannot guarantee that improvements will be sufficient[247].

Financial Data and Key Metrics - Total revenue for Q1 FY25 was $87.2 million, a 21% YoY increase, exceeding analyst expectations [7][8] - Subscription revenue grew 20% YoY to $73.5 million, representing 84% of total revenue [8][27] - Non-GAAP gross profit was $60.9 million with a 70% gross margin [8] - Non-GAAP operating loss was $16.6 million, better than the guidance of $22 million to $30 million [8] - Net cash provided by operating activities was $8 million, and free cash flow was $7.1 million [8] - The company ended the quarter with $762.5 million in cash, cash equivalents, and marketable securities [28] Business Line Data and Key Metrics - The company closed 71 agreements in Q1, including 72 new pilots, marking a 117% YoY increase in pilot count [9] - State and local government business grew over 500% YoY, with 25 agreements signed in Q1 [9][12] - C3 AI Federal business represented over 30% of bookings for the quarter, with new agreements signed with the U.S. Air Force, Navy, Marine Corps, and Intelligence Community [13] - Partner-supported bookings grew 94% YoY, with 72% of total agreements closed through the partner ecosystem [15][16] Market Data and Key Metrics - The company expanded its footprint in state and local governments across multiple U.S. states, including Texas, California, and Florida [9] - The public sector market in Europe is expected to more than double the addressable market [12] - The company signed 40 agreements with Google Cloud in Q1, a 300% YoY increase, driven by joint campaigns focused on the public sector [16] Company Strategy and Industry Competition - The company is focused on expanding sales capacity in North America, Europe, and the public sector [15] - C3 AI's platform is designed to deliver pre-built AI applications quickly, differentiating it from legacy software companies and modern data integration platforms [18][19][20] - The company leverages partnerships with hyperscalers like AWS, Google Cloud, and Microsoft to drive workload in their compute and storage clouds [16] Management Commentary on Operating Environment and Future Outlook - Management highlighted the complexity of the AI market, particularly with the advent of generative AI, and the difficulty in modeling the business [42][43] - The company expects to be free cash flow positive in Q4 FY25 and for the full fiscal year, despite short-term pressure on gross and operating margins due to higher pilot mix and investments in sales, R&D, and marketing [30][32] - Revenue guidance for Q2 FY25 is $88.6 million to $93.6 million, with full-year guidance maintained at $370 million to $395 million, implying a YoY growth rate of 19% to 27% [31] Other Important Information - The company launched C3 Generative AI for government programs in Q1, with a pilot signed with a state on the U.S. East Coast [24] - C3 AI's customer base continues to expand, with significant success in improving manufacturing outcomes for Nucor Corporation and enhancing grid resiliency for Eletrobras [14][15] Q&A Session Summary Question: Tone of business in Q1 and deal size - The tone of business was described as "wild," with generative AI driving complexity and unexpected opportunities in sectors like public sector, law firms, and medical diagnostics [41][42][43] Question: Why guidance didn't increase despite strong bookings - The company maintained its full-year revenue guidance of $370 million to $395 million, representing 19% to 27% YoY growth, as it remains one of the fastest-growing companies in the software sector [44] Question: Trends in subscription revenue and expenses - Subscription revenue is expected to remain lumpy, with professional services revenue bouncing around 10% to 20% of total revenue, averaging 15% [46][47] - The company plans to continue investing in salesforce, R&D, and marketing efforts [50] Question: Competitive dynamics - The primary competition comes from IT organizations and CIOs attempting to build AI applications themselves, often leading to failures and eventual return to C3 AI [51][52][53] Question: Pilot growth and Q2 revenue guidance - The value of pilots remains consistent, with enterprise AI pilots averaging $0.5 million and generative AI pilots averaging $0.25 million [56] - Confidence in Q2 revenue growth is based on the company's track record of meeting or exceeding guidance for the past 15 quarters [58] Question: Partner efforts outside of Google Cloud - The company has strong partnerships with AWS and Microsoft Azure, with all hyperscalers benefiting from C3 AI's ability to quickly deploy applications and drive cloud resource consumption [62] Question: State and local government agreements - Most state and local government agreements begin as pilots, with the majority converting to production contracts [63][66]

Investor Supplemental FY25-Q1 September 4, 2024 Disclaimer 2 This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "will" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Forward-looking statements in this press release include, but are not limited to, sta ...