C3.ai(AI) - 2026 Q3 - Quarterly Results

Financial Performance - Total revenue for Q3 2026 was $53.3 million, with subscription revenue accounting for $48.2 million, representing 90% of total revenue[7] - GAAP gross profit was $9.2 million, resulting in a gross margin of 17%, while non-GAAP gross profit was $19.6 million, yielding a non-GAAP gross margin of 37%[7] - Total revenue for the three months ended January 31, 2026, was $53,260,000, a decrease of 46% compared to $98,782,000 for the same period in 2025[28] - Subscription revenue for the nine months ended January 31, 2026, was $178,706,000, down from $240,297,000 in 2025, representing a decline of 25.7%[28] - Gross profit for the three months ended January 31, 2026, was $9,235,000, compared to $58,347,000 in 2025, reflecting a gross margin decrease from 59% to 17%[34] - Net loss for the nine months ended January 31, 2026, was $354,800,000, compared to a net loss of $209,000,000 in 2025, representing an increase of 69.7%[32] - Non-GAAP net loss per share for the nine months ended January 31, 2026, was $(1.02), compared to $(0.24) in 2025, indicating a significant increase in losses per share[34] Cost Management - C3 AI's restructuring plan is expected to yield annual cost savings and reduced cash burn of approximately $135 million in non-GAAP operating expenses[12] - Operating expenses for the nine months ended January 31, 2026, totaled $443,399,000, an increase from $403,812,000 in 2025, indicating a rise of 9.8%[28] - Stock-based compensation expense for the nine months ended January 31, 2026, was $209,528,000, up from $174,373,000 in 2025, an increase of 20.2%[34] - Total stock-based compensation expense for Q3 2026 was $75.9 million, up from $62.7 million in Q3 2025, representing a 21.8% increase[35] Cash Flow and Liquidity - Cash, cash equivalents, and marketable securities totaled $621.9 million as of the end of Q3 2026[7] - Cash and cash equivalents as of January 31, 2026, were $88,847,000, down from $164,358,000 as of April 30, 2025[30] - Net cash used in operating activities for Q3 2026 was $(55.8) million, compared to $(22.0) million in Q3 2025, indicating a significant increase in cash outflow[36] - Free cash flow for Q3 2026 was $(56.2) million, compared to $(22.4) million in Q3 2025, reflecting a worsening cash position year-over-year[36] - Net cash provided by investing activities for Q3 2026 was $40.2 million, a substantial increase from $12.4 million in Q3 2025[36] - Net cash provided by financing activities for Q3 2026 was $1.2 million, a decrease from $13.5 million in Q3 2025[36] Business Development - Total bookings in the federal, defense, and aerospace sectors increased by 134% year-over-year, making up 55% of total bookings[8] - The company closed 44 agreements in Q3, including significant contracts with the U.S. Department of Agriculture and ExxonMobil[8] - C3 AI expanded its Strategic Integrator Program, adding partners like Cathexis and stc Kuwait to enhance AI offerings[8] - C3 Generative AI secured eight agreements in Q3, including initial production deployments with McLaren Automotive and the U.S. Intelligence Community[13] Future Outlook - C3 AI's guidance for Q4 2026 projects total revenue between $48.0 million and $52.0 million, with a non-GAAP loss from operations estimated between $(56.0) million and $(64.0) million[15] - The company is set to hold its annual user conference, C3 Transform 2026, from March 3-5, 2026, to showcase enterprise AI solutions[11] Expense Analysis - Sales and marketing expenses for Q3 2026 reached $30.7 million, up from $21.9 million in Q3 2025, marking a 40.0% increase[35] - Research and development expenses for Q3 2026 were $21.5 million, compared to $19.9 million in Q3 2025, reflecting an 8.2% increase[35] - General and administrative expenses for Q3 2026 totaled $13.4 million, up from $11.4 million in Q3 2025, a rise of 17.6%[35] - Cost of subscription for stock-based compensation in Q3 2026 was $9.8 million, compared to $8.6 million in Q3 2025, an increase of 14.4%[35] - Total current liabilities as of January 31, 2026, were $118,935,000, a decrease from $131,884,000 as of April 30, 2025, reflecting a reduction of 9.8%[30]