Why C3.ai Q2 Revenue Beat Impresses Analysts

Core Viewpoint - C3.ai Inc reported fiscal second-quarter results that showed mixed performance, with total revenue slightly above consensus but still below guidance, leading to a rise in share price. Financial Performance - C3.ai reported total revenue of $75.1 million, which missed the midpoint of its guidance but exceeded consensus estimates of $74.9 million [2] - Total revenue declined 20% year-on-year, while non-GAAP gross margins remained under pressure at 55% [4] - Subscription revenue saw a sequential improvement, declining by 22% year-on-year, an improvement from the previous quarter's 30% contraction [6] Business Developments - The company experienced 89% growth in federal bookings despite a 43-day government shutdown, indicating resilience in its federal business [5] - C3.ai closed 24 agreements with hyperscaler partners, with Microsoft deal activity expanding by 146% year-on-year and Amazon's AWS agreements increasing by 172% [3] Future Guidance - Management reintroduced revenue guidance for fiscal 2026, projecting $289.5-$309.5 million, which implies a 23% decline [7] - The company guided for third-quarter revenue of $72-$80 million, compared to estimates of $75.6 million [8] Analyst Ratings - Wedbush analyst Dan Ives reaffirmed an Outperform rating with a price target of $20 [10] - Canaccord Genuity maintained a Hold rating with a price target of $16 [10] - DA Davidson reiterated an Underperform rating with a price target of $13 [10] - Needham analyst Mike Cikos maintained a Hold rating [10]