Here's What Investors Must Expect Ahead of C3.ai's Q3 Earnings

Core Insights - C3.ai, Inc. (AI) is set to report its third-quarter fiscal 2026 results on February 25, 2026, after market close [1] - The company reported an adjusted loss per share of 25 cents in the last quarter, which was better than the Zacks Consensus Estimate of a loss of 32 cents but worse than the adjusted loss of six cents from the previous year [1] - Revenues for the last quarter were $75.1 million, remaining flat with the consensus estimate but showing a year-over-year decline of 20.4% [1] Earnings Estimates - The Zacks Consensus Estimate for the upcoming fiscal third quarter indicates a loss per share of 29 cents, unchanged over the past 60 days, and 141.7% wider than the loss of 12 cents reported in the same quarter last year [3] - Revenue estimates for the third quarter are pegged at $75.8 million, reflecting a 23.2% year-over-year decline from $98.8 million [3] Revenue Performance - The expected decline in revenues is attributed to lower contributions from Subscription services (93% of total revenues) and Professional services (7% of total revenues) [4] - The downturn is likely due to weaker recognized revenues despite ongoing deal activity, as many deals are still in early implementation phases, along with a decline in prioritized engineering services [5] Revenue Guidance - C3.ai expects total revenues for the fiscal third quarter to be between $72 million and $80 million, with Subscription revenues estimated at $68 million and Professional services at $7.5 million, indicating year-over-year declines of 20.9% and 42.7%, respectively [6] Margin Expectations - The company's bottom line is expected to decline due to reduced prioritized engineering service projects and increased payroll and contractor costs [7] - Gross margins for Subscription and Professional services are expected to be 49.9% and 74%, respectively, indicating year-over-year contractions of 610 basis points and 600 basis points [9] Earnings Prediction Model - The Zacks model does not predict an earnings beat for C3.ai this time, as the company has an Earnings ESP of -9.40% and a Zacks Rank of 4 (Sell) [10][11]