C3.ai Faces Big Questions After Two Straight Revenue Declines Demand a Reversal

Core Insights - C3.ai has reported two consecutive quarters of year-over-year revenue decline, raising concerns about its ability to convert bookings into revenue growth [1] - Despite a 89% increase in Federal bookings, the company's Q2 gross profit fell by 47% year-over-year, and operating expenses reached 190% of revenue [1] - C3.ai's stock has decreased by 61.8% over the past year, reflecting market skepticism about its growth prospects [1] Revenue Performance - In Q4 FY2025, C3.ai achieved $108.7 million in revenue, a 25.5% increase year-over-year, but this was followed by a decline in Q1 FY2026 to $70.26 million and Q2 to $75.1 million, representing a 20.4% year-over-year decline [1] - The company reported a net loss of $105 million in Q2, following a loss of $117 million in Q1, indicating significant financial strain [1] - Management has guided Q3 revenue expectations to a range of $72 million to $80 million, suggesting stagnation rather than growth [1] Market Sentiment - C3.ai's stock has already priced in significant doubt, with a year-to-date decline of 25.5% and a 32% drop since the Q2 earnings report in December [1] - The market is focused on whether C3.ai can demonstrate year-over-year revenue growth, as this will be a critical indicator of the company's ability to capitalize on enterprise AI demand [1] - A failure to show revenue growth for a third consecutive quarter could lead to increased concerns about the company's financial viability [1]