Core Viewpoint - C3.ai's recent struggles are attributed to internal execution issues rather than fundamental flaws in technology or market position, suggesting a potential for recovery with new leadership [1][5][12] Financial Performance - C3.ai reported total revenue of $70.3 million for fiscal Q1 2026, marking a 19% year-over-year decline and falling short of the consensus estimate of approximately $104 million [2][4] - The GAAP gross margin decreased to 38%, resulting in a net loss of $116.8 million for the quarter [2] Leadership Changes - Thomas Siebel stepped down as CEO, and Stephen Ehikian has been appointed as the new CEO, bringing operational expertise to address the company's execution issues [3][5] - The leadership overhaul includes unifying sales and services under new leadership, indicating a comprehensive operational restructuring [6] Strategic Opportunities - The new CEO's background in building AI software companies and federal expertise aligns with C3.ai's growth segments, particularly in Federal, Defense, and Aerospace contracts, which accounted for 28% of bookings in Q1 [6][8] - The company has a strong financial position with $711.9 million in cash and no debt, providing a cushion for strategic investments [9] Growth Potential - C3.ai's partner ecosystem is a significant growth driver, with 40 out of 46 agreements in Q1 coming through this channel, highlighting the importance of partnerships [10] - The Remaining Performance Obligation (RPO) of $223.2 million indicates a backlog of future revenue, offering stability for the new leadership team [11] Future Outlook - The narrative around C3.ai has shifted to focus on execution capabilities of the new leadership team, with an emphasis on stabilizing revenue growth and meeting financial guidance [12][13] - The company is exploring strategic options, including a potential sale, which could provide a valuation floor and a path to shareholder returns [14]

Financial Data and Key Metrics Changes - Total revenues for Q1 Fiscal 2026 were $1.3 billion, an increase of 1.5% year over year, exceeding expectations, primarily driven by cloud and license revenues [17][19] - Cloud revenues reached $485 million, up 6% year over year, attributed to strong demand in the content product category [7][17] - Annual recurring revenue (ARR) was $1.1 billion, an increase of 1.8% year over year, representing 83.2% of total revenues [18] - Adjusted EBITDA for the quarter was $467 million, with a margin of 36.3%, up 130 basis points year over year [19] - Free cash flow was $101 million, a significant increase of $218 million year over year [19] Business Line Data and Key Metrics Changes - Content Cloud, the largest business unit, grew 21% year over year, driven by bookings in financial services, energy, utilities, and telecom verticals [8][9] - Customer support revenues were down 1.5% year over year, indicating challenges in that segment [18] - Enterprise cloud bookings increased by 20% year over year, with 33 deals greater than $1 million closed in Q1, up 43% year over year [8] Market Data and Key Metrics Changes - The company is experiencing a shift towards cloud solutions, with customers increasingly making faster decisions to transition workloads from on-premise to cloud [11][12] - The content management business is expected to dominate revenue sources as non-core units are divested [25][26] Company Strategy and Development Direction - The company is focusing on its core business units in enterprise information management and plans to leverage its extensive data connectors for training agentic AI [24][25] - A strategy to divest non-core business units is underway, with a goal to enhance shareholder value [25][28] - The company aims to maintain a hybrid model offering both on-premise and cloud solutions, catering to customer preferences [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's financial and operational position, expecting continued strength in the content business [10][12] - The outlook for Q2 total revenue is projected to be between $1.275 billion and $1.295 billion, with an adjusted EBITDA margin between 35.5% and 36% [10] - The company anticipates ARR to return to growth in fiscal 2026, with cloud growth outpacing maintenance declines [11] Other Important Information - The company is actively seeking a permanent CEO, with a search ongoing for both internal and external candidates [29] - The upcoming OpenText World event is expected to showcase new product offerings and innovations, particularly in agentic AI solutions [9][10] Q&A Session Summary Question: What is OpenText's competitive edge in content as it pivots to leveraging data for AI? - The competitive edge has been built over 35 years, with extensive data connectors critical for training agentic AI [36][38] Question: Can you provide insight into the growth of the content business? - Growth is driven by customer readiness for AI and the need for content curation [39][40] Question: What are the expectations for Q2 revenue guidance? - The guidance implies potential variability due to customer transitions to cloud solutions, affecting license revenue [44][62] Question: What is the strategy for divestitures moving forward? - The company plans to divest non-core units methodically, aiming for one divestiture per quarter [47][48] Question: How is the ITOM business expected to stabilize? - Stabilization is still to be determined, but there is positive demand and growth in cloud offerings [58]

Core Insights - C3.ai and Veritone are small-cap companies leading in enterprise artificial intelligence software, with C3.ai focusing on a broad industry reach and Veritone on human-centered AI solutions [1] - Both companies are at critical junctures following their recent earnings results, with C3.ai showing strong revenue growth but facing operating losses, while Veritone is expanding its software revenues despite challenges in legacy services [2] C3.ai Overview - C3.ai reported $108.7 million in revenues for the fourth quarter of fiscal 2025, a 26% year-over-year increase, driven by demand for its AI applications [4] - The company has strategic partnerships with major tech firms like Microsoft, Amazon, and Google, enhancing its market presence across 19 industries [4] - Preliminary first-quarter fiscal 2026 revenues are projected to be $70.2-$70.4 million, down approximately 19% from $87.2 million a year earlier, significantly missing prior guidance [5] - C3.ai's GAAP operating loss is estimated between $124.7 million and $124.9 million, with non-GAAP losses between $57.7 million and $57.9 million [5] - The company maintains a strong liquidity position with about $711.9 million in cash and equivalents as of late July 2025 [8] Veritone Overview - Veritone is experiencing growth driven by its AI training data and public sector initiatives, with a near-term pipeline exceeding $20 million, more than doubling since the first quarter [10] - The company signed 35 new public sector customers and expanded its public sector pipeline to $189 million, indicating strong demand for its aiWARE platform [11] - Despite revenue stability, Veritone's GAAP gross profit fell 7% year-over-year to $15.3 million, and the net loss widened to $26.8 million due to a non-cash charge [13] - Veritone has initiated a cost reduction program targeting $10 million in annual savings and raised about $10 million in fresh equity capital [14] Stock Performance - C3.ai stock has declined 37.8% over the past three months, with a significant drop of around 25% following disappointing preliminary results [15] - In contrast, Veritone stock has surged 95.5% in the same period, reflecting positive sentiment around its path to profitability [16] Valuation and Earnings Estimates - C3.ai has a forward price-to-sales ratio of 5.44, indicating a discount relative to its industry, while Veritone's market capitalization is around $168 million, suggesting potential upside if it executes well [18] - The Zacks Consensus Estimate for C3.ai's fiscal 2026 loss per share has widened to $1.39, while Veritone's estimate has narrowed to 55 cents, indicating a positive shift in sentiment [19][22] Conclusion - C3.ai has a larger scale and established partnerships but is currently facing execution challenges and declining sales momentum [25] - Veritone is positioned for growth with improving core revenues and significant contracts, suggesting more upside potential moving forward [26]