Core Insights - C3.ai, Inc. has partnered with Eletrobras to implement its Grid Intelligence solution across the utility's entire transmission network, marking a significant step in Eletrobras' Eletro.ia program aimed at integrating AI into operations [1][7] - The deployment will utilize C3.ai's technology for real-time fault detection and operational reporting, enhancing efficiency and service reliability in Brazil's energy sector [2][3] Strategic Partnerships - C3.ai's growth is significantly driven by its expanding partner ecosystem, with 73% of agreements in fiscal 2025 being collaborations, including deepened ties with major hyperscalers like Microsoft, AWS, and Google Cloud [4] - The renewal of the partnership with Baker Hughes, which has generated over $0.5 billion in revenues since 2019, further emphasizes the importance of strategic alliances for C3.ai's growth trajectory [5] Market Performance - In the last three months, C3.ai's shares have decreased by 20.5%, contrasting with a 9% decline in the Zacks Technology Services industry [6]

Group 1: Company Performance - C3.ai experienced a significant stock price drop, with a decline of over 30% at one point and a closing drop of 25.58% after reporting first-quarter revenues of approximately $70.2 million to $70.4 million, a 19% year-over-year decrease, which was far below analyst expectations of $104.3 million [1][4] - The company's adjusted operating loss for the first quarter is projected to be between $57.7 million and $59.9 million, nearly double the previous forecast of $23.5 million to $33.5 million, indicating a substantial deterioration in financial performance [4] - C3.ai's CEO Tom Siebel attributed the poor performance to significant sales restructuring disruptions and his own health issues, although he expressed optimism for improved sales in the second quarter [4][5] Group 2: Market Sentiment - A recent Bank of America survey revealed that approximately 91% of fund managers believe the U.S. stock market is overvalued, marking the highest level since 2001 [2][7] - The survey also indicated that 49% of respondents view emerging market stocks as undervalued, the highest level since February 2024, suggesting a potential shift in investment focus [2][7] - The survey highlighted that 45% of participants consider the most crowded trade to be long positions in the "Magnificent Seven" tech stocks, which include Microsoft, Nvidia, Meta, Amazon, Tesla, Google, and Apple [7]

Core Viewpoint - C3.ai is a prominent player in the enterprise AI sector, but it faces significant challenges regarding cash burn and competition, which could impact its long-term viability and investment attractiveness [1][16]. Company Overview - C3.ai specializes in providing an enterprise AI platform, focusing on deploying AI in large organizations across various sectors such as supply chains, energy, and defense [4][6]. - The company offers tools like the C3 Agentic AI Platform and C3 Generative AI, which facilitate the development and implementation of AI solutions [5][6]. Financial Performance - C3.ai has accumulated losses of $1.4 billion since its inception in 2009, with a projected non-GAAP loss from operations of around $100 million for fiscal year 2026 [8][9]. - The company ended the last fiscal year with $743 million in cash and equivalents, but this could diminish quickly if losses continue at the current rate [8]. - Revenue growth for fiscal year 2026 is expected to be between 15% and 25%, which is considered moderate compared to its spending levels [9][11]. - The company signed 264 agreements in fiscal year 2025, marking a 38% year-over-year increase, indicating potential for improved growth rates in the future [10]. Competitive Landscape - C3.ai faces increasing competition from major tech companies like Microsoft, Google, and AWS, which are heavily investing in AI and have established customer bases [13][14]. - Smaller startups are also emerging with specialized AI tools that are easier to implement and more flexibly priced, intensifying the competitive pressure [14][15]. - To maintain relevance, C3.ai must continue to address complex customer needs in its core verticals, or risk being marginalized in the market [15].

Core Insights - C3.ai, Inc. (AI) shares have declined 32.2% over the past six months, significantly underperforming the industry decline of 12.5% and the S&P 500's drop of 1% [1] - The company's stock performance is impacted by high operational costs despite revenue growth, with a consumption-based pricing model leading to increased pilot costs and expensive customer acquisition [1][19] - C3.ai is expanding its operations through a growing direct salesforce and partnerships with major firms like Microsoft, AWS, and McKinsey's QuantumBlack, which is expected to drive long-term growth but may pressure near-term operating margins [2] Price Performance - In the last month, C3.ai's stock gained 6.4%, contrasting with a 0.4% decline in the industry, closing at $24.17, still below its 52-week high of $45.08 but above its low of $17.03 [5] - Competitors such as Asana, Inc. (ASAN) and Braze, Inc. (BRZE) experienced stock declines of 13% and 28.3%, respectively, during the same period [5] Financial Estimates - The Zacks Consensus Estimate for fiscal 2026 and 2027 loss per share has improved to 37 cents and 16 cents, respectively, from previous estimates of 47 cents and 45 cents [8] - Sales growth estimates for fiscal 2026 and 2027 are projected at 20.1% and 21.8%, respectively, while Asana and Braze are expected to see sales increases of 7.9% and 18.7% [9] Growth Drivers - C3.ai is gaining traction in the federal sector, highlighted by a $450 million contract with the U.S. Air Force for its PANDA predictive maintenance platform, indicating a growing role in national defense [10][19] - The company's AI-driven platforms are now integrated across various military branches, enhancing operational efficiency and providing real-time insights [11] - In Q4 fiscal 2025, 73% of agreements were made in collaboration with major cloud providers, leading to a 419% year-over-year increase in partner-driven bookings [12][13] Customer Expansion - C3.ai has expanded its customer base across commercial and government sectors, securing notable clients such as Flex, Sanofi, ExxonMobil, Shell, and the U.S. Department of Defense [14] - The company is leveraging its generative AI solutions for applications ranging from predictive maintenance to customer service enhancement [14] Valuation - Despite recent stock gains, C3.ai is trading at a discount compared to its industry, with a forward 12-month price-to-sales ratio of 6.64, lower than Asana's 3.83 and Braze's 3.77 [15] Long-term Outlook - The recent stock weakness does not reflect the operational progress and long-term potential of C3.ai, positioning it as a compelling investment opportunity for forward-looking investors [18] - The company is building a strong foundation through government contracts and partnerships, which are expected to lead to durable revenue growth and margin improvement over time [19][20]

Core Viewpoint - C3.ai has reported strong performance driven by the increasing demand for enterprise-level AI applications, with revenue projections for fiscal year 2026 exceeding analyst expectations, indicating robust growth in both AI infrastructure and software applications [1][2] Financial Performance - For the fourth fiscal quarter of 2025, C3.ai achieved total revenue of $108.7 million, a 26% year-over-year increase, surpassing analyst expectations of $107.9 million [2] - The company expects fiscal year 2026 revenue to range between $447.5 million and $484.5 million, aligning with analyst forecasts [1] - C3.ai's subscription revenue for the fourth quarter was approximately $87.3 million, a 9% increase from the previous year, accounting for 80% of total revenue [2] - The company anticipates a Non-GAAP operating loss of $23.5 million to $33.5 million for the first quarter of fiscal year 2026, which is better than the analyst average expectation of a $35.2 million loss [2] Product and Market Position - C3.ai is a leader in the enterprise-level AI application market, offering a comprehensive suite of generative AI solutions that enhance operational efficiency across various industries [3][4] - The company has integrated large language models (LLMs) into its AI software products, launching the C3 Generative AI suite [4] - C3.ai has established a strong foothold in high-barrier industries such as energy and defense, benefiting from the growing interest in AI among enterprise customers [3][4] Strategic Partnerships and Growth - C3.ai has expanded its strategic partnership with Baker Hughes, focusing on joint product sales and investment in AI solutions to enhance operational efficiency in the energy sector [6] - The company has secured long-term contracts with major clients, including the U.S. Department of Defense and large energy firms like Shell and ExxonMobil [6] - C3.ai signed 69 agreements in the fourth quarter, including 36 initial production deployment agreements, indicating strong market demand [7] Industry Trends - The AI application software market is expected to experience significant growth, with the AI agent market projected to expand from $7.8 billion in 2025 to approximately $52.6 billion by 2030, reflecting a compound annual growth rate of 46% [9] - The emergence of AI agents is anticipated to transform AI applications from information assistance tools to highly intelligent productivity tools, significantly enhancing operational efficiency [8][9]

Core Viewpoint - C3.ai, Inc. is currently trading at a slight premium compared to its sector but at a discount to historical metrics, with a forward 12-month Price/Sales ratio of 6.39X, higher than the sector's 6.18X, yet below its three-year average [1] Group 1: Share Price Performance - C3.ai's shares have increased by 20.7% in the past month, but this performance lags behind the Zacks Computer & Technology sector and the Zacks Computers - IT Services industry [2] - The current stock price reflects a 48.6% discount from its 52-week high of $45.08 and a 36.1% premium to its 52-week low of $17.03 [2] Group 2: Growth Drivers - Partnerships with major players like Amazon AWS, Google Cloud, Microsoft Azure, and Booz Allen Hamilton are significant growth multipliers, resulting in 28 closed deals across nine industries, indicating a 460% quarter-over-quarter increase [5] - C3.ai has expanded its customer base in both commercial and government sectors, securing notable clients such as Flex, Sanofi, ExxonMobil, Shell, and the U.S. Department of Defense [6] - The company has a robust federal pipeline, particularly with the U.S. Department of Defense, citing 39 active pilots that are gaining traction in areas like predictive maintenance and logistics optimization [10] Group 3: Financial Challenges - C3.ai reported a GAAP net loss of 62 cents per share in the fiscal third quarter, with a non-GAAP loss of 12 cents per share [11] - The company signed 50 new pilots in the fiscal third quarter, totaling 310 pilots, which carry higher upfront costs and pressure on gross margins [12] - C3.ai anticipates some moderation in gross margins due to the increased mix of costly pilots and expects elevated operating losses due to ongoing investments in sales and R&D [13] Group 4: Estimate Revisions - The Zacks Consensus Estimate for fiscal 2025 loss per share remains unchanged at $2.29, while the estimate for fiscal 2026 loss per share has widened to $2.41 [14] - Sales growth estimates for fiscal 2025 and 2026 are projected at 29.6% and 22.4%, respectively [14] Group 5: Overall Assessment - Despite high-profile partnerships and a strong pipeline, C3.ai's ongoing lack of profitability, margin pressures, and increasing cost structure raise concerns [17] - The company operates at a steep GAAP loss with over 300 active pilots that have yet to convert into significant revenues, which may further impact margins [16] - The forward Price/Sales ratio of 6.39, while above the sector average, does not indicate an improved long-term financial outlook, leading to an unfavorable risk-reward profile for investors [17]

Financial Data and Key Metrics Changes - Total revenue for Q3 increased 26% year-over-year to $98.8 million, with subscription revenue growing by 22% to $85.7 million, representing 87% of total revenue [15][33] - Non-GAAP gross profit was $68.2 million, resulting in a gross margin of 69% [15][36] - Non-GAAP operating loss improved to $23.1 million, better than the guidance of $38.6 million to $46.6 million [16][37] - Free cash flow for Q3 was negative $22.4 million, an improvement from negative $45.1 million in the same quarter last year [39] Business Line Data and Key Metrics Changes - Revenue from software licenses was $28.6 million, while professional services revenue was $13.1 million, accounting for 13% of total revenue [33][35] - Subscription and professional engineering services revenue combined was $91.4 million, representing an 18% increase compared to the previous year [36] Market Data and Key Metrics Changes - The partnership with Microsoft resulted in 28 closed agreements across nine different industries, marking a 460% increase quarter-over-quarter [17][21] - The joint qualified sales pipeline with Microsoft surged by 244% year-over-year, targeting 621 accounts recognized as eligible customer opportunities [18] Company Strategy and Development Direction - The company is focusing on expanding its strategic alliances with Microsoft, AWS, and McKinsey QuantumBlack to enhance global reach and execution speed [19][20] - The emphasis on Generative AI and Agentic AI is expected to drive innovation and customer traction, with a goal of increasing market share in fiscal years 2026 and 2027 [30][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning to capitalize on the growing enterprise AI market, highlighting the importance of their partner ecosystem [30][31] - The company anticipates continued investments in sales, partner ecosystem, and research and development, expecting to be free cash flow positive in Q4 [42][43] Other Important Information - The company closed 50 pilots during Q3, with 310 pilots cumulatively signed, of which 245 are still active [41] - The total accounts receivable balance at the end of Q3 was $180.4 million, with a strong health of accounts receivables [40] Q&A Session Summary Question: Can you give more color on the total number of pitches and pipeline? - The company is currently involved in over 600 engagements with Microsoft, with 28 agreements closed in the last quarter [48][55] Question: Can you discuss the trends in remaining performance obligations? - The total remaining performance obligations (RPO) at the end of the quarter was around $208 million, with expectations of some decline in RPO in the near term [61] Question: What drove the outperformance in professional services this quarter? - The uptick in professional services revenue was driven by increased revenue from consulting services, paid implementation services, and training services [78] Question: Why are demonstration licenses outperforming this year? - The increase in demonstration licenses is attributed to the need for sales teams to have effective tools to engage customers, leading to a significant rise in interest from large organizations [82][84]