C3.ai(US:AI)2025-12-03 23:00Financial Data and Key Metrics Changes - Total revenue for Q2 was $75.1 million, a quarter-over-quarter increase of 7% [19] - Subscription revenue was $70.2 million, a quarter-over-quarter increase of 16.5%, representing 93% of total revenue [19] - Non-GAAP gross profit was $40.9 million, with a non-GAAP gross margin of 54% [21] - Non-GAAP operating loss for the quarter was $42.2 million, and non-GAAP net loss was $34.8 million, equating to $0.25 per share [21] - Free cash flow for the quarter was negative $46.9 million, with $675 million in cash and equivalents at quarter-end [22] Business Line Data and Key Metrics Changes - Bookings increased by 49% sequentially to $86 million, with significant traction in federal business [5][20] - Total bookings across federal, defense, and aerospace increased by 89% year over year, accounting for 45% of total bookings [6] - Professional services revenue was $4.9 million, representing 7% of total revenue [20] Market Data and Key Metrics Changes - The federal market is identified as a large growth vector, with agencies moving towards commercial off-the-shelf solutions [6] - The company signed new agreements with various federal agencies, including the U.S. Department of Health and Human Services and the U.S. Department of Defense [6][7] Company Strategy and Development Direction - The company aims to return to rapid growth and a path towards free cash flow positive and non-GAAP profitability [14] - Focus on driving sales execution and doubling down on products and industries where the company has demonstrable leadership [15] - The product roadmap includes innovations like C3.ai Agentic Process Automation, which expands the scope of what customers can accomplish [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges challenges from a government shutdown but remains optimistic about the demand for enterprise AI [5][30] - The management team is focused on delivering economic value quickly to convert opportunities into agreements [27][36] - The company is benefiting from trends such as the push for AI adoption and the reindustrialization of the maritime industrial base [34] Other Important Information - The company has established a detailed financial model and operational objectives to facilitate growth [17][18] - The partner ecosystem is crucial, with 89% of bookings in Q2 closed through partnerships [10] Q&A Session Summary Question: Explanation for the decline in business performance - Management attributed the decline to poor sales execution and acknowledged that demand for enterprise AI is accelerating [26] Question: Clarification on revenue from demo licenses - The revenue of $21.9 million was from demo licenses [31] Question: Outlook for professional services revenue mix - Long-term expectations for professional services mix remain between 10%-20% of revenue [32] Question: Future outlook for federal business - The federal business is expected to be a durable growth engine, driven by government trends towards commercial solutions and AI adoption [33] Question: Initiatives for better growth and accountability - Management emphasized the importance of rigorous evaluation and delivery of value to drive growth [36]