C3.ai Reports Strong Q3 FY2025 Results, But Forecast Disappoints Investors

This Beaten-Down Artificial Intelligence (AI) Stock Could Be a Solid Long-Term Winner | The Motley Fool

2025 started rough for C3.ai (AI 0.32%) with shares of the enterprise artificial intelligence (AI) software provider dropping 35% year to date, but a closer look at its business indicates that the market may not be giving this company its due. C3.ai's enterprise AI software solutions are gaining traction among customers, which is evident from the company's recent quarterly results. More importantly, a closer look at C3.ai's latest results suggests that the software specialist is setting itself up for solid, long-term growth. Let's look at the reasons why investors should consider adding this AI stock to their portfolios before the market starts appreciating its robust growth, sending its shares soaring in the long run. C3.ai released its fiscal 2025 third-quarter results (for the three months ended Jan. 31) on Feb. 26. Though the company reported healthy growth and exceeded consensus estimates on revenue and earnings, the stock price fell nearly 10% the following day. C3.ai's top line jumped 26% year over year to almost $99 million. This probably weighed on investors' sentiment as the software specialist delivered slightly faster growth of 29% in fiscal Q2. However, the sell-off in C3.ai stock seems like an overreaction as its top line was slightly higher than what Wall Street was anticipating. Moreover, C3.ai's fiscal Q3 growth was far stronger than the 18% year-over-year growth it reported in the same quarter last year. The company, therefore, needs to be given credit for the fact that its growth profile is much better than it was in the same quarter last year. The midpoint of C3.ai's revenue guidance for the current quarter points toward a year-over-year increase of 25%, which would be an improvement over the 20% growth it reported in the same quarter last year. The company is on track to finish the current fiscal year with a top-line jump of 25%, which would again be better than the 16% growth it clocked in the previous fiscal year. Looking ahead, C3.ai's pace of growth could continue improving thanks to the huge AI software market that it is targeting on account of its improving deal activity. The company reported that it closed 66 agreements with customers last year, an increase of 72% from the year-ago period. Even better, C3.ai management pointed out on the latest earnings conference call that its existing customers, which include both commercial and federal, are expanding the usage of its AI software solutions: In Q3, we secured new and expanded agreements with clients such as Flex, Worley, New York Power Authority, Sanofi, Nucor Corporation, Holcim, Shell, ExxonMobil, GSK, Quest Diagnostics, and Swift, among others. In the federal sector, we closed agreements with the U.S. Department of Defense, the U.S. Air Force, the U.S. Navy, and the Missile Defense Agency. We also expanded our work with state and local governments closing 21 agreements across various states. Our focus on generative AI continues to drive innovation and customer traction. It is also worth noting that C3.ai is engaged in pilot projects as well with large corporations and several government agencies, which could contribute toward stronger revenue growth in the long run. All this explains why C3.ai management believes that it can deliver "continually expanded growth and market share" over the next couple of fiscal years. With the AI software market expected to clock annual growth of 30% through 2033, C3.ai is operating in a fast-growing market that should allow it to sustain healthy levels of growth in the long run. C3.ai is trading at a very attractive valuation unlike other significantly expensive AI software plays. The stock has a price-to-sales (P/S) ratio of 8, which is significantly lower than peer Palantir Technologies which is trading at 73 times sales. What's worth noting here is that there isn't a huge gap between the growth rates of Palantir and C3.ai to justify the former's massively expensive valuation. What this means is that investors can get their hands on C3.ai at relatively attractive levels right now. They should consider grabbing this opportunity with both hands since C3.ai's 12-month price target of $27.50, as per 17 analysts covering the stock, points toward a 17% jump from current levels. More importantly, this AI stock could deliver remarkable returns in the long run as well thanks to the reasons discussed above, which is why it may be a good idea to buy it while it remains beaten down.

Can C3.ai's Revenue Growth Help Drive a Rebound in Its Stock? | The Motley Fool

Share prices of C3.ai (AI -6.05%) sank after the enterprise artificial intelligence (AI) software company reported its fiscal 2025 third-quarter results on Feb. 26, despite overall solid results. After a strong run to end 2024, the stock has now given back all of its recent gains and is down more than 30% year to date and 20% over the past 12 months. But could the stock be poised for a rebound? In its fiscal 2025 third quarter, which ended Jan. 31, C3.ai's revenue climbed 26% to $98.8 million. This broke the company's streak of revenue acceleration, but it was its fourth straight quarter of 20% or more growth and second quarter of growth in excess of 25%. Its revenue was within its $95.5 million to $100.5 million guidance range and was above the midpoint. Data source: C3.ai earnings reports. YOY = Year over year. Subscription revenue jumped by 22% to $85.7 million. Professional services revenue, meanwhile, soared by 64% to $13.1 million. C3.ai said that excluding income from Baker Hughes -- its largest client -- its revenue surged 43%, which would have been an acceleration from its 41% growth on that metric in the previous quarter. It's still unclear whether their partnership will be extended after their current agreement ends in June. Baker Hughes accounts for about 18% of C3.ai's revenue. The company's new extended partnership with Microsoft, meanwhile, has begun bearing fruit. Under the deal, which runs until March 2030, C3.ai's solutions are available through Azure, and Microsoft's salespeople get commissions for Azure C3 AI sales. Since the partnership, Microsoft salespeople helped close 28 agreements across nine different industries, which was a 450% increase quarter over quarter. In addition, it said its sales cycle with Microsoft had been shortened by 20% while its pipeline with the tech giant had skyrocketed. C3.ai was also busy inking other new partnerships in the quarter. It expanded a strategic alliance with Amazon to offer advanced enterprise AI solutions on AWS, and announced a partnership with McKinsey QuantumBlack, the company's AI consulting arm. In fiscal Q3, C3.ai said 71% of its agreements were delivered in collaboration with its partners. Overall, it signed 66 agreements in the quarter, of which 50 were pilots -- three- to six-month term contracts during which customers can try out its services. Twenty of these were generative AI pilots. The company's gross margin came in at 59.1%, up from 57.8% in the prior year period. Its adjusted gross margin (which factors out stock-based compensation expenses) was around 69%. Subscription gross margin was 55.9% for the quarter, up from 54.2% a year ago. Overall, these are pretty low gross margins for a subscription software business. C3.ai continued to be unprofitable, booking an adjusted loss of $0.12 per share. That was a slight improvement from the $0.13 per share loss it produced the prior year period. It generated negative free cash flow of $22.4 million in the quarter and negative $54.48 million free cash flow through the first nine months of its fiscal year. It ended the quarter with $724.3 million in cash and marketable securities on its books, and no debt. Management guided for fiscal Q4 revenue to be between $103.6 million and $113.6 million, which would equate to 20% to 31% growth. It also narrowed its fiscal 2025 revenue guidance range to $383.9 million to $393.9 million. Source: C3.ai's earnings press releases. C3.ai is enjoying some solid gains from its Microsoft partnership, and it just signed new deals with Amazon and McKinsey QuantumBlack. However, the question of whether or not Baker Hughes is going to renew its agreement remains a significant overhang. Now Baker Hughes is no longer a growth driver for C3.ai, which could perhaps be better off selling its services directly to the oil and natural gas industry. Still, the loss of that partnership would likely be viewed by the market as a big negative for the software company. Meanwhile, C3.ai distributes an exorbitant amount of stock-based compensation, which bolsters its adjusted metrics. The company had $215.8 million in stock-based compensation expenses through the first nine months of its fiscal year, which was equal to nearly 70% of its revenue. While that's a non-cash expense, it is a real expense and it dilutes shareholders. From a valuation perspective, C3.ai trades at a forward price-to-sales (P/S) ratio of about 6 based on analysts' consensus estimates for fiscal 2026. That's not an expensive valuation for a software-as-a-service (SaaS) company, although its weak gross margins and aggressive use of stock-based compensation also need to be taken into consideration. With the uncertainty about the Baker Hughes partnership still hanging over C3.ai's head, I would stay on the sidelines when it comes to the stock.

C3.ai Posts 26% Revenue Growth | The Motley Fool

C3.ai delivered a strong earnings performance in Q3 FY2025, exceeding revenue expectations and showcasing notable growth in strategic partnerships. C3.ai (AI 0.42%), a leading enterprise artificial intelligence (AI) company, demonstrated strong performance in its fiscal third quarter of 2025 earnings release on Feb. 26, 2025. The company reported revenue of $98.8 million, marking a 26% increase from the same period last year and exceeding analyst estimates of $98 million. Non-GAAP earnings per share (EPS) improved to $(0.12), a notable improvement from the expected $(0.25). Despite ongoing losses, the quarter reflects significant strategic progress. Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in 2024-12-09 earnings report. C3.ai is a pioneer in the enterprise AI sector, known for its model-driven architecture and comprehensive AI solutions. Its unique architecture allows for the rapid development and deployment of AI applications. The company's recent focus on generative AI solutions and strategic partnerships are critical for its growth. Generative AI is a rapidly growing field, drawing significant industry attention. Key factors contributing to C3.ai's success include its strong, expanding partnerships, particularly with cloud technology leaders like Amazon's AWS and Microsoft Azure, helping to broaden its market reach and distribution capabilities. C3.ai made several key developments during the quarter. Revenue growth was a standout, with total revenue advancing 26% year-over-year to $98.8 million. This growth was bolstered by a 22% increase in subscription revenue, reaching $85.7 million. The strong performance exceeded both analyst and management's expectations, reflecting effective execution of strategic plans. Operating expenses were high, with sales and marketing expenses at $61.2 million, impacting profitability. The company reported a narrower-than-expected non-GAAP loss from operations at $(23.1) million. One of the most significant achievements during the quarter was the expansion of strategic partnerships. The partnership with Microsoft, in particular, allowed for a 460% increase in collaborative agreements across various industries. The joint sales campaign with Microsoft targeted over 600 accounts globally, showcasing the strength and potential of this alliance. Other strategic partnerships with AWS and McKinsey & Company QuantumBlack further enhanced C3.ai's distribution network and product deployment capabilities. Generative AI solutions also saw increased adoption with 20 new pilot programs launched in the quarter. Notable collaborations with the U.S. Department of Defense and Liberty Coca-Cola Beverages underscore the scalability and industry interest in C3.ai's generative AI capabilities. These developments are essential for future growth and positioning in the competitive AI landscape. Despite these advancements, the company continues to face profitability challenges, reporting a GAAP operating loss of $(87.6) million. Research and development costs totaled $59.4 million. Looking forward, C3.ai projects continued revenue growth, with fourth-quarter guidance set between $103.6 million and $113.6 million, reflecting confidence in ongoing strategic initiatives. Full-year fiscal 2025 revenue guidance remains robust, with expectations of reaching between $383.9 million and $393.9 million. For investors, C3.ai's focus on expanding strategic partnerships and enhancing AI innovation is promising. While the road to profitability requires diligence in managing expenses, the company's strategic direction and partnerships, especially with tech giants like Microsoft, hint at significant potential for growth in the quarters ahead.

Why C3.ai Stock Is Sinking Today | The Motley Fool

Shares of C3.ai (AI -9.78%) are falling on Thursday. The company's stock had lost 6.4% as of 2:10 p.m. ET, but was down as much as 10.3% earlier in the day. The drop comes as the S&P 500 was flat and the Nasdaq Composite lost 0.6%. C3.ai, which helps businesses leverage artificial intelligence (AI), reported its fiscal 2025 Q3 earnings Wednesday evening, and several key analysts downgraded their ratings. The company posted a loss of $0.12 a share on $98.8 million in sales, versus the consensus estimate of a $0.24 loss on $98.01 in sales. The $98.8 million in sales represents a 26% increase over the same period in the previous year. CEO Thomas Siebel was encouraged, saying C3.ai had "achieved significant milestones" and that it is "on the verge of building one of the world's great companies." Investors were less rosy. Despite the mostly positive numbers, they were likely hoping to see year-over-year (YOY) sales growth that matched or exceeded the previous quarter's YOY growth of 28.3%. A number of analysts lowered their price targets for C3.ai, including KeyBanc Capital Markets which maintained its underweight rating and lowered its price target for c3.ai from $29.00 to $21.00. Analysts cited concern in the makeup of C3.ai's revenue mix. The company saw its demonstration licenses surge, up 50% quarter over quarter. While some of these will translate into full subscriptions, this revenue is not recurring and brings uncertainty to C3.ai's growth picture.

C3 AI reports strong revenue growth but forecast disappoints investors - SiliconANGLE

C3 AI reports strong revenue growth but forecast disappoints investors Shares in C3.ai Inc. were down over 5% in late trading today after the artificial intelligence software maker was weighed down by a weak earnings outlook despite reporting revenue and earnings beats in its 2025 fiscal third quarter. For the quarter that ended on Jan. 31, C3 AI reported an adjusted loss per share of 12 cents, down from a loss of 13 cents per share in the same quarter of the previous year, on revenue of $98.8 million, up 26% year-over-year. Both figures were beats, as analysts had been expecting a loss of 24 cents per share on revenue of $98.01 million. C3 AI saw subscription revenue in the quarter of $85.7 million, up 22% year-over-year, with subscription and prioritized engineering service combined revenue of $91.4 million, up 18% year-over-year. The company reported an adjusted gross profit in the quarter of $68.2 million and was sitting on $724.3 million in cash, cash equivalents and marketable securities as of the end of January. Business highlights in the quarter included C3 AI's strengthening collaboration with Microsoft Corp. to drive increased pilot activity and a new strategic partnership with McKinsey & Company QuantumBlack LLC to expand its global distribution network. The company closed 66 agreements, including 50 pilots, up 72% year-over-year. C3 AI also secured new and expanded agreements with major organizations, including the New York Power Authority, Shell plc, Exxon Mobil Corp. and GSK plc, along with 21 state and local government deals across multiple U.S. states. Additionally, its federal business saw strong execution, with new and expanded contracts involving the U.S. Department of Defense, the U.S. Air Force, the U.S. Navy, CAE USA and the Missile Defense Agency. "In the third quarter, C3 AI achieved significant milestones -- expanding our global distribution network, advancing our leadership in agentic and generative AI, and delivering total revenue reaching $98.8 million, up 26% year-over-year," said Thomas M. Siebel, chairman and chief executive officer of C3 AI, in the company's earnings release. "We have the technology, the management team and the global partner ecosystem -- through our dramatically expanded strategic partnerships with Microsoft, AWS, and McKinsey QuantumBlack -- we believe we have all the elements in place to indelibly change the face of Enterprise AI." For its fiscal fourth quarter, C3 AI said it expects revenue of $103.6 million to $113.6 and an adjusted loss of 30 cents to 40 cents per share. Analysts had been expecting $108.6 million and a loss of 26 cents per share. For the full fiscal year, the company expects revenue of $383.9 million to $393.9 million and an adjusted loss of 87 cents to 97 cents per share. Analysts had expected $388.3 million and a loss of 63 cents per share.

C3.ai Q3 Earnings Highlights: Revenue Beat, EPS Beat, 'Significant Milestones' Achieved - C3.ai (NYSE:AI)

Enterprise artificial intelligence company C3.ai Inc AI reported third-quarter financial results after market close Wednesday. Here are the key highlights. What Happened: C3.ai reported third-quarter revenue of $98.8 million, up 26% year-over-year. The revenue total beat a Street consensus estimate of $98.1 million, according to data from Benzinga Pro. Subscription revenue totaled $85.7 million in the quarter, up 22% year-over-year. Subscription revenue represented 87% of the company's quarterly total. The company had a non-GAAP net loss of 12 cents per share, which beat a street consensus estimate of a loss of 25 cents per share. "In the third quarter, C3.ai achieved significant milestones -- expanding our global distribution network, advancing our leadership in agentic and generative AI, and delivering total revenue reaching $98.8 million, up 26% year-over-year," C3.ai CEO Thomas Siebel said. The company expanded strategic partnerships with Microsoft, AWS and McKinsey Quantumblack in the third quarter. During the third quarter, C3.ai closed 66 agreements including 50 pilots, an increase of 72% year-over-year. The company closed 21 state and local government agreements. During the third quarter, the company also entered into new and expanded agreements with the U.S. Air Force, U.S. Navy and U.S. Department of Defense. C3.ai and Microsoft have closed 28 agreements across nine industries as part of its strategic alliance. The joint qualified opportunity pipeline between the two companies was up 244% year-over-year in the quarter. C3.ai finished the third quarter with $724.3 million in cash and cash equivalents. Read Also: C3.ai's Options: A Look at What the Big Money is Thinking What's Next: C3.ai will hold its C3 Transform 2025 conference from March 18-20, 2025. The event will include the participation of C3's executive team, customers, partners and sales prospects. "By bringing together C3.ai experts and early adopters who can speak to the value of Enterprise AI, C3 Transform gives customers, partners and prospects the chance to discover exactly how they can use Enterprise AI and generative AI securely and effectively," the company said. C3.ai is guiding for fourth-quarter revenue to be in a range of $103.6 million to $113.6 million. Full fiscal year revenue is guided to a range of $383.9 million to $393.9 million. "We have the technology, the management team, and the global partner ecosystem -- through our dramatically expanded strategic partnerships with Microsoft, AWS, and McKinsey QuantumBlack -- we believe we have all the elements in place to indelibly change the face of Enterprise AI," Siebel said. AI Price Action: C3.ai stock is down 1.74% to $25.98 in after-hours trading versus a 52-week trading range of $18.85 to $45.08. Read Next: C3.ai Teams Up With McKinsey For AI-Driven Business Transformations: Details Photo: Shutterstock AIC3.ai Inc$26.10-0.87%OverviewMarket News and Data brought to you by Benzinga APIs