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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, ...

Core Viewpoint - C3.ai's stock price declined significantly after reporting its fiscal 2025 third-quarter results, despite showing solid revenue growth. The company faces challenges with subscription growth and the uncertainty surrounding its partnership with Baker Hughes [1][11]. Financial Performance - C3.ai reported a revenue increase of 26% year-over-year to $98.8 million in fiscal Q3 2025, marking its fourth consecutive quarter of over 20% growth [1][2]. - Subscription revenue rose by 22% to $85.7 million, while professional services revenue surged by 64% to $13.1 million [2]. - Excluding revenue from Baker Hughes, C3.ai's revenue would have increased by 43%, up from 41% growth in the previous quarter [3]. - The company's gross margin improved to 59.1%, with an adjusted gross margin of around 69% [7]. - C3.ai reported an adjusted loss of $0.12 per share, a slight improvement from the previous year's loss of $0.13 per share [8]. Partnerships and Collaborations - C3.ai has expanded its partnership with Microsoft, which has led to a 450% increase in closed agreements across various industries [4]. - The company also formed new partnerships with Amazon and McKinsey QuantumBlack to enhance its enterprise AI solutions [5]. - In fiscal Q3, 71% of C3.ai's agreements were made in collaboration with partners, with 66 agreements signed, including 20 generative AI pilots [6]. Guidance and Future Outlook - Management provided guidance for fiscal Q4 revenue between $103.6 million and $113.6 million, indicating a growth rate of 20% to 31% [9]. - The fiscal 2025 revenue guidance was narrowed to a range of $383.9 million to $393.9 million [10]. - The uncertainty regarding the renewal of the Baker Hughes partnership remains a significant concern for the company's future growth [11][12]. Valuation Considerations - C3.ai's forward price-to-sales (P/S) ratio is approximately 6, which is considered reasonable for a software-as-a-service (SaaS) company, although its low gross margins and high stock-based compensation need to be factored in [14].

Artificial intelligence (AI) is a once-in-a-generation investment opportunity. Leading AI stocks have soared over the last few years, as the AI market is projected to grow 27% annually to reach $826 billion by 2030, according to Statista. Here are two stocks that could soar over the long term.1. C3.aiThe cost of building advanced AI models is decreasing, and this could translate to explosive demand for AI software in the coming years. C3.ai (AI -1.80%) is the dark horse in the AI software market right now, ...

Core Viewpoint - Cathie Wood believes that software companies represent the next significant opportunity in the AI sector, predicting a potential revenue generation of $8 for every dollar spent on chips from suppliers like Nvidia [1] Group 1: C3.ai's Business Model and Market Position - C3.ai has developed over 130 ready-made AI applications that can be deployed within three months, serving various industries such as oil and gas, manufacturing, utilities, and financial services [4] - The company has established partnerships with major cloud service providers like Amazon Web Services, Microsoft Azure, and Google Cloud, enhancing its customer reach and enabling broader AI solutions [5][6] - C3.ai's shift to consumption-based pricing has accelerated its growth, allowing for quicker onboarding of new customers compared to the previous subscription model [9] Group 2: Financial Performance - In the fiscal 2025 third quarter, C3.ai reported a record revenue of $98.7 million, reflecting a year-over-year increase of 26%, which is an acceleration from the previous year's growth rate of 18% [8] - The company closed 47 new agreements during the same quarter, marking a 74% increase from the prior year, and is collaborating on a joint sales campaign with Microsoft Azure targeting 621 potential accounts globally [7] - Despite the revenue growth, C3.ai's GAAP net loss increased by 10% year over year to $80.2 million, although the non-GAAP loss was significantly lower at $15.7 million due to the exclusion of stock-based compensation [11] Group 3: Market Valuation and Future Potential - C3.ai's stock is currently trading 85% below its record high of $161, with a more reasonable price-to-sales (P/S) ratio of 9.4, indicating a potential value opportunity [14] - The addressable market for enterprise AI is projected to be worth $1.3 trillion by 2032, suggesting significant growth potential for C3.ai based on its current revenue levels [16] - As companies increasingly adopt AI technologies, many are likely to turn to third-party providers like C3.ai for cost-effective and efficient solutions, reinforcing the long-term value of AI software over hardware [15]

JP Morgan analyst Pinjalim Bora maintained an Underweight rating on C3.ai, Inc AI with a price target of $27, down from $28.C3.ai reported a third-quarter revenue of $98.8 million, up 26%. The revenue total beat a Street consensus estimate of $98.1 million.Also Read: EchoStar Q4: $3.97 Billion Revenue, Narrows Pay-TV Subscriber Losses, Focuses On High-Quality Users, Wireless GrowthThe company had an adjusted net loss of 12 cents per share, which beat a street consensus estimate of 25 cents per share.C3.ai e ...

Core Viewpoint - C3.ai has experienced a significant decline in stock value, losing 26.8% year-to-date, while the broader technology sector has only declined by 0.9% [1]. Despite this, the company reported strong third-quarter fiscal 2025 results, with earnings and revenues surpassing expectations [1]. Financial Performance - C3.ai reported an adjusted loss of 12 cents per share for the third quarter of fiscal 2025, which is better than the Zacks Consensus Estimate of a loss of 25 cents [2]. The company had a non-GAAP loss of 13 cents in the same quarter last year [2]. - Revenues for the third quarter reached $98.78 million, reflecting a 26% year-over-year increase and exceeding the Zacks Consensus Estimate by 0.83% [3]. Subscription revenues rose by 22% year-over-year to $85.7 million, indicating strong demand for AI-driven enterprise solutions [3]. Client Engagement and Partnerships - In the third quarter of fiscal 2025, C3.ai secured 66 agreements, including 50 pilot projects, marking a 72% year-over-year increase [6]. The company also finalized 47 agreements through its partner network, a 74% year-over-year increase [7]. - Partnerships with major companies like Microsoft, Amazon Web Services, and McKinsey QuantumBlack have accelerated sales cycles and expanded the company's global reach [8]. C3.ai and Microsoft closed 28 agreements across nine industries, representing a 460% quarter-over-quarter increase [8]. Growth Prospects - C3.ai expects revenues for the fourth quarter of fiscal 2025 to be between $103.6 million and $113.6 million, and for the full fiscal year, revenues are projected to be between $383.9 million and $393.9 million [13]. - The Zacks Consensus Estimate for fourth-quarter fiscal 2025 revenues is $108.64 million, indicating a growth of 25.46% year-over-year [14]. For fiscal 2025, the consensus estimate for revenues is $388.16 million, reflecting a 29.57% year-over-year growth [15]. Market Position and Valuation - C3.ai's stock is currently trading at a forward Price/Sales ratio of 7.36X, which is higher than the sector average of 6.32X, indicating a stretched valuation [16]. - Despite strong demand for its solutions, C3.ai faces stiff competition in the enterprise AI sector, which may hinder its market share growth [19]. The company plans to invest aggressively in its offerings to secure market share, although this may pressure margins in the near term [19].

Financial Data and Key Metrics Changes - Total revenue for Q3 increased 26% year-over-year to $98.8 million, with subscription revenue growing 22% to $85.7 million, representing 87% of total revenue [16][34] - Non-GAAP gross profit was $68.2 million, resulting in a gross margin of 69% [16][37] - Non-GAAP operating loss improved to $23.1 million, better than the guidance of $38.6 million to $46.6 million [17][38] - Free cash flow for Q3 was negative $22.4 million, an improvement from negative $45.1 million in the same quarter last year [40] 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 [34][36] - Subscription and professional engineering services revenue combined was $91.4 million, representing 93% of total revenue, an increase of 18% compared to the previous year [37] Market Data and Key Metrics Changes - The partnership with Microsoft resulted in closing 28 agreements across nine different industries, marking a 460% increase quarter-over-quarter [18][22] - The joint qualified sales pipeline with Microsoft surged 244% year-over-year, targeting 621 eligible customer opportunities [19] 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 [20][29] - The emphasis on Generative AI and Agentic AI is expected to drive innovation and customer traction, with plans to ensure proper organization for expanding direct sales and services [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, with fiscal years 2026 and 2027 expected to focus on expanded growth and market share [31][32] - The company anticipates continued moderation in gross margins due to a higher mix of pilots in the near term, but expects to be free cash flow positive for Q4 [43][44] Other Important Information - The company closed 50 pilots during Q3, with 245 still active, indicating strong customer engagement [42] - The company ended the quarter with $724.3 million in cash, cash equivalents, and marketable securities, indicating strong capitalization [40] Q&A Session Summary Question: Can you provide more color on the total number of pitches and pipeline? - Management indicated involvement in over 600 engagements with Microsoft, with 28 agreements closed in the last quarter [49][56] Question: Can you discuss remaining performance obligations trends? - Management noted that 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 [62] Question: What drove the outperformance in professional services this quarter? - The outperformance was attributed to an uptick in revenue from consulting services, paid implementation services, and training services [78] Question: Why are demonstration licenses outperforming? - The increase in demonstration licenses was driven by the need to equip sales teams with effective tools to engage customers independently, resulting in higher revenue recognition [84][85]

This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Neither we nor any other person makes any representation as to the accuracy or completeness of such data or undertakes any obligation to update such data after the date of this presentation. In addition, proje ...

Core Insights - C3.ai reported strong earnings in Q3 FY2025, with revenue of $98.8 million, a 26% increase year-over-year, surpassing analyst expectations of $98 million [2][5] - The company achieved a non-GAAP EPS of $(0.12), better than the expected $(0.25), indicating progress despite ongoing losses [2][3] - Strategic partnerships, particularly with Microsoft, have significantly contributed to C3.ai's growth and market reach [4][6] Financial Performance - Revenue for Q3 FY2025 was $98.8 million, up from $78.4 million in Q3 FY2024, reflecting a 26% year-over-year growth [3][5] - Subscription revenue increased by 22% to $85.7 million, contributing to overall revenue growth [3][5] - Non-GAAP gross profit reached $68.2 million, a 24.7% increase from the previous year [3] Strategic Developments - C3.ai expanded its strategic partnerships, achieving a 460% increase in collaborative agreements, particularly with Microsoft [6] - The company launched 20 new pilot programs for generative AI solutions, indicating increased adoption and interest in its capabilities [7] - Collaborations with notable organizations, including the U.S. Department of Defense, highlight the scalability of C3.ai's offerings [7] Future Outlook - C3.ai projects fourth-quarter revenue guidance between $103.6 million and $113.6 million, reflecting confidence in ongoing strategic initiatives [9] - Full-year fiscal 2025 revenue guidance is set between $383.9 million and $393.9 million, indicating robust expectations for growth [9]