Continued Accelerating Revenue
Growth
C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the
Enterprise AI application software company, today announced
financial results for its fiscal first quarter ended July 31,
2024.
“We had a solid start to the fiscal year, with rising demand for
Enterprise AI driving our sixth consecutive quarter of accelerating
revenue growth,” said Thomas M. Siebel, Chairman and CEO, C3 AI.
“C3 AI is the original Enterprise AI company. Our unwavering
commitment to solving the most challenging problems in the
enterprise has led us to what we believe are the highest levels of
customer satisfaction in the industry.”
Fiscal First Quarter 2025 Financial Highlights
- Revenue: Total revenue for the quarter was $87.2
million, an increase of 21% compared to $72.4 million one year
ago.
- Subscription Revenue: Subscription revenue for the
quarter was $73.5 million, constituting 84% of total revenue, an
increase of 20% compared to $61.4 million one year ago.
- Gross Profit: GAAP gross profit for the quarter was
$52.2 million, representing a 60% gross margin. Non-GAAP gross
profit for the quarter was $60.9 million, representing a 70%
non-GAAP gross margin.
- Net Loss per Share: GAAP net loss per share was $(0.50).
Non-GAAP net loss per share was $(0.05).
- Cash Reserves: $762.5 million in cash, cash equivalents,
and marketable securities.
- Free Cash Flow: Net cash provided by operating
activities was $8.0 million. Positive free cash flow of $7.1
million.
Business Highlights
C3 AI made significant progress in broadening our market
presence with particularly strong momentum in Manufacturing and
State and Local Government.
- In Q1, the Company closed 71 agreements (an increase of 122%
year-over-year) including 52 pilots (an increase of 117%
year-over-year).
- The Company significantly expanded its footprint across State
and Local Government, closing 25 agreements with municipal, county,
and state agencies in Texas, California, New Jersey, Georgia,
Washington, Connecticut, Virginia, Rhode Island, Maine, New Mexico,
and Florida.
- The Company entered into new agreements with GSK, Eletrobras,
Valero, Swift, SmithRx, Sanofi, the U.S. Intelligence Community,
the U.S. Department of Defense, Dolce & Gabbana, and Ingersoll
Rand, among others.
- C3 AI’s Federal business continues to experience sustained
momentum, representing over 30% of bookings for Q1. The Company
entered into new and expansion agreements with the U.S. Air Force,
the U.S. Navy, the U.S. Marine Corps, and the U.S. Intelligence
Community, among others.
Customer Success
C3 AI’s customer base continues to expand both within and across
industries while maintaining exceptional levels of customer
satisfaction by focusing on delivering measurable enterprise
value.
- Eletrobras, Latin America’s largest power generation and
transmission company, has partnered with C3 AI to enhance grid
resilience and availability. Brazil’s grid is among the world’s
most complex, owing to its generation profile, variability,
extensive service territory, and challenging regulatory
environment. With C3 AI, Eletrobras can efficiently process and
analyze real-time data, surfacing low latency AI insights to
mitigate network disturbances.
- The U.S. Marine Corps (USMC) and C3 AI continued the
successful collaboration digitally transforming the branch’s legacy
software systems. The USMC is using the C3 AI Defense &
Intelligence Suite to improve efficiency of personnel and
management systems by accelerating critical processes and
time-to-decision support. Backed by the Manpower IT Systems
Modernization program, this work with C3 AI supports the USMC’s
multi-year roadmap and goals, which includes becoming a more agile
and technologically advanced force.
- Nucor Corporation is seeing significant success in
improving manufacturing outcomes with the C3 AI Supply Chain Suite.
This deployment includes three distinct C3 AI applications — C3 AI
Demand Forecasting, C3 AI Inventory Optimization, and C3 AI
Production Schedule Optimization — working together to support and
optimize daily decision making across multiple facilities.
- U.S. counties are increasingly seeing significant
benefits including enhanced efficiency and operational
effectiveness with the C3 AI Property Appraisal application. “We
set the bar high for C3 AI and they delivered with over 90% model
accuracy in our property valuations. This technology is letting our
staff do the mundane tasks faster and easier so they can
concentrate on the very complicated properties. And our employees
are starting to see the fruits of this effort, translating into
better customer service. Overall, we are seeing incredible results
with C3 AI,” Riverside County, CA, Assessor-County
Clerk-Recorder.
Partner Network
Strong alliances powered pilot growth, markedly increasing
activity in State and Local Government in particular.
- In Q1, the Company closed 51 agreements representing 72% of
total agreements through its partner network, an increase of 155%
year-over-year.
- Partner supported bookings grew by 94% year-over-year.
- Google Cloud and C3 AI jointly closed 40 agreements, an
increase of 300% year-over-year. This was driven by a joint
campaign promoting the C3 AI State & Local Government Suite of
applications, including C3 AI Property Appraisal and C3 Generative
AI for Government Benefits. Through these efforts, the Company saw
high adoption with State and Local Government, closing 24
agreements in the quarter.
C3 Generative AI
C3 Generative AI continues to have strong customer demand with
diverse use cases, including operator assistance, intelligence
analysis, complex documentation drafting, and customer service.
- In Q1, the Company closed 17 C3 Generative AI pilots with
Cargill, Eletrobras, Valero, Dolce & Gabbana, Tractor Supply,
and others including various government agencies in Texas, Georgia,
and New Jersey.
- The Company converted C3 Generative AI pilots to production
including Carpenter and the U.S. Marine Corps, among others.
- In Q1, the Company closed a pilot of the newly launched C3
Generative AI for Government Programs with a state in the
Northeastern U.S. This generative AI application streamlines access
to and comprehension of public benefits and government programs —
such as healthcare, employment, financial assistance, and
education. The application can be used within contact centers to
accelerate response time and improve first call resolution rate. It
can also be deployed customer facing to deliver fast, accurate, and
secure answers to constituent questions, complete with source
citations, in 133 languages, and without hallucinations.
- C3 Generative AI is being applied to a wide range of use cases
including:
Manufacturing:
- Operator assistance for enhancing yield and improving
production efficiency.
- Expediting troubleshooting of machines.
- Streamlining asset inspections and turnarounds.
- Management of assets/factory equipment, scheduling repairs and
replacements.
- Enabling access to product and inventory information for sales
teams.
- Question answering on research papers, R&D, and technical
reports.
Agriculture:
- Improving plant operations by streamlining management decision
making, understanding and reasoning about outliers.
- Automating analysis of contracts and better management of
payment terms.
- Providing improved visibility into production schedules, yield,
and demand forecasts and deviations.
Federal, Defense and Aerospace:
- Faster intelligence analysis across diverse datasets,
accelerating time to insight and action.
- Providing interactive, up-to-date data and reasoning support to
commanding officers.
- Accelerated answering of questions by reasoning across policy
documents, grants, and proposals.
Construction:
- Streamlining the structural detailing process and reducing
errors by reasoning across contracts, change orders, and
checklists.
Automotive:
- Improving the ability for field technicians to troubleshoot and
perform high-quality maintenance.
Professional Services:
- Accelerating the due diligence process for investments.
- Drafting 10-K filings and cohort analysis for S-1 filings.
Life Sciences:
- Drafting complex product documentation and accelerating risk
factor analysis based on historical data, compliance guidelines,
and user feedback.
State and Local Government:
- Faster generation of accurate and defensible property
appraisals.
- Accelerated answering of constituent questions by reasoning
across internal policy documents.
- Accelerating criminal investigations.
Financial Outlook:
The Company’s guidance includes GAAP and non-GAAP financial
measures.
The following table summarizes C3 AI’s guidance for the second
quarter of fiscal 2025 and full-year fiscal 2025:
(in millions)
Second Quarter Fiscal
2025
Guidance
Full Year Fiscal 2025
Guidance
Total revenue
$88.6 - $93.6
$370.0 - $395.0
Non-GAAP loss from operations
$(26.7) - $(34.7)
$(95.0) - $(125.0)
A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty regarding, and the
potential variability of, expenses that may be incurred in the
future. Stock-based compensation expense-related charges, including
employer payroll tax-related items on employee stock transactions,
are impacted by the timing of employee stock transactions, the
future fair market value of our common stock, and our future hiring
and retention needs, all of which are difficult to predict and
subject to constant change. We have provided a reconciliation of
GAAP to non-GAAP financial measures in the financial statement
tables for our historical non-GAAP results included in this press
release. Our fiscal year ends April 30, and numbers are rounded for
presentation purposes.
Conference Call Details
What:
C3 AI First Quarter Fiscal 2025 Financial
Results Conference Call
When:
Wednesday, September 4, 2024
Time:
2:00 p.m. PT / 5:00 p.m. ET
Participant Registration:
https://register.vevent.com/register/BI1316837a59134b1c95643d24f0bb2076
(live)
Webcast:
https://edge.media-server.com/mmc/p/mefprd7q/ (live and replay)
Investor Presentation Details
An investor presentation providing additional information and
analysis can be found at our investor relations page at
ir.c3.ai.
Statement Regarding Use of Non-GAAP Financial
Measures
The Company reports the following non-GAAP financial measures,
which have not been prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”), in addition
to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP.
- Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss
from operations, and non-GAAP net loss per share. Our non-GAAP
gross profit, non-GAAP gross margin, non-GAAP loss from operations,
and non-GAAP net loss per share exclude the effect of stock-based
compensation expense-related charges and employer payroll tax
expense related to employee stock-based compensation. We believe
the presentation of operating results that exclude these non-cash
items provides useful supplemental information to investors and
facilitates the analysis of our operating results and comparison of
operating results across reporting periods.
- Free cash flow. We believe free cash flow, a non-GAAP
financial measure, is useful in evaluating liquidity and provides
information to management and investors about our ability to fund
future operating needs and strategic initiatives. We calculate free
cash flow as net cash provided by operating activities less
purchases of property and equipment and capitalized software
development costs. This non-GAAP financial measure may be different
than similarly titled measures used by other companies.
Additionally, the utility of free cash flow is further limited as
it does not represent the total increase or decrease in our cash
balances for a given period.
We use these non-GAAP financial measures internally for
financial and operational decision-making purposes and as a means
to evaluate period-to-period comparisons. Non-GAAP financial
measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures and should be
read only in conjunction with our condensed consolidated financial
statements prepared in accordance with GAAP. Our presentation of
non-GAAP financial measures may not be comparable to similar
measures used by other companies. We encourage investors to
carefully consider our results under GAAP, as well as our
supplemental non-GAAP information and the reconciliation between
these presentations, to more fully understand our business. Please
see the tables included at the end of this release for the
reconciliation of GAAP to non-GAAP financial measures.
Use of Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. The words “anticipate,” “believe,” “continue,” “estimate,”
“expect,” “intend,” “may,” “will” and similar expressions are
intended to identify forward-looking statements, although not all
forward-looking statements contain these words. Forward-looking
statements in this press release include, but are not limited to,
statements regarding our market leadership position, anticipated
benefits from our partnerships, financial outlook, our sales and
customer opportunity pipeline including our industry
diversification, the expected benefits of our offerings (including
the potential benefits of our C3 Generative AI offerings), and our
business strategies, plans, and objectives for future operations.
We have based these forward-looking statements largely on our
current expectations and projections about future events and trends
that we believe may affect our financial condition, results of
operations, business strategy, short-term and long-term business
operations and objectives, and financial needs. These
forward-looking statements are subject to a number of risks and
uncertainties, including our history of losses and ability to
achieve and maintain profitability in the future, our historic
dependence on a limited number of existing customers that account
for a substantial portion of our revenue, our ability to attract
new customers and retain existing customers, market awareness and
acceptance of enterprise AI solutions in general and our products
in particular, the length and unpredictability of our sales cycles
and the time and expense required for our sales efforts. Some of
these risks are described in greater detail in our filings with the
Securities and Exchange Commission, including our Annual Report on
Form 10-K for the fiscal year ended April 30, 2024, and other
filings and reports we make the Securities and Exchange Commissions
from time to time, including our Quarterly Report on Form 10-Q that
will be filed for the fiscal quarter ended July 31, 2024, although
new and unanticipated risks may arise. The future events and trends
discussed in this press release may not occur and actual results
could differ materially and adversely from those anticipated or
implied in the forward-looking statements. Although we believe that
the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity,
performance, achievements, or events and circumstances reflected in
the forward-looking statements will occur. Except to the extent
required by law, we do not undertake to update any of these
forward-looking statements after the date of this press release to
conform these statements to actual results or revised
expectations.
About C3.ai, Inc.
C3.ai, Inc. (NYSE:AI) is the Enterprise AI application software
company. C3 AI delivers a family of fully integrated products
including the C3 AI Platform, an end-to-end platform for
developing, deploying, and operating enterprise AI applications, C3
AI applications, a portfolio of industry-specific SaaS enterprise
AI applications that enable the digital transformation of
organizations globally, and C3 Generative AI, a suite of
domain-specific generative AI offerings for the enterprise.
C3.AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended July
31,
2024
2023
Revenue
Subscription (1)
$
73,456
$
61,352
Professional services (2)
13,757
11,010
Total revenue
87,213
72,362
Cost of revenue
Subscription
33,292
30,434
Professional services
1,755
1,379
Total cost of revenue
35,047
31,813
Gross profit
52,166
40,549
Operating expenses
Sales and marketing (3)
52,125
43,885
Research and development
52,927
50,868
General and administrative
19,700
19,889
Total operating expenses
124,752
114,642
Loss from operations
(72,586
)
(74,093
)
Interest income
10,003
10,122
Other income (expense), net
28
(239
)
Loss before provision for income taxes
(62,555
)
(64,210
)
Provision for income taxes
272
148
Net loss
$
(62,827
)
$
(64,358
)
Net loss per share attributable to Class A
and Class B common stockholders, basic and diluted
$
(0.50
)
$
(0.56
)
Weighted-average shares used in computing
net loss per share attributable to Class A and Class B common
stockholders, basic and diluted
124,979
115,681
(1)
Including related party revenue of $10,581
for the three months ended July 31, 2023.
(2)
Including related party revenue of $5,804
for the three months ended July 31, 2023.
(3)
Including related party sales and
marketing expense of $810 for the three months ended July 31,
2023.
C3.AI, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except for
share and per share data)
(Unaudited)
July 31, 2024
April 30, 2024
Assets
Current assets
Cash and cash equivalents
$
133,820
$
167,146
Marketable securities
628,715
583,221
Accounts receivable, net of allowance of
$390 and $359 as of July 31, 2024 and April 30, 2024,
respectively
140,070
130,064
Prepaid expenses and other current
assets
23,806
23,963
Total current assets
926,411
904,394
Property and equipment, net
86,480
88,631
Goodwill
625
625
Other assets, non-current
44,104
44,575
Total assets
$
1,057,620
$
1,038,225
Liabilities and stockholders’
equity
Current liabilities
Accounts payable
$
31,615
$
11,316
Accrued compensation and employee
benefits
33,927
44,263
Deferred revenue, current
39,580
37,230
Accrued and other current liabilities
12,805
9,526
Total current liabilities
117,927
102,335
Deferred revenue, non-current
717
1,732
Other long-term liabilities
64,055
60,805
Total liabilities
182,699
164,872
Commitments and contingencies
Stockholders’ equity
Class A common stock
123
120
Class B common stock
3
3
Additional paid-in capital
2,027,274
1,963,726
Accumulated other comprehensive income
(loss)
281
(563
)
Accumulated deficit
(1,152,760
)
(1,089,933
)
Total stockholders’ equity
874,921
873,353
Total liabilities and stockholders’
equity
$
1,057,620
$
1,038,225
C3.AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended July
31,
2024
2023
Cash flows from operating
activities:
Net loss
$
(62,827
)
$
(64,358
)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization
3,119
3,056
Non-cash operating lease cost
85
274
Stock-based compensation expense
54,683
50,880
Accretion of discounts on marketable
securities
(3,936
)
(3,974
)
Other
98
25
Changes in operating assets and
liabilities
Accounts receivable (1)
(10,037
)
12,017
Prepaid expenses, other current assets and
other assets (2)
1,604
3,051
Accounts payable (3)
20,033
(564
)
Accrued compensation and employee
benefits
(1,755
)
(39
)
Operating lease liabilities
(498
)
8,204
Other liabilities (4)
6,138
2,254
Deferred revenue (5)
1,335
(6,890
)
Net cash provided by operating
activities
8,042
3,936
Cash flows from investing
activities:
Purchases of property and equipment
(924
)
(11,338
)
Capitalized software development costs
—
(1,500
)
Purchases of marketable securities
(230,924
)
(322,534
)
Maturities and sales of marketable
securities
190,298
250,572
Net cash used in investing activities
(41,550
)
(84,800
)
Cash flows from financing
activities:
Proceeds from exercise of Class A common
stock options
3,127
9,595
Taxes paid related to net share settlement
of equity awards
(2,945
)
(7,118
)
Net cash provided by financing
activities
182
2,477
Net decrease in cash, cash equivalents and
restricted cash
(33,326
)
(78,387
)
Cash, cash equivalents and restricted cash
at beginning of period
179,712
297,395
Cash, cash equivalents and restricted cash
at end of period
$
146,386
$
219,008
Cash and cash equivalents
$
133,820
$
206,442
Restricted cash included in other
assets
12,566
12,566
Total cash, cash equivalents and
restricted cash
$
146,386
$
219,008
Supplemental disclosure of cash flow
information—cash paid for income taxes
$
292
$
150
Supplemental disclosures of non-cash
investing and financing activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
301
$
5,764
Right-of-use assets obtained in exchange
for lease obligations (including remeasurement of right-of-use
assets and lease liabilities due to changes in the timing of
receipt of lease incentives)
$
1,345
$
778
Receivable from exercise of stock options
included in prepaid expenses, other current assets and other
assets
$
—
$
33
Vesting of early exercised stock
options
$
105
$
—
(1)
Including changes in related party
balances of $12,444 for the three months ended July 31, 2023.
(2)
Including changes in related party
balances of $(810) for the three months ended July 31, 2023.
(3)
Including changes in related party
balances of $248 for the three months ended July 31, 2023.
(4)
Including changes in related party
balances of $(2,448) for the three months ended July 31, 2023.
(5)
Including changes in related party
balances of $(46) for the three months ended July 31, 2023.
C3.AI, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands, except
percentages)
(Unaudited)
Three Months Ended July
31,
2024
2023
Reconciliation of GAAP gross profit to
non-GAAP gross profit:
Gross profit on a GAAP basis
$
52,166
$
40,549
Stock-based compensation expense (1)
8,408
8,516
Employer payroll tax expense related to
employee stock-based compensation (2)
356
541
Gross profit on a non-GAAP basis
$
60,930
$
49,606
Gross margin on a GAAP basis
60
%
56
%
Gross margin on a non-GAAP basis
70
%
69
%
Reconciliation of GAAP loss from
operations to non-GAAP loss from operations:
Loss from operations on a GAAP basis
$
(72,586
)
$
(74,093
)
Stock-based compensation expense (1)
54,683
50,880
Employer payroll tax expense related to
employee stock-based compensation (2)
1,272
2,500
Loss from operations on a non-GAAP
basis
$
(16,631
)
$
(20,713
)
Reconciliation of GAAP net loss per
share to non-GAAP net loss per share:
Net loss on a GAAP basis
$
(62,827
)
$
(64,358
)
Stock-based compensation expense (1)
54,683
50,880
Employer payroll tax expense related to
employee stock-based compensation (2)
1,272
2,500
Net loss on a non-GAAP basis
$
(6,872
)
$
(10,978
)
GAAP net loss per share attributable to
Class A and Class B common shareholders, basic and diluted
$
(0.50
)
$
(0.56
)
Non-GAAP net loss per share attributable
to Class A and Class B common shareholders, basic and diluted
$
(0.05
)
$
(0.09
)
Weighted-average shares used in computing
net loss per share attributable to Class A and Class B common
stockholders, basic and diluted
124,979
115,681
(1)
Stock-based compensation expense for gross
profits and gross margin includes costs of subscription and cost of
professional services as follows. Stock-based compensation expense
for loss from operations includes total stock-based compensation
expense as follows:
Three Months Ended July
31,
2024
2023
Cost of subscription
$
7,694
$
8,056
Cost of professional services
714
460
Sales and marketing
18,833
16,779
Research and development
18,431
17,033
General and administrative
9,011
8,552
Total stock-based compensation expense
$
54,683
$
50,880
(2)
Employer payroll tax expense related to
employee stock-based compensation for gross profits and gross
margin includes costs of subscription and cost of professional
services as follows. Employer payroll tax expense related to
employee stock-based compensation for loss from operations includes
total employer payroll tax expense related to employee stock-based
compensation as follows:
Three Months Ended July
31,
2024
2023
Cost of subscription
$
326
$
509
Cost of professional services
30
32
Sales and marketing
472
1,005
Research and development
364
817
General and administrative
80
137
Total employer payroll tax expense
$
1,272
$
2,500
Reconciliation of free cash flow to the GAAP measure of net
cash provided by operating activities:
The following table below provides a reconciliation of free cash
flow to the GAAP measure of net cash provided by operating
activities for the periods presented:
Three Months Ended July
31,
2024
2023
Net cash provided by operating
activities
$
8,042
$
3,936
Less:
Purchases of property and equipment
(924
)
(11,338
)
Capitalized software development costs
—
(1,500
)
Free cash flow
$
7,118
$
(8,902
)
Net cash used in investing activities
$
(41,550
)
$
(84,800
)
Net cash provided by financing
activities
$
182
$
2,477
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240904880249/en/
Investor Contact ir@c3.ai
C3 AI Public Relations Edelman Lisa Kennedy (415)
914-8336 pr@c3.ai
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