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Share Name | Share Symbol | Market | Type |
---|---|---|---|
C3 AI Inc | NYSE:AI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.45 | 5.81% | 26.40 | 26.66 | 25.67 | 25.98 | 7,085,496 | 23:44:56 |
Revenue accelerated 17% year-over-year; Increased traction in C3 Generative AI
Customer engagement increased 81% year-over-year
C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal second quarter ended October 31, 2023.
“It was a solid quarter, with total revenue growing 17% year-over-year to $73.2 million, and customer engagement growing by 81% year-over-year. We saw unprecedented interest and traction in our generative AI offerings. Importantly, we are seeing a return to accelerating revenue growth as we continue our transition to a consumption-based pricing model,” said C3 AI CEO and Chairman Thomas M. Siebel. “In the trailing four quarters, we have seen top line year-over-year revenue growth increase from -4% in Q3 FY23, to 0% in Q4 FY23, to 11% in Q1 FY24, to 17% in Q2 FY24.”
Fiscal Second Quarter 2024 Financial Highlights
Key Customers
During the quarter, C3 AI closed 62 agreements including 36 pilots.
Customer Success Stories
Key News
Pilot Growth
During the quarter, C3 AI closed 62 agreements including 36 pilots. The 36 pilots represented an increase from 24 pilots in the first quarter and 13 pilots in the year-ago quarter. Notably, 20 of these pilots were generative AI pilots, an increase from eight in the first quarter.
Consumption Pricing
In Q1 FY23, C3 AI introduced a transition to a consumption-based pricing model to fuel growth, which the Company believes is becoming the standard among enterprise SaaS companies in the industry. The consumption-based pricing model is based on vCPU/hour, in line with industry-standard cloud software pricing standards. The transition has been met with great reception among C3 AI’s prospects, customers, and partners. Since this transition, the Company has closed over 100 pilots on the new consumption pricing model. The Company believes traction with C3 Generative AI: AWS Marketplace Edition will further accelerate the Company’s consumption pricing adoption and customer engagement metrics.
C3 Generative AI
Recent estimates suggest that the market for Enterprise AI applications is bigger and expanding faster than certain experts previously anticipated. Bloomberg Intelligence estimates that generative AI will become a $1.3 trillion market by 2032. Goldman Sachs predicts that AI could increase corporate profits by 30% in the next decade, and that generative AI alone could raise the global GDP by 7%. C3 AI believes it is in a prime position to see a significant increase in opportunities for Enterprise AI, and the Company is also well-positioned to accelerate growth, gain market share, attain sustainable non-GAAP profitability and establish a market-leading position globally. As such, the Company plans to further accelerate its investment in generative AI, deepening its investments in lead generation, branding, market awareness, and customer success.
C3 AI closed 20 new agreements for C3 Generative AI in the second quarter. C3 Generative AI is addressing use cases across multiple industries including manufacturing, financial services, and defense & intelligence.
Financial Outlook:
The Company’s guidance includes GAAP and non-GAAP financial measures.
The following table summarizes C3 AI’s guidance for the third quarter of fiscal 2024 and full-year fiscal 2024:
(in millions)
Third Quarter Fiscal 2024
Guidance
Full Year Fiscal 2024
Guidance
Total revenue
$74.0 - $78.0
$295.0 - $320.0
Non-GAAP loss from operations
$(40.0) - $(46.0)
$(115.0) - $(135.0)
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 Second Quarter Fiscal 2024 Financial Results Conference Call
When:
Wednesday, December 6, 2023
Time:
2:00 p.m. PT / 5:00 p.m. ET
Participant Registration:
https://register.vevent.com/register/BIe37b9b099bea488eb9570b24243fce69 (live call)
Webcast:
https://edge.media-server.com/mmc/p/zc6c5s27/ (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.
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. All statements contained in this press release other than statements of historical facts, including our market leadership position, anticipated benefits from our partnerships and investments, financial outlook, our expectations relating to our new consumption-pricing model and the impact to our results of operations, the expected benefits of our offerings (including the potential benefits of our C3 Generative AI offerings), our business strategies, plans, and objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements. 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 difficulties in evaluating our prospects and future results of operations given our operating history, our 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, and our history of operating losses. Some of these risks are described in greater detail in our filings with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2023 and, when available, October 31, 2023, 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 October 31,
Six Months Ended October 31,
2023
2022
2023
2022
Revenue
Subscription(1)
$
66,449
$
59,508
$
127,801
$
116,534
Professional services(2)
6,780
2,900
17,790
11,182
Total revenue
73,229
62,408
145,591
127,716
Cost of revenue
Subscription
30,937
19,165
61,371
33,257
Professional services
1,179
1,587
2,558
5,901
Total cost of revenue
32,116
20,752
63,929
39,158
Gross profit
41,113
41,656
81,662
88,558
Operating expenses
Sales and marketing(3)
49,895
44,936
93,780
87,923
Research and development
50,399
50,051
101,267
105,928
General and administrative
20,215
18,635
40,104
39,882
Total operating expenses
120,509
113,622
235,151
233,733
Loss from operations
(79,396
)
(71,966
)
(153,489
)
(145,175
)
Interest income
10,480
4,224
20,602
6,762
Other (expense) income, net
(638
)
(945
)
(877
)
(1,966
)
Loss before provision for income taxes
(69,554
)
(68,687
)
(133,764
)
(140,379
)
Provision for income taxes
226
163
374
342
Net loss
$
(69,780
)
$
(68,850
)
$
(134,138
)
$
(140,721
)
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted
$
(0.59
)
$
(0.63
)
$
(1.15
)
$
(1.30
)
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted
118,656
108,876
117,125
107,885
(1)
Including related party revenue of $10,581 and $35,568 for the six months ended October 31, 2023 and 2022, respectively, and $19,238 for the three months ended October 31, 2022.
(2)
Including related party revenue of $5,804 and $150 for the six months ended October 31, 2023 and 2022, respectively, and $21 for the three months ended October 31, 2022.
(3)
Including related party sales and marketing expense of $810 and $7,031 for the six months ended October 31, 2023 and 2022, respectively, and $3,531 for the three months ended October 31, 2022.
C3.AI, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except for share and per share data)
(Unaudited)
October 31, 2023
April 30, 2023
Assets
Current assets
Cash and cash equivalents
$
149,009
$
284,829
Marketable securities
613,260
446,155
Accounts receivable, net of allowance of $359 and $359 as of October 31, 2023 and April 30, 2023, respectively(1)
143,153
134,586
Prepaid expenses and other current assets(2)
25,662
23,309
Total current assets
931,084
888,879
Property and equipment, net
92,651
84,578
Goodwill
625
625
Long-term investments
—
81,418
Other assets, non-current(3)
46,754
47,528
Total assets
$
1,071,114
$
1,103,028
Liabilities and stockholders’ equity
Current liabilities
Accounts payable(4)
$
25,740
$
24,610
Accrued compensation and employee benefits
37,648
46,513
Deferred revenue, current(5)
40,486
47,846
Accrued and other current liabilities(6)
10,280
17,070
Total current liabilities
114,154
136,039
Deferred revenue, non-current
68
4
Other long-term liabilities
45,616
37,320
Total liabilities
159,838
173,363
Commitments and contingencies
Stockholders’ equity
Class A common stock
116
110
Class B common stock
3
3
Additional paid-in capital
1,856,307
1,740,174
Accumulated other comprehensive loss
(775
)
(385
)
Accumulated deficit
(944,375
)
(810,237
)
Total stockholders’ equity
911,276
929,665
Total liabilities and stockholders’ equity
$
1,071,114
$
1,103,028
(1)
Including amounts from a related party of $74,620 as of April 30, 2023.
(2)
Including amounts from a related party of $4,983 as of April 30, 2023.
(3)
Including amounts from a related party of $11,279 as of April 30, 2023.
(4)
Including amounts from a related party of $2,200 as of April 30, 2023.
(5)
Including amounts from a related party of $249 as of April 30, 2023.
(6)
Including amounts from a related party of $2,448 as of April 30, 2023.
C3.AI, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended October 31,
2023
2022
Cash flows from operating activities:
Net loss
$
(134,138
)
$
(140,721
)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization
6,220
2,413
Non-cash operating lease cost
454
1,101
Stock-based compensation expense
104,049
112,643
Accretion of discounts on marketable securities
(8,755
)
(582
)
Other
—
186
Changes in operating assets and liabilities
Accounts receivable(1)
(8,567
)
(14,668
)
Prepaid expenses, other current assets and other assets(2)
(665
)
(3,204
)
Accounts payable(3)
(2,918
)
(28,197
)
Accrued compensation and employee benefits
(2,551
)
(1,050
)
Operating lease liabilities
7,804
650
Other liabilities(4)
1,709
(882
)
Deferred revenue(5)
(7,296
)
(18,534
)
Net cash used in operating activities
(44,654
)
(90,845
)
Cash flows from investing activities:
Purchases of property and equipment
(16,631
)
(39,978
)
Capitalized software development costs
(2,750
)
(1,000
)
Purchases of marketable securities
(489,871
)
(384,024
)
Maturities and sales of marketable securities
412,554
455,534
Net cash (used in) provided by investing activities
(96,698
)
30,532
Cash flows from financing activities:
Proceeds from issuance of Class A common stock under employee stock purchase plan
5,055
—
Proceeds from exercise of Class A common stock options
10,163
1,782
Taxes paid related to net share settlement of equity awards
(9,686
)
(3,375
)
Net cash provided by (used in) financing activities
5,532
(1,593
)
Net decrease in cash, cash equivalents and restricted cash
(135,820
)
(61,906
)
Cash, cash equivalents and restricted cash at beginning of period
297,395
352,519
Cash, cash equivalents and restricted cash at end of period
$
161,575
$
290,613
Cash and cash equivalents
$
149,009
$
277,622
Restricted cash included in other assets
12,566
12,566
Restricted cash included in prepaid expenses and other current assets
—
425
Total cash, cash equivalents and restricted cash
$
161,575
$
290,613
Supplemental disclosure of cash flow information—cash paid for income taxes
$
281
$
136
Supplemental disclosures of non-cash investing and financing activities:
Purchases of property and equipment included in accounts payable and accrued liabilities
$
7,293
$
18,361
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)
$
778
$
—
Unpaid liabilities related to intangible purchases
$
—
$
1,500
Vesting of early exercised stock options
$
294
$
561
(1)
Including changes in related party balances of $12,444 and $18,023 for the six months ended October 31, 2023 and 2022, respectively.
(2)
Including changes in related party balances of $(810) and $(2,431) for the six months ended October 31, 2023 and 2022, respectively.
(3)
Including changes in related party balances of $248 and $(16,396) for the six months ended October 31, 2023 and 2022, respectively.
(4)
Including changes in related party balances of $(2,448) and $(2,510) for the six months ended October 31, 2023 and 2022, respectively.
(5)
Including changes in related party balances of $(46) and $255 for the six months ended October 31, 2023 and 2022, respectively.
C3.AI, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(In thousands, except percentages)
(Unaudited)
Three Months Ended October 31,
Six Months Ended October 31,
2023
2022
2023
2022
Reconciliation of GAAP gross profit to non-GAAP gross profit:
Gross profit on a GAAP basis
$
41,113
$
41,656
$
81,662
$
88,558
Stock-based compensation expense(1)
8,993
5,965
17,509
11,308
Employer payroll tax expense related to employee stock-based compensation(2)
297
186
838
572
Gross profit on a non-GAAP basis
$
50,403
$
47,807
$
100,009
$
100,438
Gross margin on a GAAP basis
56
%
67
%
56
%
69
%
Gross margin on a non-GAAP basis
69
%
77
%
69
%
79
%
Reconciliation of GAAP loss from operations to non-GAAP loss from operations:
Loss from operations on a GAAP basis
$
(79,396
)
$
(71,966
)
$
(153,489
)
$
(145,175
)
Stock-based compensation expense(1)
53,169
56,013
104,049
112,643
Employer payroll tax expense related to employee stock-based compensation(2)
1,274
991
3,774
3,033
Loss from operations on a non-GAAP basis
$
(24,953
)
$
(14,962
)
$
(45,666
)
$
(29,499
)
Reconciliation of GAAP net loss per share to non-GAAP net loss per share:
Net loss on a GAAP basis
$
(69,780
)
$
(68,850
)
$
(134,138
)
$
(140,721
)
Stock-based compensation expense(1)
53,169
56,013
104,049
112,643
Employer payroll tax expense related to employee stock-based compensation(2)
1,274
991
3,774
3,033
Net loss on a non-GAAP basis
$
(15,337
)
$
(11,846
)
$
(26,315
)
$
(25,045
)
GAAP net loss per share attributable common shareholders, basic and diluted
$
(0.59
)
$
(0.63
)
$
(1.15
)
$
(1.30
)
Non-GAAP net loss per share attributable common shareholders, basic and diluted
$
(0.13
)
$
(0.11
)
$
(0.22
)
$
(0.23
)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
118,656
108,876
117,125
107,885
(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 October 31,
Six Months Ended October 31,
2023
2022
2023
2022
Cost of subscription
$
8,514
$
5,486
$
16,570
$
9,758
Cost of professional services
479
479
939
1,550
Sales and marketing
18,226
19,080
35,005
35,859
Research and development
16,685
23,905
33,718
49,122
General and administrative
9,265
7,063
17,817
16,354
Total stock-based compensation expense
$
53,169
$
56,013
$
104,049
$
112,643
(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 October 31,
Six Months Ended October 31,
2023
2022
2023
2022
Cost of subscription
$
282
$
170
$
791
$
456
Cost of professional services
15
16
47
116
Sales and marketing
463
356
1,468
886
Research and development
415
386
1,232
1,329
General and administrative
99
63
236
246
Total employer payroll tax expense
$
1,274
$
991
$
3,774
$
3,033
View source version on businesswire.com: https://www.businesswire.com/news/home/20231206095760/en/
Investor Contact ir@c3.ai
C3 AI Public Relations Cheryl Sanclemente 415-988-4960 pr@c3.ai
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