C3 AI — Fiscal First Quarter 2027 Earnings Summary

Financial Performance

• Total revenue was $52.4 million, compared to $70.3 million in the prior year period.
• Subscription revenue was $49.2 million, representing 94% of total revenue.
• Professional services revenue was $3.2 million, down from $10.0 million in the prior year period.
• GAAP gross profit was $16.7 million (32% margin), while non-GAAP gross profit was $26.1 million (50% margin).
• GAAP net loss was $92.8 million ($0.60 per share), compared to a net loss of $116.8 million ($0.86 per share) in the prior year period.
• Non-GAAP net loss was $30.7 million ($0.20 per share), compared to a non-GAAP net loss of $49.8 million ($0.37 per share) in the prior year period.
• Non-GAAP operating loss was $36.2 million, a 33% improvement quarter-over-quarter.
• Net cash provided by operating activities was $2.1 million, compared to a net cash used of $33.5 million in the prior year period.
• Free cash flow was $2.1 million.
• Cash, cash equivalents, and marketable securities totaled $651.1 million, an increase of $76 million quarter-over-quarter.
• Deferred revenue increased to $53.7 million ($52.6 million current, $1.1 million non-current) from $36.4 million ($34.9 million current, $1.6 million non-current) at the start of the quarter.

Guidance and Future Outlook

• Second Quarter Fiscal 2027 total revenue guidance is $51.0 million to $55.0 million.
• Full Year Fiscal 2027 total revenue guidance is $210.0 million to $240.0 million.
• Second Quarter Fiscal 2027 non-GAAP loss from operations guidance is $(34.5) million to $(42.5) million.
• Full Year Fiscal 2027 non-GAAP loss from operations guidance is $(123.0) million to $(155.0) million.
• Management stated the turnaround plan is on track with revenue stabilizing and operating losses narrowing.

Business Segments and Product Lines

• The company closed 22 agreements in the quarter, including customers such as Heidelberg Materials, Ford Motor Company, Johnson & Johnson, Holcim, Seaspan, the U.S. Department of Agriculture, the Defense Logistics Agency, the U.S. Department of War, and the U.S. Marine Corps.
• Prioritized engineering services revenue was $1.8 million, down from $8.7 million in the prior year period.
• Service fees revenue was $1.4 million, up from $1.3 million in the prior year period.
• Forrester Research named C3 AI a leader in Enterprise AI.

Market and Competitive Landscape

• Management highlighted the company's position as a leader in Enterprise AI per Forrester Research.
• The company noted continued growth opportunities in the Federal market.

Risks and Challenges

• Forward-looking statements cite risks including the company's history of losses and ability to achieve profitability.
• Risks include historic dependence on a limited number of existing customers accounting for a substantial portion of revenue.
• Challenges include the ability to attract new customers, retain existing customers, and the length and unpredictability of sales cycles.
• Risks also include the impact of the return of Tom Siebel as CEO and the ability to retain key senior management members.

Management Commentary and Tone

• Thomas M. Siebel, Chairman and CEO, stated the company has done "exactly what a disciplined, focused turnaround should do."
• Management cited specific actions taken: restructuring Sales, aligning cash outflows with inflows, instituting rigorous expense control, installing experienced leadership, and implementing rigorous management discipline.
• The tone was confident, asserting the plan is working and the company is on track to grow revenue, generate cash, attain non-GAAP profitability, maintain technology leadership, and increase customer satisfaction.

Other Key Points

• The company incurred $0.7 million in pre-tax restructuring charges, primarily consisting of vendor consolidation costs.
• Proceeds from the exercise of Class A common stock options were $72.8 million in the quarter.
• Stock-based compensation expense was $59.2 million.
• The fiscal year ends April 30.