Delivering Secure, Reliable Generative AI
Solutions to the Enterprise
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,
2023.
“It is difficult to describe the scale of the increasing
interest that we are seeing globally in enterprise AI adoption,”
said Thomas M. Siebel, C3 AI CEO. “We are experiencing strong
traction with our enterprise AI applications and especially C3
Generative AI.”
Fiscal First Quarter 2024 Financial Highlights
- Revenue: Total revenue for the quarter was $72.4
million, coming in at the high end of guidance of $70.0 million to
$72.5 million.
- Subscription Revenue: Subscription revenue for the
quarter was $61.4 million, constituting 85% of total revenue.
- Gross Profit: GAAP gross profit for the quarter was
$40.5 million, representing a 56% gross margin. Non-GAAP gross
profit for the quarter was $49.6 million, representing a 69%
non-GAAP gross margin.
- Remaining Performance Obligations (“RPO”): GAAP RPO was
$334.6 million.
- Current RPO: Current RPO was $170.6 million.
- Net Loss per Share: GAAP net loss per share was $(0.56).
Non-GAAP net loss per share was $(0.09).
- Cash Balance: $809.6 million in cash, cash
equivalents, and investments.
- Operating Cash Flow: Net cash provided by operating
activities of $3.9 million.
- Free Cash Flow: Free cash flow of $(8.9) million.
Customer Wins and Expansions
During the quarter, C3 AI entered into new and expanded
agreements with NEOM, Nucor, Roche, Riverside County, California;
Pantaleon, Ball, Cargill, Con Edison, Shell, Tyson Foods, and the
U.S. Department of Defense.
C3 AI Partner Network
C3 AI’s partner ecosystem continues to yield strong results. In
Q1, we closed 20 agreements with and through our partner network,
including Google Cloud, AWS, Microsoft, and Booz Allen Hamilton.
Over 60% of our business was closed with and through the C3 AI
partner network.
C3 AI Federal
C3 AI’s Federal business is showing significant strength, with
Federal bookings up 39% compared with the year-ago quarter. The
company continues to expand its work with the U.S. Department of
Defense with new and expanded projects with the Chief Digital and
AI Office (“CDAO”), the U.S. Marines Corps, the U.S. Air Force, the
Missile Defense Agency, and the Defense Counterintelligence and
Security Agency. C3 AI is now engaged in more than a dozen projects
through the CDAO including predictive maintenance for aircraft,
commander’s dashboards, contested logistics, insider threat, and
multi-domain command and control.
Customer Success Stories
C3 AI customers including Shell, Georgia-Pacific, Koch
Industries, Bank of America, and the U.S. Department of Defense
continue to expand their C3 AI application footprints –
increasingly including C3 Generative AI – realizing outsized
economic benefit from digital transformations enterprise AI.
C3 Generative AI
- The product adoption and customer success from our initial
March 2023 C3 Generative AI release has been immediate. In Q1, C3
AI closed eight new agreements for C3 Generative AI, addressing use
cases across multiple industries, including Agriculture, Consumer
Packaged Goods, Defense, Intelligence, Manufacturing, State and
Local Government, and Utilities.
- To date, we have closed 12 generative AI agreements and have a
pipeline of more than 140+ qualified C3 Generative AI enterprise
opportunities. Importantly, the qualified pipeline of C3 Generative
AI opportunities exceeds that of any other product in our product
line.
C3 Generative AI Suite
To meet market demand, C3 AI today announced the immediate
availability of the new C3 Generative AI Suite including 28 new
domain-specific generative AI solutions for industries, business
processes, and enterprise systems, all of which can be fully
deployed within 12 weeks for $250,000 and are available now on the
AWS Marketplace, the GCP Marketplace, and the Azure
Marketplace.
“The market response to our Generative AI offerings is
staggering. C3 Generative AI provides fine-tuned tailored
Generative AI solutions that address the crippling problems that
prevent widespread industry adoption of LLMs,” continued Siebel.
“We believe that advent of Generative AI may more than double the
addressable market immediately available to C3 AI, and now with our
new C3 Generative AI Suite of products out the door, you can expect
that we will be investing in the coming quarters to promote,
market, and support these initiatives.”
We have demonstrated in the recent quarters that have solid
management and expense controls. In Q4 FY 23, cash flow from
operations was $27.1 million. In Q1 FY 24, cash flow from
operations was $3.9 million. Non-GAAP operating loss substantially
beat market expectations in both Q4 FY 23 and Q1 FY 24. We finished
Q1 FY 24 with $809.6 million in cash and investments, a decrease of
$2.8 million from the prior quarter.
After careful consideration with our leadership and our
marketing partners, we have made the decision to invest in lead
generation, branding, market awareness, and customer success
related to our Generative AI solutions. The market opportunity is
immediate, and we intend to seize it. While we still expect to be
cash positive in Q4 FY 24 and in FY 25, we will be investing in our
Generative AI solutions and at this time do not expect to be
non-GAAP profitable in Q4 FY 24.
“C3 AI was well ahead of its time in predicting the scale of the
opportunity in enterprise AI applications,” Siebel continued. “We
started the company when the market was nascent, and as the market
has developed and expanded, we have expanded our branding and our
market offerings to meet market expectations.”
“While we believed for over a decade that this market would be
quite large, no one could have anticipated the size and growth rate
of the AI market that we now address.”
“C3 AI has spent the past 14 years preparing for this
opportunity. The technology foundation is tried, tested, and
proven. A strong portfolio of applications is in place. We have a
pricing and distribution model that meets the needs of the market.
We have a quality brand and a long list of satisfied customers. We
are armed with a battalion of talented, professional employees
deployed worldwide. Our partner ecosystem with Google, AWS, Azure,
Booz Allen, Baker Hughes and others is well developed and
expanding. The Company is well capitalized with a seasoned
leadership team.”
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 2024 and full-year fiscal 2024:
(in millions)
Second Quarter Fiscal
2024
Guidance
Full Year Fiscal 2024
Guidance
Total revenue
$72.0 - $76.5
$295.0 - $320.0
Non-GAAP loss from operations
($27.0) - ($40.0)
($70.0) - ($100.0)
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 2024 Financial
Results Conference Call
When:
Wednesday, September 6, 2023
Time:
2:00 p.m. PT / 5:00 p.m. ET
Participant Registration:
https://register.vevent.com/register/BIc094f50f4a324a60bf341ff372659066
(live call)
Webcast:
https://edge.media-server.com/mmc/p/a92rm8gu (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 (used in) 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.
Other information
Baker Hughes ceased to qualify as a related party of the Company
as of June 30, 2023 and the amounts disclosed related to them are
accordingly presented only while they were considered a related
party.
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 limited 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 Annual
Report on Form 10-K for the fiscal year ended April 30, 2023, and
other filings and reports we make with the Securities and Exchange
Commission from time to time, including our Quarterly Report on
Form 10-Q that will be filed for the fiscal quarter ended July 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 Application Platform, an end-to-end platform
for developing, deploying, and operating enterprise AI applications
and C3 AI Applications, a portfolio of industry-specific SaaS
enterprise AI applications that enable the digital transformation
of organizations globally.
Source: C3.ai, Inc.
C3.AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended July
31,
2023
2022
Revenue
Subscription(1)
$
61,352
$
57,026
Professional services(2)
11,010
8,282
Total revenue
72,362
65,308
Cost of revenue
Subscription
30,434
14,092
Professional services
1,379
4,314
Total cost of revenue
31,813
18,406
Gross profit
40,549
46,902
Operating expenses
Sales and marketing(3)
43,885
42,987
Research and development
50,868
55,877
General and administrative
19,889
21,247
Total operating expenses
114,642
120,111
Loss from operations
(74,093
)
(73,209
)
Interest income
10,122
2,538
Other (expense) income, net
(239
)
(1,021
)
Loss before provision for income taxes
(64,210
)
(71,692
)
Provision for income taxes
148
179
Net loss
$
(64,358
)
$
(71,871
)
Net loss per share attributable to Class A
and Class B common stockholders, basic and diluted
$
(0.56
)
$
(0.67
)
Weighted-average shares used in computing
net loss per share attributable to Class A and Class B common
stockholders, basic and diluted
115,681
106,842
(1)
Including related party revenue of $10,581
and $16,330 for the three months ended July 31, 2023 and 2022,
respectively.
(2)
Including related party revenue of $5,804
and $129 for the three months ended July 31, 2023 and 2022,
respectively.
(3)
Including related party sales and
marketing expense of $810 and $3,500 for the three months ended
July 31, 2023 and 2022, respectively.
C3.AI, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except for
share and per share data)
(Unaudited)
July 31, 2023
April 30, 2023
Assets
Current assets
Cash and cash equivalents
$
206,442
$
284,829
Short-term investments
544,433
446,155
Accounts receivable, net of allowance of
$359 and $359 as of July 31, 2023 and April 30, 2023,
respectively(1)
122,568
134,586
Prepaid expenses and other current
assets(2)
21,352
23,309
Total current assets
894,795
888,879
Property and equipment, net
88,666
84,578
Goodwill
625
625
Long-term investments
58,706
81,418
Other assets, non-current(3)
46,611
47,528
Total assets
$
1,089,403
$
1,103,028
Liabilities and stockholders’
equity
Current liabilities
Accounts payable(4)
$
26,885
$
24,610
Accrued compensation and employee
benefits
32,454
46,513
Deferred revenue, current(5)
40,943
47,846
Accrued and other current
liabilities(6)
10,429
17,070
Total current liabilities
110,711
136,039
Deferred revenue, non-current
17
4
Other long-term liabilities
46,233
37,320
Total liabilities
156,961
173,363
Commitments and contingencies
Stockholders’ equity
Class A common stock, $0.001 par value.
1,000,000,000 shares authorized as of July 31, 2023 and April 30,
2023; 114,424,588 and 110,442,569 shares issued and outstanding as
of July 31, 2023 and April 30, 2023, respectively
114
110
Class B common stock, $0.001 par value;
3,500,000 shares authorized as of July 31, 2023 and April 30, 2023;
3,499,992 and 3,499,992 shares issued and outstanding as of July
31, 2023 and April 30, 2023, respectively
3
3
Additional paid-in capital
1,807,678
1,740,174
Accumulated other comprehensive loss
(758
)
(385
)
Accumulated deficit
(874,595
)
(810,237
)
Total stockholders’ equity
932,442
929,665
Total liabilities and stockholders’
equity
$
1,089,403
$
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)
Three Months Ended July
31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(64,358
)
$
(71,871
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities
Depreciation and amortization
3,056
1,461
Non-cash operating lease cost
274
1,862
Stock-based compensation expense
50,880
56,630
Other
(3,949
)
78
Changes in operating assets and
liabilities
Accounts receivable(1)
12,017
(927
)
Prepaid expenses, other current assets and
other assets(2)
3,051
2,910
Accounts payable(3)
(564
)
(21,318
)
Accrued compensation and employee
benefits
(39
)
491
Operating lease liabilities
8,204
(991
)
Other liabilities(4)
2,254
(1,106
)
Deferred revenue(5)
(6,890
)
(5,477
)
Net cash provided by (used in) operating
activities
3,936
(38,258
)
Cash flows from investing
activities:
Purchases of property and equipment
(11,338
)
(15,536
)
Capitalized software development costs
(1,500
)
(1,000
)
Purchases of investments
(322,534
)
(226,367
)
Maturities and sales of investments
250,572
162,429
Net cash used in investing activities
(84,800
)
(80,474
)
Cash flows from financing
activities:
Proceeds from exercise of Class A common
stock options
9,595
1,087
Taxes paid related to net share settlement
of equity awards
(7,118
)
—
Net cash provided by financing
activities
2,477
1,087
Net decrease in cash, cash equivalents and
restricted cash
(78,387
)
(117,645
)
Cash, cash equivalents and restricted cash
at beginning of period
297,395
352,519
Cash, cash equivalents and restricted cash
at end of period
$
219,008
$
234,874
Cash and cash equivalents
$
206,442
$
221,883
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
$
219,008
$
234,874
Supplemental disclosure of cash flow
information—cash paid for income taxes
$
150
$
66
Supplemental disclosures of non-cash
investing and financing activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
5,764
$
19,326
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
$
—
$
333
(1)
Including changes in related party
balances of $12,444 and $(2,240) for the three months ended July
31, 2023 and 2022, respectively.
(2)
Including changes in related party
balances of $(810) and $(1,216) for the three months ended July 31,
2023 and 2022, respectively.
(3)
Including changes in related party
balances of $248 and $(13,861) for the three months ended July 31,
2023 and 2022, respectively.
(4)
Including changes in related party
balances of $(2,448) and $(2,536) for the three months ended July
31, 2023 and 2022, respectively.
(5)
Including changes in related party
balances of $(46) and $(51) for the three months ended July 31,
2023 and 2022, respectively.
C3.AI, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands, except
percentages)
(Unaudited)
Three Months Ended July
31,
2023
2022
Reconciliation of GAAP gross profit to
non-GAAP gross profit:
Gross profit on a GAAP basis
$
40,549
$
46,902
Stock-based compensation expense (1)
8,516
5,343
Employer payroll tax expense related to
employee stock-based compensation (2)
541
386
Gross profit on a non-GAAP basis
$
49,606
$
52,631
Gross margin on a GAAP basis
56
%
72
%
Gross margin on a non-GAAP basis
69
%
81
%
Reconciliation of GAAP loss from
operations to non-GAAP loss from operations:
Loss from operations on a GAAP basis
$
(74,093
)
$
(73,209
)
Stock-based compensation expense (1)
50,880
56,630
Employer payroll tax expense related to
employee stock-based compensation (2)
2,500
2,042
Loss from operations on a non-GAAP
basis
$
(20,713
)
$
(14,537
)
Reconciliation of GAAP net loss per
share to non-GAAP net loss per share:
Net loss on a GAAP basis
$
(64,358
)
$
(71,871
)
Stock-based compensation expense (1)
50,880
56,630
Employer payroll tax expense related to
employee stock-based compensation (2)
2,500
2,042
Net loss on a non-GAAP basis
$
(10,978
)
$
(13,199
)
GAAP net loss per share attributable
common shareholders, basic and diluted
$
(0.56
)
$
(0.67
)
Non-GAAP net loss per share attributable
common shareholders, basic and diluted
$
(0.09
)
$
(0.12
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
115,681
106,842
(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,
2023
2022
Cost of subscription
$
8,056
$
4,272
Cost of professional services
460
1,071
Sales and marketing
16,779
16,779
Research and development
17,033
25,217
General and administrative
8,552
9,291
Total stock-based compensation expense
$
50,880
$
56,630
(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,
2023
2022
Cost of subscription
$
509
$
286
Cost of professional services
32
100
Sales and marketing
1,005
530
Research and development
817
943
General and administrative
137
183
Total employer payroll tax expense
$
2,500
$
2,042
Reconciliation of free cash flow to the GAAP measure of net
cash provided by (used in) operating activities:
The following table below provides a reconciliation of free cash
flow to the GAAP measure of net cash provided by (used in)
operating activities for the periods presented:
Three Months Ended July
31,
2023
2022
Net cash provided by (used in) operating
activities
$
3,936
$
(38,258
)
Less:
Purchases of property and equipment
(11,338
)
(15,536
)
Capitalized software development costs
(1,500
)
(1,000
)
Free cash flow
$
(8,902
)
$
(54,794
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230906214914/en/
Investor Contact ir@c3.ai
C3 AI Public Relations Cheryl Sanclemente 415-988-4960
pr@c3.ai
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