Artificial Intelligence Software Company C3.ai Stock AI Falls 15% After Misses Earnings, Slashes Guidance

Artificial intelligence software company C3.ai missed analyst expectations in Q1 FY2023 quarter, with revenue up 24.6% year on year to $65.3 million. Guidance for the next quarter also missed analyst expectations with revenues guided to $61 million at the midpoint, or 14.9% below analyst estimates. C3.ai made a GAAP loss of $71.8 million, down on its loss of $37.4 million, in the same quarter last year. AI stock traded at 15.20 down $2.80 or 15.56% After Hours

C3.ai Q1 2023 Earnings

Highlights

  • EPS (non-GAAP): -$0.12 vs analyst estimates of -$0.24
  • GAAP net loss per share was $(0.67), compared to $(0.37) one year ago.
  • Subscription Revenue: Subscription revenue for the quarter was $57.0 million, an increase of 24% compared to $46.1 million one year ago.
  • Gross Profit: GAAP gross profit for the quarter was $46.9 million, representing a 72% gross margin, compared to GAAP gross profit of $39.4 million one year ago. Non-GAAP gross profit for the quarter was $52.6 million, representing an 81% non-GAAP gross margin, compared to non-GAAP gross profit of $40.9 million one year ago.
  • Remaining Performance Obligations (“RPO”): GAAP RPO increased by 58% to $458.2 million, up from $290.6 million one year ago. Significantly, GAAP RPO now represents 175% of Q1 annualized revenue. Non-GAAP RPO increased by 39% to $496.8 million, from $357.3 million one year ago.
  • Free cash flow was negative $54.7 million, compared to negative free cash flow of $14.7 million in previous quarter
  • Gross Margin (GAAP): 71.8%, down from 75.1% same quarter last year

“I’m pleased to announce that C3 AI is transitioning from a subscription model to a consumption-based pricing model, bringing us in line with what is becoming the standard among enterprise SaaS companies,” said CEO Thomas M. Siebel.

C3.ai quarterly revenue growth was still up 24.6% year on year. But the revenue actually decreased by $7 million in Q1, compared to $2.54 million increase in Q4 2022.

Outlook

  • Revenue guidance for Q2 2023 is $61 million at the midpoint, below analyst estimates of $71.7 million. Slowing down from the 40.9% year-over-year increase in revenue the company had recorded in the same quarter last year.
  • Revenue guidance for the full year, from $312 million to $262.5 million at the midpoint, a 15.8% decrease.  Ahead of the earnings results the analysts covering the company were estimating sales to grow 24.5% over the next twelve months.

About C3 AI

Founded in 2009 by enterprise software veteran Tom Seibel, C3.ai (NYSE:AI) provides software that makes it easy for organizations to add artificial intelligence technology to their applications.

C3 AI is a leading Enterprise AI software provider for accelerating digital transformation. The proven C3 AI Application Platform provides comprehensive services to build enterprise-scale AI applications more efficiently and cost-effectively than alternative approaches. The C3 AI Application Platform supports the value chain in any industry with prebuilt, configurable, high-value AI applications for reliability, fraud detection, sensor network health, supply network optimization, energy management, anti-money laundering, and customer engagement. via Company Website

Source: C3.ai

From The TradersCommunity Research Desk