C3.ai Beat Analysts Revenue Targets but AI Cash Burn Rate Worries Remain

Artificial intelligence software company C3.ai beat analyst expectations for the Q2 fiscal FY2023 quarter, with revenue up 7% year-over-year to $62.41 million. However, AI is still running with large losses and its growth has stagnated. For Q2 2023, bookings were down 14% y/y. while bulls cite the large amount of cash on hand it is the burn rate that is of concern and explains much of why the stock is down over 90% from its highs. AI stock traded at $11.71 down 0.27 (2.25%) after hours.

C3.ai Q2 2023 Earnings

Highlights

  • EPS (non-GAAP): $-0.11 v est $-0.16 Diff: +$0.05 (+31%) compared to $(0.23) one year ago.
  • GAAP net loss per share was $(0.63), compared to $(0.55) one year ago.
  • Revenue: $62.41M v est $60.86M Diff: +$1.55M (+3%)
  • Still sees FY Rev. $255M to $270M,Est. $261M;
  • Subscription Revenue: $59.5 million, an increase of 26% compared to $47.4 million one year ago.
  • GAAP gross profit $41.7 million, a 67% gross margin, compared to GAAP gross profit of $42.3 million one year ago.
  • Non-GAAP gross profit $47.8 million, a 77% non-GAAP gross margin, compared to non-GAAP gross profit of $45.3 million one year ago.
  • GAAP RPO of $417.3 million, down from $465.5 million one year ago. GAAP RPO represents 163% of Q2 annualized revenue.
  • Non-GAAP RPO of $453.5 million, down from $529.3 million one year ago.
  • The number of completed contracts in the quarter increased to 25, slightly greater than a 100% increase from 12 one year earlier.
  • The average contract value in the second quarter was $0.8 million, down from $19.0 million a year earlier as a result of the new pricing model.
  • $858.8 million in cash, cash equivalents, and investments

C3.ai Inc NYSE: AI Stock market Reaction

  • 12.00 ▲ +0.01 (+0.083%) close today
  • 11.71 ▼ -0.27 (2.25%) After Hours

C3 AI successfully completed its transition from a subscription-based pricing model to a consumption-based pricing model.

“We made substantial progress ramping our consumption-based sales motion effort, which has been well received by our customers, partners, and sales organization. We expect consumption-based sales will be a substantial contributor to growth in forthcoming quarters,” said Thomas M. Siebel, CEO of C3.ai.

Consumption-based pricing is used by cloud-computing companies like Amazon Web Services, Microsoft Azure, Google Cloud, and Snowflake

Outlook

  • Q3 Outlook: Total revenue $63.0 – $65.0M, Non-GAAP loss from operations ($25.0) – ($29.0)M.
  • 2023 Outlook: Total revenue $255.0 – $270.0M, non-GAAP loss from operations ($85.0) – ($98.0) M.
  • The company said it expects to reach non-GAAP profitability and positive cash flow by the end of FY 2024.

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