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HomeMarketC3.ai Completes Switch to New Business Model, as Sales Meet Street Estimates

C3.ai Completes Switch to New Business Model, as Sales Meet Street Estimates

Thomas M. Siebel is chief executive officer of C3.ai.

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Chris J. Ratcliffe/Bloomberg

C3.ai
stock is little changed after the enterprise artificial intelligence software company posted financial results for its fiscal second quarter ended Oct. 31 that were largely in line with guidance and Street estimates.

For the quarter, C3.ai (ticker: AI) reported revenue of $62.4 million, up 7% from a year earlier, above the guidance range of $60 million to $62 million, and ahead of the Street consensus forecast of $60.9 million. C3.ai posted a non-GAAP loss from operations of $15 million; the company’s guidance had called for a loss of $15 million to $20 million. The company reported a non-GAAP loss of 11 cents a share, beating the Street consensus forecast for a loss of 16 cents a share.

The company said subscription revenue was $59.5 million, up 26% versus a year ago. Under generally accepted accounting principles, the company lost $68.9 million, or 63 cents a share.

C3.ai said it has completed its transition to a consumption-based pricing mode, from a subscription-based model, noting that the effect of the change lowers revenue and decreases remaining performance obligations for now, but should boost revenue growth over time. Consumption-based pricing is used by cloud-computing companies like Amazon Web Services, Microsoft Azure, Google Cloud, and
Snowflake.
It is a utility model, like water or electricity. The more computing power used, the more the customer pays.

The company also said it expects to reach non-GAAP profitability and positive cash flow by the end of FY 2024.

C3.ai notes that it ended the quarter with $858.8 million in cash, cash equivalents, and investments, which represents about two-thirds of the company’s $1.3 billion market cap.

For the January quarter, the company sees revenue of $63 million to $65 million, slightly below consensus at $66.8 million, with a non-GAAP loss from operations of between $25 million and $29 million. C3.ai now sees full-year revenue of between $255 million and $270 million, with a non-GAAP loss from operations of between $85 million and $98 million; previous guidance called for revenue of $255 million to $275 million, with a loss of between $90 million and $98 million.

In late trading, C3.ai is fractionally lower at $11.95. C3.ai shares are down about 61% for the year.

Write to Eric J. Savitz at eric.savitz@barrons.com

Credit: marketwatch.com

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