To The Moon

$C3.ai, Inc.(AI)$ is scheduled to announce its financial results for the fiscal fourth quarter and full fiscal year 2025 on Wednesday, 28 May 2025, after the close of U.S. markets. A conference call and webcast to discuss the results will follow at 2:00 p.m. PDT / 5:00 p.m. EDT.

Revenue: Analysts generally anticipate C3.ai to report revenue around $107.79 million for Q4 FY2025. This would represent a year-over-year increase of approximately 24.48%. The company's own guidance for Q4 fiscal 2025 revenue was between $103.6 million and 113.6million.

Earnings Per Share(EPS): The consensus EPS forecast is a loss of approximately (0.67) to $(0.70) per share. For comparison, the reported EPS for the same quarter last year (Q4 FY 2024) was $(0.59). While still unprofitable, C3.ai has consistently beaten Wall Street's bottom-line estimates in recent quarters, with losses being lower than expected.

Tipranks is more optimistic which is predicting a narrower loss of $0.20 per share

Full Fiscal Year 2025 Guidance: The company previously narrowed its full fiscal year 2025 revenue guidance to between $383.9 million and $393.9 million. This will be an important figure to see if they met or exceeded this range.

C3.ai (AI) Last Positive Earnings Call Saw Share Price Declined A Significant 14.03%

C3.ai had a positive earnings call on 26 Feb 2025 which saw its share price declined by a significant 14.03%.

The earnings call highlighted strong revenue growth, strategic partnerships, and advancements in AI solutions, indicating a positive outlook for C3.ai. Despite some financial challenges like negative free cash flow and a decline in RPO, the company's strategic alliances and innovation position it well for future growth. The CEO's health issue was addressed with measures in place to ensure business continuity.

C3.ai (AI) Guidance

During the C3.ai third quarter fiscal year 2025 earnings call, the company reported significant growth and strategic advancements. Total revenue for the quarter reached $98.8 million, a 26% increase year-over-year, with subscription revenue growing by 22% to $85.7 million, contributing to a 69% gross margin. The company exceeded its guidance with a non-GAAP operating loss of $23.1 million, compared to the expected range of $38.6 million to $46.6 million.

A major highlight was the expansion of strategic alliances, particularly with Microsoft, AWS, and McKinsey QuantumBlack, which resulted in a 460% increase in agreements and a 244% surge in the joint qualified sales pipeline with Microsoft. The company also reported closing 20 C3 Generative AI pilots and strengthening its position in Agentic AI, with innovations that enhance AI model autonomy and efficiency. Looking ahead, C3.ai anticipates revenue for Q4 between $103.6 million and $113.6 million, with a full fiscal year range of $383.9 million to $393.9 million, and continues to focus on expanding its distribution ecosystem and executing its strategic partnerships.

Factors to Watch and Key Themes

CEO Tom Siebel experienced a health setback affecting his vision but is managing the business with support and accommodations.

Generative AI Adoption: C3.ai is heavily focused on enterprise AI applications, including generative AI tools. The increasing demand for generative AI software in enterprise use cases is a significant tailwind for the company. Investors will be looking for signs of accelerated adoption and how this translates into new customer agreements and increased spending from existing clients.

Advancements in Generative AI and Agentic AI, with 20 pilots closed in Q3, including clients like Mars and the U.S. Department of Defense.

Customer Acquisition and Pilot Projects: In Q3 FY2025, C3.ai closed 66 agreements, a 72% increase year-over-year, which included 50 pilot projects. The conversion rate of these pilot projects into larger, long-term contracts will be a critical indicator of future growth.

Strategic Partnerships: C3.ai has expanded alliances with major cloud providers like Microsoft and AWS, and also with consulting firms like McKinsey QuantumBlack and PwC. The impact of these partnerships on their pipeline and closed deals will be important to monitor. In Q3 FY2025, the joint qualified opportunity pipeline with Microsoft increased by over 244% year-over-year.

Significant progress in partnerships with Microsoft, AWS, and McKinsey QuantumBlack. The partnership with Microsoft alone resulted in 28 agreements closed in Q3 and a 244% year-over-year surge in the joint qualified sales pipeline.

71% of agreements delivered in collaboration with partners, highlighting the ecosystem's role in driving business.

Profitability Path and Cash Burn: While C3.ai continues to be unprofitable on a GAAP basis, the trend of lower-than-expected losses is positive. Investors will be scrutinizing the company's progress towards profitability and its cash burn rate. The company ended Q3 FY2025 with a strong cash reserve of $724.3 million and no debt, which provides some cushion.

Non-GAAP operating loss improved to $23.1 million, better than the guidance range of $38.6 million to $46.6 million.

Free cash flow for the quarter was negative $22.4 million, although improved from negative $45.1 million last year.

Subscription Revenue Growth: Subscription revenue is a key metric for SaaS companies. In Q3 FY 2025, subscription revenue grew 22% year-over-year, making up 87% of total revenue. Continued strong growth in this area is essential.

Total revenue for Q3 reached $98.8 million, a 26% increase year-over-year. Subscription revenue grew by 22% to $85.7 million.

RPO expected to continue declining in the near term, indicating potential future revenue challenges.

Baker Hughes Partnership: The potential non-renewal of the Baker Hughes partnership (their largest client) after their current agreement ends in June 2025 is a potential concern. Investors will be looking for updates or clarity on this.

Competition: C3.ai faces intense competition from other AI startups and larger tech giants building in-house AI solutions. Management commentary on their competitive positioning and differentiation will be important.

C3.ai (AI) Price Target

Based on 13 analysts from Tiger Brokers offering 12 month price targets for C3ai in the last 3 months. The average price target is $30.46 with a high forecast of $56.00 and a low forecast of $15.00. The average price target represents a 34.01% change from the last price of $22.73.

Analyst ratings for C3.ai generally lean towards "Hold." While revenue growth is projected to remain strong, earnings are forecast to continue declining in the near term, with the company expected to remain unprofitable for the next few years.

Technical Analysis - Exponential Moving Average (EMA)

Looking at how AI share price have been trading recently, it is trying to clear the 50-day period, where the bears looks like still in control, and we saw that it has started to dip below the 50-day period, and the momentum from RSI is still showing negative and weak, hence,

I think C3.ai need to show that they really have a good strategy to beat off intense competition from other AI startups and larger tech giants building in-house AI solutions. Hence, the earnings call to watch is their management plan for competitive strategy.

Summary

C3.ai's Q4 FY 2025 earnings report will be closely watched for signs of accelerated adoption of its enterprise AI solutions, particularly generative AI, and the effectiveness of its strategic partnerships. Strong customer acquisition and conversion of pilot projects will be key to demonstrating sustained growth. While profitability remains a long-term goal, managing losses effectively and maintaining a healthy cash position will be important indicators for investors.

Appreciate if you could share your thoughts in the comment section whether you think C3.ai can show better cash burn rate and strategy for competitive positioning for path to profitability.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.