Here's some news from last month that show what happening with AI: REDWOOD CITY, Calif. – December 6, 2023 – C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal second quarter ended October 31, 2023.
“It was a solid quarter, with total revenue growing 17% year-over-year to $73.2 million, and customer engagement growing by 81% year-over-year. We saw unprecedented interest and traction in our generative AI offerings. Importantly, we are seeing a return to accelerating revenue growth as we continue our transition to a consumption-based pricing model,” said C3 AI CEO and Chairman Thomas M. Siebel. “In the trailing four quarters, we have seen top line year-over-year revenue growth increase from -4% in Q3 FY23, to 0% in Q4 FY23, to 11% in Q1 FY24, to 17% in Q2 FY24.”
Fiscal Second Quarter 2024 Financial Highlights
Revenue: Total revenue for the quarter was $73.2 million, an increase of 17% compared to $62.4 million one year ago.
Subscription Revenue: Subscription revenue for the quarter was $66.4 million, constituting 91% of total revenue, an increase of 12% compared to $59.5 million one year ago.
Gross Profit: GAAP gross profit for the quarter was $41.1 million, representing a 56% gross margin. Non-GAAP gross profit for the quarter was $50.4 million, representing a 69% non-GAAP gross margin.
Net Loss per Share: GAAP net loss per share was $(0.59). Non-GAAP net loss per share was $(0.13).
Cash Reserves: $762.3 million in cash, cash equivalents, and investments.
Customer Engagement: Customer Engagement for the quarter was 404, an increase of 81% compared to 223 one year ago. [See FY23-Q4 Investor Supplemental for more details on Customer Engagement methodology.]
Key Customers
During the quarter, C3 AI closed 62 agreements including 36 pilots.
The Company entered into new agreements with GSK, Indorama, and First Business Bank and expanded agreements with Con Edison, Roche, Nucor Corporation, and Hewlett Packard Enterprise, among others.
C3 AI’s federal business continues to show significant strength with federal bookings representing almost half of total bookings, up nearly 187% from the year prior. C3 AI signed 20 new federal agreements, including five agreements for C3 Generative AI.
The Company closed new and expanded deals with the U.S. Navy, the Office of the Director of National Intelligence, Joint Staff J8, the Defense Logistics Agency, and the Administration for Children & Families, a division of the Department of Health & Human Services.
Customer Success Stories
Building on its success in the manufacturing sector, C3 AI continues to work with Nucor to optimize production schedules across several mills, expanding the largest U.S. steel producer’s AI program. This expansion with Nucor also included two new use cases initiated in Q2: AI to improve forecasting, and generative AI targeted at facilitating proper health and safety procedures.
Con Edison, a customer since 2017, continues to expand its use of C3 AI applications, most recently with C3 Generative AI to help workers quickly find answers to questions and analysis related to smart meter, service, and infrastructure data. In the second quarter, Con Edison completed two pilots of the newest application, which have since converted to production.
C3 AI also converted two pilots and expanded its federal business within the U.S. Department of Defense at the Defense Logistics Agency (“DLA”), which provides logistical, acquisition, and technical support for the Army, Navy, Air Force, Marine Corps and other federal agencies and allies. C3 AI is helping the DLA improve efficiency, visibility, and readiness across the supply chain predicting consumption, inventory, and transportation of critical goods such as parts, components, and fuel.
In Q2, the Administration for Children and Families (“ACF”), a division of the U.S. Department of Health and Human Services, has made the first order to C3 AI under a $90 million blanket purchase agreement. As a critical civilian agency, the ACF works to help unaccompanied children who cross the U.S. border find temporary shelter or permanent homes. The ACF will use the C3 AI Platform to perform complex data analysis more efficiently, examining the scope and resource landscape for children within the agency’s care, including staffing needs and how long these children are with their case managers — and ultimately use the resulting insights to inform decision makers on resource allocation and needs.
Key News
The C3 AI partner ecosystem continues to drive significant growth. In Q2, the Company closed 40 agreements through its partner network, which includes AWS, Baker Hughes, Booz Allen, Google Cloud, and Microsoft. The qualified opportunity pipeline with partners has increased by 75% in the past year.
C3 AI and AWS expanded their Strategic Collaboration Agreement (SCA). Under the expanded SCA, C3 AI and AWS will focus on continuing to offer advanced generative AI solutions for enterprises.
To meet market demand, C3 AI has announced and released a no-code, self-service generative AI application in AWS Marketplace, C3 Generative AI: AWS Marketplace Edition.
In Q2, C3 AI was recognized multiple times for its innovation in the AI space. C3 AI has been named to Fortune 50 AI Innovators list and was recognized as a top 10 AI partner by Everest Group in its inaugural ‘Artificial Intelligence Top 50’ list of global market-leading AI-first technology providers.
For the fourth year in a row, Constellation Research named C3 AI as a “solution to know” on its ShortListTM for Artificial Intelligence and Machine Learning Cloud Platforms in Q3 2023.
Pilot Growth
During the quarter, C3 AI closed 62 agreements including 36 pilots. The 36 pilots represented an increase from 24 pilots in the first quarter and 13 pilots in the year-ago quarter. Notably, 20 of these pilots were generative AI pilots, an increase from eight in the first quarter.
Consumption Pricing
In Q1 FY23, C3 AI introduced a transition to a consumption-based pricing model to fuel growth, which the Company believes is becoming the standard among enterprise SaaS companies in the industry. The consumption-based pricing model is based on vCPU/hour, in line with industry-standard cloud software pricing standards. The transition has been met with great reception among C3 AI’s prospects, customers, and partners. Since this transition, the Company has closed over 100 pilots on the new consumption pricing model. The Company believes traction with C3 Generative AI: AWS Marketplace Edition will further accelerate the Company’s consumption pricing adoption and customer engagement metrics.
C3 Generative AI
Recent estimates suggest that the market for Enterprise AI applications is bigger and expanding faster than certain experts previously anticipated. Bloomberg Intelligence estimates that generative AI will become a $1.3 trillion market by 2032. Goldman Sachs predicts that AI could increase corporate profits by 30% in the next decade, and that generative AI alone could raise the global GDP by 7%. C3 AI believes it is in a prime position to see a significant increase in opportunities for Enterprise AI, and the Company is also well-positioned to accelerate growth, gain market share, attain sustainable non-GAAP profitability and establish a market-leading position globally. As such, the company plans to further accelerate its investment in generative AI, deepening its investments in lead generation, branding, market awareness, and customer success.
C3 AI closed 20 new agreements for C3 Generative AI in the second quarter. C3 Generative AI is addressing use cases across multiple industries including manufacturing, financial services, and defense & intelligence.
The generative AI qualified pipeline grew to over 225 in Q2, an increase of more than 55% from Q1.
C3 AI has announced a no-code, self-service generative AI application in AWS Marketplace, C3 Generative AI: AWS Marketplace Edition, allowing users of all technical levels to begin using generative AI in minutes in their enterprise. The application provides a starting point for customers and can be quickly scaled across the enterprise and can be used together with all other C3 AI applications. C3 Generative AI: AWS Marketplace Edition is now available under a 14-day free trial in AWS Marketplace via private preview.
Financial Outlook:
The Company’s guidance includes GAAP and non-GAAP financial measures.
The following table summarizes C3 AI’s guidance for the third quarter of fiscal 2024 and full-year fiscal 2024:
(in millions) Third Quarter Fiscal 2024 Guidance Full Year Fiscal 2024 Guidance
Total revenue $74.0 – $78.0 $295.0 – $320.0
Non-GAAP loss from operations $(40.0) – $(46.0) $(115.0) – $(135.0)
