C3.ai Inc. disclosed lower-than-expected quarterly sales and issued a more pessimistic prognosis for the operating loss for the fiscal year. Extended trading saw a 9% decline in the share price. Previously, C3.ai had predicted a loss of up to $100 million for the fiscal year; however, the company announced on Wednesday that, after removing certain things, the loss might reach $135 million. Analysts projected an average loss of $87.6 million for the year ending in April.
Known for its “data management and analysis” tools, the Redwood City, California-based company went public in 2020. C3.ai unveiled generative artificial intelligence (AI) solutions in March. This AI software generates text and graphics in reaction to user input. On Wednesday, the business announced that it would be investing more resources than expected to capitalize on the tremendous interest in generative AI solutions.
Gene Munster @deepwatermgmt comments on $AI earnings
States that https://t.co/HpggnofFLq is NOT a transformative AI company, and that Deepwater invests ONLY in companies building transformative tech ( $PLTR )
Simply, they’re great marketers (PowerPoint presentations) 😬 pic.twitter.com/Mgdm1S0R6E
— PalantirHotline 🎯 (@PalantirHotline) December 7, 2023
During Wednesday’s results call, Chief Executive Officer Tom Siebel stated that the investment in generative AI will have a “short-term downward pressure on free cash flow and profitability.” Also, he mentioned that the company’s expectations for the fiscal year ending in April 2025 remain unchanged regarding positive cash flow.
C3.ai claimed to be “in a prime position” to “establish a market-leading position globally,” “accelerate growth,” and “benefit from businesses embracing AI.” A steeper-than-expected loss “illustrates the challenge in expanding market share,” according to Bloomberg Intelligence’s Sunil Rajgopal.
To $73.2 million, sales for the fiscal second quarter grew 17%. Around $74.3 million was the average forecast among analysts. Despite analysts’ expectations of an 18-cent loss per share, the adjusted loss for the quarter ending October 31 was 13 cents per share.
How does https://t.co/JT3ciVfjyA's revenue trajectory compare to other exciting AI plays? Revenue is roughly flat over the past three quarters ($72-$73mm). By contrast, Nvidia revenue grew from $7 billion to $13.5 billion to $18.1 billion over the past three quarters. $AI $NVDA pic.twitter.com/GjcRZcXdUn
— Adam Taub (@taubamush) December 6, 2023
Siebel reported that the sales process was delayed due to new artificial intelligence (AI) management departments established by customers, which impacted revenue. “The normal sale cycle is getting longer, and it has added a step to the process,” he explained.
Following a New York closing of $29.16, the share price fell to $26.05 in extended trading. As Wall Street’s voracious hunger for developing technologies grew, C3.ai—whose ticker is literally “AI”—gained 161% this year. But a few backers need to be convinced the business can deliver. S3 Partners data shows that as of Wednesday, about 36% of the publicly traded shares of C3.ai were shorted, making it the second most-shorted U.S. technology stock by the percentage of shares traded. The necessity for cost cuts was cited by the corporation last month when layoffs were announced.
At least 200 articles comparing @PalantirTech $PTLR to $AI in the last 2-3 days.
Trying too hard to associate this garbage AI company earning to Palantir.
Like this:
"Palantir Technologies, Inc (NYSE:PLTR) was holding relatively flat Thursday, despite https://t.co/FXXM8qibKo… pic.twitter.com/DeVHVQYddi— Mike (@MikeLongTerm) December 7, 2023
The European sales teams “did not perform well,” Siebel stated during his interview on CNBC. “To salvage the situation, we instituted a restructuring there. According to a presentation given to investors, most of the 62 client agreements the company closed in the quarter were pilots or had a total contract value of less than $1 million. According to the business, thirteen deals were worth over $1 million, with one sale exceeding $5 million.
As of last month, C3.ai’s software would be available for purchase on the marketplace of Amazon Web Services, Inc.’s cloud computing division, further increasing its exposure. In particular, Wall Street has been watching C3.ai’s capacity to turn software trials into paying clients.
