C3.ai shares were trading sharply lower in premarket trading Thursday, the morning after the company provided a financial outlook for its April 2024 fiscal year that fell shy of Wall Street estimates.
The popular play on AI software, which soared 33% on Tuesday, fell 9% in Wednesday’s regular session, and is off another 19% Thursday.
The fourth quarter results provided few surprises.
About two weeks ago, the company projected revenue of $72.1 million to $72.4 million, a non-GAAP loss from operations of $23.7 million to $23.9 million, and free cash flow of $18 million to $19.4 million.
The actual results were mostly consistent with that announcement, with revenue or $72.4 million, and a non-GAAP loss from operations of $25.3 million, but free cash flow of $16.3 million, a little below the forecast.
“We believe it is generally agreed today that the market for enterprise AI applications is substantially larger and growing at a much greater growth rate than experts predicted,” the company said in its earnings announcement. “C3 AI has been at the vanguard of the enterprise AI market for over a decade … The interest in applying AI to business processes is more active than we’ve ever seen.”
But the outlook
C3.ai
provided was not well received.
For the July quarter, the company sees revenue of $70 million to $72.5 million. At the midpoint, that’s about in line with Wall Street’s forecast of $71.6 million. C3.ai expects a non-GAAP loss from operations for the quarter of between $25 million and $30 million
For the full year, ending in April 2024, C3.ai sees revenue of between $295 million and $320 million; at the mid-point that would be up about 15% from the previous year, but a little below the Wall Street consensus forecast of $317 million. The company projects a full -year non-GAAP operating loss of between $50 million and $75 million.
C3.ai said it is on track for its previously stated goal to be a non-GAAP profitable business by the end of fiscal year 2024.
C3.ai’s unusually long press release, which was released only minutes ahead of the company’s earnings conference call, spends a lot of time laying out the markets where the company has been having success. A third of its revenue comes from the oil and gas sector, a reflection of the company’s strong and long standing relationship with
Baker Hughes,
with another 29% from “Federal, Defense and Aerospace.”
The company also said it signed three C3 Generative AI application agreements in the quarter with large enterprises, including Georgia Pacific, Flint Hills Resources, and the U.S. Department of Defense Missile Defense Agency.
CEO Tom Siebel said in a statement that the company is “well positioned to accelerate growth, gain market share, attain sustainable non-GAAP profitability, and establish a market-leading position globally in enterprise AI. FY 2024 will be exciting.”
It’s already exciting from an investors point of view. C3.ai is trading like a meme stock, with huge price swings, while attracting substantial interest from short sellers. On the same day the company made the earnings pre-announcement in May, C3.ai also said that it had completed an investigation of allegations made by a pair of short sellers—Spruce Point Capital Management and Kerrisdale Capital Management—and found that “none of the allegations or insinuations of wrongdoing made by either Spruce Point or Kerrisdale were supported by the facts.”
Despite today’s sharp selloff, the stock is still up more than 200% for the year.
Write to Eric J. Savitz at [email protected]
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