C3.ai Inc (AI, Financial) has reported a strong start to the fiscal year 2024, with revenue coming in at the high end of the guidance and exceeding analyst consensus. This marks the 11th consecutive quarter where the company has met or exceeded its revenue guidance as a public company. The company's Q1 results were driven by a dramatic increase in demand for enterprise AI adoption following the release of ChatGPT in November 2022.
Financial Highlights
The company's total revenue for Q1 was $72.4 million, exceeding the guidance range of $70 million to $72.5 million. Subscription revenue constituted 85% of the total revenue, amounting to $61.4 million. The gross profit for the quarter was $40.5 million, representing a 56% gross margin. Non-GAAP gross profit was $49.6 million, representing a 69% non-GAAP gross margin. The GAAP net loss per share was $0.56, while the non-GAAP net loss per share was $0.09, both exceeding analyst consensus expectations substantially.
Business Highlights
C3.ai Inc reported strong traction with its enterprise AI applications, particularly with C3 Generative AI. The company entered into new and expanded agreements with several companies and organizations, including Saudi Arabia's smart city NEOM, Nucor, Roche, Pantaleon, Ball Corporation, Cargill, Con Ed, Shell, Tyson Foods, and the U.S. Department of Defense. The company's partner ecosystem also continues to expand, with 60% of its agreements closed with and through its partner network, including Google Cloud, AWS, Microsoft, and Booz Allen Hamilton.
Generative AI: A Game Changer
The company's Generative AI product has seen significant adoption since its release in March 2023. In the last quarter, C3.ai closed eight new agreements for C3 Generative AI, addressing use cases across multiple industries. The company believes that the advent of generative AI may more than double the immediately addressable market opportunity available to C3.ai. To meet market demand, C3.ai announced the immediate availability of the new C3 Generative AI suite, including 28 new domain-specific generative AI solutions for industries, business processes, and enterprise systems.
Looking Ahead
While C3.ai Inc expects to be cash-positive in Q4 of this year and in fiscal year '25, the company plans to invest in generative AI, lead generation, branding, marketing awareness, and customer success related to its generative AI solutions. The company believes that the generative AI market opportunity is immediate and intends to seize it. As a result, the company does not expect to be non-GAAP profitable in Q4 of '24. However, the company maintains a tight rein on its financial controls and operates a disciplined business, making this decision to invest in generative AI because it is in the best interest of its shareholders.
