REDWOOD CITY, Calif. – August 31, 2022 – C3.ai, Inc. (“C3 AI,” “C3,” or the “Company”) (NYSE: AI), the Enterprise AI application software company, today announced financial results for its fiscal first quarter ended July 31, 2022.
This is the seventh consecutive quarter in which C3 AI has met or exceeded our revenue guidance.
“I’m pleased to announce that C3 AI is transitioning from a subscription model to a consumption-based pricing model, bringing us in line with what is becoming the standard among enterprise SaaS companies,” said CEO Thomas M. Siebel. “We have implemented a new pricing model, a new sales model, a new partner model, and new applications to accelerate sales cycles, accelerate product adoption, increase market share, and increase revenue growth and profitability in the medium and long-term.”
Mr. Siebel added, “The economic downturn is real. Our customers are scrutinizing big deals as never before, which also makes this a smart time to launch consumption pricing. With 80% non-GAAP gross margins, and more than $930 million in cash reserves, we are well positioned to weather market headwinds. Moreover, we are accelerating our planned path to profitability, aiming to be non-GAAP profitable during FY 2024.”
C3 AI announces
- Consumption-Based Pricing: C3 AI is now charging new customers based on vCPU/hour, similar to pricing at Snowflake, Google Cloud, AWS, and Azure. The customer entry is now a six-month, pilot subscription, offering one AI Enterprise application, unlimited use of the C3 AI Platform, unlimited developer licensing, unlimited runtime licensing, and a concierge technical support and training program.
- Partner Model: The consumption model aligns well with C3 AI partners Baker Hughes, Google Cloud, Microsoft Azure, Amazon Web Services, and fits perfectly with the hyperscaler marketplaces and their consumption-based pricing models.
- Focus on Sales Force: C3 AI has fundamentally reshaped its sale force over the past few quarters, bringing on professionals with deep domain and technical expertise.
- Product Model: The release of Version 8 of the C3 AI Platform— a four-year, 1000-person year effort –provided the capabilities prerequisite to the company’s transition to a consumption-based pricing model.
Fiscal First Quarter 2023 Financial Highlights
- Revenue: Total revenue for the quarter was $65.3 million, an increase of 25% compared to $52.4 million one year ago.
- Subscription Revenue: Subscription revenue for the quarter was $57.0 million, an increase of 24% compared to $46.1 million one year ago.
- Gross Profit: GAAP gross profit for the quarter was $46.9 million, representing a 72% gross margin, compared to GAAP gross profit of $39.4 million one year ago. Non-GAAP gross profit for the quarter was $52.6 million, representing an 81% non-GAAP gross margin, compared to non-GAAP gross profit of $40.9 million one year ago.
- Remaining Performance Obligations (“RPO”): GAAP RPO increased by 58% to $458.2 million, up from $290.6 million one year ago. Significantly, our GAAP RPO now represents 175% of Q1 annualized revenue. Non-GAAP RPO increased by 39% to $496.8 million, from $357.3 million one year ago.
- Net Loss per Share: GAAP net loss per share was $(0.67), compared to $(0.37) one year ago. Non-GAAP net loss per share was $(0.12), compared to $(0.22) one year ago.
C3 AI First Quarter Customer Success
- Shell and C3 AI continues to expand the deployment of C3 AI applications to deliver cleaner, safer, more reliable energy with less environmental impact. With Shell, C3 AI integrates over 1.2 million data streams each day and monitors over 13,000 pieces of equipment.
- The U.S. Missile Defense Agency (“MDA”) submitted its third order in C3 AI’s five-year, $500 million Production-Other Transaction Agreement that C3 AI was awarded in December 2021.The agreement makes it easy for all Department of Defense agencies to purchase C3 AI products and services.
- C3 AI continues to scale its efforts with the USAF Rapid Sustainment Office (“RSO”) to improve aircraft readiness, with 14 aircraft platforms now live on C3 AI software including the F15, F16, C5, KC-135, and others.
- Raytheon Technologies selected C3 AI to deliver next-generation AI and machine learning (“ML”) capabilities for a ready-now solution for the U.S. Army’s Tactical Intelligence Targeting Access Node (“TITAN”) program.
- A top five global pharmaceutical manufacturer licensed the C3 AI Application Platform and C3 AI Reliability application. The solution will provide predictive maintenance capabilities for equipment at the company’s largest pharmaceutical production plant, including bioreactors, centrifuges, and other critical asset classes.
Partner Model Success
- Google Cloud and C3 AI expanded their partnership, increasing Google Cloud’s commitment for co-selling and funding customer pilot programs over the next three years. C3 AI is also expanding its efforts with Google Cloud to ensure customer success.
- C3 AI’s joint selling activity with Microsoft was brisk in Q1, with over 16 joint selling agreements.
- C3 AI and AWS are increasing their joint-selling activity, which C3 AI expects to contribute to growth in FY 23 and beyond. AWS remains C3 AI’s largest installed base.
- C3 AI’s strategic partnership with Baker Hughes remains strong. In Q1, C3 AI and Baker Hughes signed one of the largest petrochemical companies in Latin America to license the C3 AI Reliability application.
New C3 AI Applications
- Since going public in December 2020, C3 AI has released five new applications. You can view demo videos about each here on the C3 AI corporate site.
- C3 AI CRM, which lets customers make their existing CRM investments instantly predictive.
- C3 AI ESG, which enables customers to integrate data from all their ERP, supplier, customer, and manufacturing systems, plus relevant exogenous market, emissions, and commodity data.
- C3 AI Property Appraisal, which gives real estate appraisers real-time integration of all data sources and the application logic necessary to rapidly complete property appraisals.
- C3 AI Law Enforcement, which provides law enforcement the ability to apply the power of AI to investigate crimes.
- C3 AI Ex Machina, a point and click, drag and drop analytics tool that enables business analysts to apply sophisticated AI/ML techniques and predictive analytics to large datasets.
C3 AI Industry Leadership
- Industry Recognition: Forrester Research named C3 AI a Leader in The 2022 Forrester WaveTM: AI/ML Platforms, Q3 2022. This is a first-of-its-kind comprehensive analysis of enterprise AI and machine learning platforms, highlighting the importance of comprehensive AI/ML platforms to realize business value. Of the 15 vendors in the report, C3 AI received the top ranking in the Strategy category and the highest scores possible nine other criteria. Forrester concludes that C3 AI “…could become the de facto AI platform standard for the world’s most complex industries.”
- Google Cloud Partner Award: C3 AI was awarded the Google Cloud Technology Partner of the Year in the artificial intelligence and machine learning category for 2021. C3 AI was recognized for achievements in the Google Cloud ecosystem.