C3 AI shares drop despite better-than-expected quarterly earnings

Shares in C3ai Inc. dropped slightly in late trading despite the artificial intelligence software provider reporting better-than-expected results in its latest earnings report.

For the quarter ending Jan. 31., C3 AI reported a non-generally accepted accounting principles loss of seven cents per share compared to a loss of 13 cents per share in the same quarter last year. Revenue came in at $69.8 million, up 42% year-over-year.

Analysts had expected a non-GAAP EPS loss of 25 cents per share on revenue of $67.2 million.

Subscription revenue in the quarter came in at $52.4 million on a 75% gross margin, compared to $36.9 million a year ago.

Highlights in the quarter included Shell plc continuing to expand its C3 AI application footprint to over 10,000 devices. C3 machine learning models are monitoring those devices. The U.S. Department of Defense awarded C3 AI a five-year, $500 million transaction agreement, accelerating the ability for any defense department agency to acquire the company’s suite of enterprise artificial intelligence products and services.

Other achievements in the quarter included new production deployments with the Defense Counterintelligence and Security Agency and additional business with the U.S. Space Force.

“These results were driven by substantially increased sales momentum due to the successful refocusing of our sales organizations, expanded customer count, increased industry diversification for our AI products and the further recognition of our technology leadership in this industry,” Thomas M. Siebel, chief executive officer of C3 AI, said in a statement. “We believe C3 AI is on track to establish a global leading market position in enterprise AI.”

Looking forward, C3 AI predicted a non-GAAP loss from operations of between $90 million and $94 million for the company’s full fiscal year 2022 on revenue of between $251 million to $252 million. Analysts had expected a figure of $249.6 million in revenue.

The numbers reported by C3 AI were ahead of expectations, both in the quarter gone and their outlook, but they didn’t impress investors. Notably, the company didn’t break out their next quarter outlook versus giving a full fiscal year outlook, although those figures can be easily ascertained by taking away previous quarterly results. Why they didn’t, however, is odd, as it’s fairly standard for most companies to do so.

Whatever the reason, C3 AI shares were down 2.6% after the bell to be sitting at $22.07 as of 8 p.m. EST.

Image: C3 AI