Q2 Revenue of $58.3 million, increased 41% year
over year
FY 22 Revenue Guidance raised to 35% - 37%
growth, up from 17% growth in FY 21
C3.ai, Inc. (NYSE: AI), the Enterprise AI software company,
today announced results for its fiscal second quarter ended October
31, 2021.
“We closed another strong quarter, including a revenue increase
of 41% from a year ago that exceeds our guidance and sell-side
analysts’ expectations,” said CEO Thomas M. Siebel. “We expanded
our important relationship with Baker Hughes extending the contract
term, significantly increasing its value, and securing that value
as a guaranteed future C3 AI revenue stream. We further diversified
our enterprise AI production footprint across many industries and
continued to innovate with the delivery of C3 AI Data Vision, that
fundamentally reinvents the enterprise software user
experience.”
Second Quarter Financial Highlights
- Revenue: Total revenue for the quarter was $58.3
million, up from $41.3 million one year ago, an increase of 41%
year over year, exceeding company guidance and sell-side analysts’
expectations.
- Subscription Revenue: Subscription revenue for the
quarter was $47.4 million, up from $35.9 million one year ago, an
increase of 32% year over year.
- Gross Profit: GAAP Gross profit for the quarter was
$42.3 million, up from $31.3 million one year ago. Non-GAAP gross
profit for the quarter was $45.3 million, up from $31.5 million one
year ago, exceeding sell-side analysts’ consensus expectations by
$1.6 million.
- Remaining Performance Obligations (“RPO”): GAAP RPO was
$465.5 million, up from $267.4 million one year ago. Non-GAAP RPO
was $529.3 million, up from $304.5 million one year ago.
- Net Loss per Share: GAAP net loss per share was $(0.55),
compared to $(0.39) one year ago. Non-GAAP net loss per share was
$(0.23), compared to $(0.26) one year ago, well above sell-side
analysts' consensus expectations.
Recent Business Highlights
- C3 AI significantly expanded and restructured its strategic
relationship with Baker Hughes for the second time, increasing the
value of the contract by $45 million to $495 million, extending its
term from five to six years, and guaranteeing C3 AI a minimum of
$357 million of GAAP revenue over the next 3.5 years. The newly
expanded contract also introduced a new pricing model and selling
structure designed to further accelerate sales of C3 AI software
products into the Baker Hughes customer base.
- C3 AI increased its customer count to 104 customers,
representing 63% year over year growth.
- C3 AI expanded its enterprise AI footprint in Manufacturing,
Oil & Gas, Chemicals, Agriculture, Agricultural Implements,
Building Equipment, Financial Services, Insurance, Life Sciences,
and Energy, with new production deployments at Cargill, Johnson
Controls, and Shell; new contracts signed with CNH Industrial,
Liberty Mutual, and a top 5 Life Sciences company; and new
additional business with Cargill, Enel, FIS, Mosaic, and PTT Global
Chemical.
- C3 AI production applications showed expanded industry
diversification, growing to 14 industries in Q2 FY 22 compared to 7
industries a year ago, including notable expansions in Agriculture,
Financial Services, Life Sciences, Healthcare, and
Manufacturing.
- C3 AI substantially increased its Public Sector business in
defense and intelligence, with new production deployments at the
U.S. Air Force, new business with the U.S. Space Force, and
additional business with the Missile Defense Agency. The year over
year growth is 33%. The company expects this growth rate to
accelerate substantially in the second half of the year.
- C3 AI strengthened its leadership team with the addition of Lt.
Gen. H.R. McMaster (U.S. Army, retired) to the C3 AI Advisory
Board. A graduate of the U.S. Military Academy and veteran of the
Gulf War, Operation Enduring Freedom, and Operation Iraqi Freedom,
Lt. Gen. McMaster served as National Security Advisor from 2017 to
2018. He has held multiple roles in the United States Central
Command, and is a Senior Fellow at the Hoover Institution and
lecturer at the Stanford Graduate School of Business.
- C3 AI expanded its university relations program though the C3
AI Digital Transformation Institute, a public-private partnership
with C3 AI, Microsoft, Lawrence Berkeley Labs, the National Center
for Supercomputing Applications, UC Berkeley, University of
Illinois-Urbana, MIT, Carnegie Mellon, Princeton, Stanford, and KTH
in Sweden. The C3 AI DTI sponsors advanced primary research in AI
for digital transformation, hold regular industry AI colloquia, and
has awarded significant research funding to develop advanced AI
techniques in precision medicine, COVID and pandemic mitigation,
and energy and climate security.
- C3 AI announced the launch of C3 AI Data Vision. C3 AI believes
that C3 AI Data Vision represents a fundamental paradigm shift in
the enterprise application user experience model from today’s
clunky forms and table-based model to a highly visual dynamic
knowledge graph experience.
- C3 AI's partnership with Google Cloud is off to a strong start.
The companies' teams have developed a comprehensive pipeline of
over 100 qualified deals across multiple industry verticals and
recently closed their first deal, in the form of a trial in the
Financial Services sector. The teams have engaged and developed
joint product roadmaps and sales enablement collateral. All C3 AI
solutions are now available on the Google Cloud marketplace.
- C3 AI introduced two new applications to serve the needs of
country tax assessors. The new C3 AI applications--C3 AI
Residential Property Appraisal and C3 AI Commercial Property
Appraisal--will be marketed nationally and have broad applicability
for local and state governments, as well as financial services
institutions engaged in mortgage lending and related services,
representing a significant new growth opportunity for C3 AI. Along
with C3 AI CRM and C3 Ex Machina, this initiative furthers our
efforts to increase revenue diversity.
- Through its partnership with energy-services leader ENGIE, C3
AI advanced its position in energy and sustainability across
multiple industries, with deployments at an iconic global coffee
shop brand where C3 AI is helping manage energy consumption and GHG
emissions at more than 12,000 sites, a multinational packaging
leader, and a major hotel group.
- C3 AI continued to attract exceptional talent to the company
and ended the quarter with 668 full-time employees, an increase of
39% year over year. The company received over 18,000 employment
applications in Q2.
Financial Outlook:
Our guidance includes GAAP and non-GAAP financial measures.
The following table summarizes our guidance for the third
quarter of fiscal 2022 and full-year fiscal 2022:
(in millions)
Third Quarter Fiscal 2022
Guidance
Full Year Fiscal 2022
Guidance
Total revenue
$66.0 - $68.0
$248.0 - $251.0
Non-GAAP loss from operations
($26.0) - ($30.0)
($100.0) - ($108.0)
A reconciliation of non-GAAP guidance measures to corresponding
GAAP measures is not available on a forward-looking basis without
unreasonable effort due to the uncertainty regarding, and the
potential variability of, expenses that may be incurred in the
future. Stock-based compensation expense-related charges, including
employer payroll tax-related items on employee stock transactions,
are impacted by the timing of employee stock transactions, the
future fair market value of our common stock, and our future hiring
and retention needs, all of which are difficult to predict and
subject to constant change. We have provided a reconciliation of
GAAP to non-GAAP financial measures in the financial statement
tables for our historical non-GAAP results included in this press
release. Our fiscal year ends April 30, and numbers are rounded for
presentation purposes.
Conference Call Details
What:
C3 AI Second Quarter Fiscal 2022 Financial
Results Conference Call
When:
Wednesday, December 1, 2021
Time:
2:00 p.m. PT / 5:00 p.m. ET
Live Call:
(833) 927-1758, Domestic
(929) 526-1599, International
Conference ID: 231349
Webcast:
https://event.on24.com/wcc/r/3517030/E997933270FA0332196F8207563DD9C8
(live and replay)
Investor Presentation Details
An investor presentation providing additional information and
analysis can be found at our investor relations page at
ir.c3.ai.
Statement Regarding Use of Non-GAAP Financial
Measures
We report the following non-GAAP financial measures, which have
not been prepared in accordance with generally accepted accounting
principles in the United States (GAAP), in addition to, and not as
a substitute for, or superior to, financial measures calculated in
accordance with GAAP.
- Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss
from operations, and non-GAAP net loss per share. Our non-GAAP
gross profit, non-GAAP gross margin, non-GAAP loss from operations,
and non-GAAP net loss per share exclude the effect of stock-based
compensation expense-related charges and employer payroll tax
expense related to employee stock-based compensation. We believe
the presentation of operating results that exclude these non-cash
items provides useful supplemental information to investors and
facilitates the analysis of our operating results and comparison of
operating results across reporting periods.
- Non-GAAP RPO: Non-GAAP RPO represents our GAAP RPO plus
the associated cancellable contracted backlog. We believe the
presentation of our RPO inclusive of the cancellable backlog
provides useful supplemental information to investors about our
aggregate contractual backlog and facilitates the analysis of our
operating results and comparison of operating results across
reporting periods.
We use these non-GAAP financial measures internally for
financial and operational decision-making purposes and as a means
to evaluate period-to-period comparisons. Non-GAAP financial
measures are not meant to be considered in isolation or as a
substitute for comparable GAAP financial measures and should be
read only in conjunction with our condensed consolidated financial
statements prepared in accordance with GAAP. Our presentation of
non-GAAP financial measures may not be comparable to similar
measures used by other companies. We encourage investors to
carefully consider our results under GAAP, as well as our
supplemental non-GAAP information and the reconciliation between
these presentations, to more fully understand our business. Please
see the tables included at the end of this release for the
reconciliation of GAAP to non-GAAP financial measures.
Analyst expectations gathered by FactSet as of November 30,
2021; consensus represents arithmetic average of this guidance. Any
opinions, estimates or forecasts regarding C3 AI’s performance made
by any analysts are theirs alone and do not represent the opinions,
forecasts or predictions of C3 AI. C3 AI does not endorse or concur
with any such opinions, estimates or forecasts.
Use of Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release other than
statements of historical facts, including our market leadership
position, anticipated benefits from our partnerships and
investments, financial outlook, our business strategies, plans, and
objectives for future operations, are forward-looking statements.
The words “anticipate,” “believe,” “continue,” “estimate,”
“expect,” “intend,” “may,” “will” and similar expressions are
intended to identify forward-looking statements. We have based
these forward-looking statements largely on our current
expectations and projections about future events and trends that we
believe may affect our financial condition, results of operations,
business strategy, short-term and long-term business operations and
objectives, and financial needs. These forward-looking statements
are subject to a number of risks and uncertainties. Some of these
risks are described in greater detail in our filings with the
Securities and Exchange Commission, including our Quarterly Reports
on Form 10-Q for the fiscal quarters ended July 31, 2021 and, when
available, October 31, 2021, although new and unanticipated risks
may arise. The future events and trends discussed in this press
release may not occur and actual results could differ materially
and adversely from those anticipated or implied in the
forward-looking statements. Although we believe that the
expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity,
performance, achievements, or events and circumstances reflected in
the forward-looking statements will occur. Except to the extent
required by law, we do not undertake to update any of these
forward-looking statements after the date of this press release to
conform these statements to actual results or revised
expectations.
About C3.ai, Inc.
C3.ai, Inc. (NYSE:AI) is the leading provider of enterprise AI
software for accelerating digital transformation. C3 AI delivers a
family of fully integrated products: C3 AI® Suite, an end-to-end
platform for developing, deploying, and operating large-scale AI
applications; C3 AI Applications, a portfolio of industry-specific
SaaS AI applications; C3 AI CRM, a suite of industry-specific CRM
applications designed for AI and machine learning; and C3 AI Ex
Machina, a no-code AI solution to apply data science to everyday
business problems. The core of the C3 AI offering is an open,
model-driven AI architecture that dramatically simplifies data
science and application development. Learn more at: www.c3.ai.
C3.AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except per
share data)
(Unaudited)
Three Months Ended October
31,
Six Months Ended October
31,
2021
2020
2021
2020
Revenue
Subscription(1)
$
47,408
$
35,854
$
93,530
$
71,549
Professional services(2)
10,855
5,487
17,139
10,275
Total revenue
58,263
41,341
110,669
81,824
Cost of revenue
Subscription(3)
11,392
7,084
20,605
15,671
Professional services
4,579
2,997
8,391
4,909
Total cost of revenue
15,971
10,081
28,996
20,580
Gross profit
42,292
31,260
81,673
61,244
Operating expenses
Sales and marketing(4)
46,166
22,088
82,988
36,446
Research and development
36,523
16,134
63,235
29,398
General and administrative
15,279
7,562
27,643
13,249
Total operating expenses
97,968
45,784
173,866
79,093
Loss from operations
(55,676
)
(14,524
)
(92,193
)
(17,849
)
Interest income
322
288
667
868
Other (expense) income, net
(1,372
)
(578
)
(2,271
)
2,440
Net loss before provision for income
taxes
(56,726
)
(14,814
)
(93,797
)
(14,541
)
Provision for income taxes
13
130
401
253
Net loss
$
(56,739
)
$
(14,944
)
$
(94,198
)
$
(14,794
)
Net loss per share attributable to Class A
common shareholders, basic and diluted
$
(0.55
)
$
(0.39
)
$
(0.91
)
$
(0.39
)
Net loss per share attributable to Class
A-1 common shareholders, basic and diluted
$
—
$
(0.39
)
$
—
$
(0.39
)
Net loss per share attributable to Class B
common shareholders, basic and diluted
$
(0.55
)
$
0.00
$
(0.91
)
$
0.00
Weighted-average shares used in computing
net loss per share attributable to Class A common stockholders,
basic and diluted
100,246
31,387
99,558
31,006
Weighted-average shares used in computing
net loss per share attributable to Class A-1 common stockholders,
basic and diluted
—
6,667
—
6,667
Weighted-average shares used in computing
net loss per share attributable to Class B common stockholders,
basic and diluted
3,500
—
3,500
—
(1)
Including related party revenue of $10,012
and $6,810 for the three months ended October 31, 2021 and 2020,
respectively, and $20,220 and $13,620 for the six months ended
October 31, 2021 and 2020, respectively.
(2)
Including related party revenue of $5,924
and nil for the three months ended October 31, 2021 and 2020,
respectively, and $7,998 and nil for the six months ended October
31, 2021 and 2020, respectively.
(3)
Including related party cost of revenue of
$80 and nil for the three months ended October 31, 2021 and 2020,
respectively, and $197 and nil for the six months ended October 31,
2021 and 2020, respectively.
(4)
Including related party sales and
marketing expense of $131 and nil for the three months ended
October 31, 2021 and 2020, respectively, and $192 and nil for the
six months ended October 31, 2021 and 2020, respectively.
C3.AI, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except for
share and per share data)
(Unaudited)
October 31, 2021
April 30, 2021
Assets
Current assets
Cash and cash equivalents
$
167,436
$
115,355
Short-term investments
802,986
978,020
Accounts receivable, net of allowance of
$57 and $812 as of October 31, 2021 and April 30, 2021,
respectively(1)
27,168
65,460
Prepaid expenses and other current
assets(2)
18,536
14,302
Total current assets
1,016,126
1,173,137
Property and equipment, net
5,239
6,133
Goodwill
625
625
Long-term investments
101,719
—
Other assets, non-current(3)
41,161
16,582
Total assets
$
1,164,870
$
1,196,477
Liabilities and stockholders’
equity
Current liabilities
Accounts payable(4)
$
10,129
$
12,075
Accrued compensation and employee
benefits
16,478
21,829
Deferred revenue, current(5)
71,901
72,263
Accrued and other current
liabilities(6)
33,675
18,318
Total current liabilities
132,183
124,485
Deferred revenue, non-current
980
2,964
Other long-term liabilities(7)
5,197
7,853
Total liabilities
138,360
135,302
Commitments and contingencies
Stockholders’ equity
Class A common stock, $0.001 par value.
1,000,000,000 shares authorized as of October 31, 2021 and April
30, 2021; 101,370,907 and 98,667,121 shares issued and outstanding
as of October 31, 2021 and April 30, 2021, respectively
102
99
Class B common stock, $0.001 par value;
3,500,000 shares authorized as of October 31, 2021 and April 30,
2021; 3,499,992 and 3,499,992 shares issued and outstanding as of
October 31, 2021 and April 30, 2021, respectively
3
3
Additional paid-in capital
1,470,176
1,410,325
Accumulated other comprehensive (loss)
income
(240
)
81
Accumulated deficit
(443,531
)
(349,333
)
Total stockholders’ equity
1,026,510
1,061,175
Total liabilities and stockholders’
equity
$
1,164,870
$
1,196,477
(1)
Including amounts from a related party of
$9,384 and $15,180 as of October 31, 2021 and April 30, 2021,
respectively.
(2)
Including amounts from a related party of
$5,015 and $1,662 as of October 31, 2021 and April 30, 2021,
respectively.
(3)
Including amounts from a related party of
$18,572 and $6,602 as of October 31, 2021 and April 30, 2021,
respectively.
(4)
Including amounts from a related party of
$84 and $56 as of October 31, 2021 and April 30, 2021,
respectively.
(5)
Including amounts from a related party of
$17,516 and $7,697 as of October 31, 2021 and April 30, 2021,
respectively.
(6)
Including amounts from a related party of
$18,458 and $3,413 as of October 31, 2021 and April 30, 2021,
respectively.
(7)
Including amounts from a related party of
$2,448 and $4,895 as of October 31, 2021 and April 30, 2021,
respectively.
C3.AI, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended October
31,
2021
2020
Cash flows from operating
activities:
Net loss
$
(94,198
)
$
(14,794
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities
Depreciation and amortization
2,364
2,098
Non-cash operating lease cost
1,100
1,650
Stock-based compensation expense
46,452
7,681
Other
(538
)
(75
)
Changes in operating assets and
liabilities
Accounts receivable(1)
39,047
(2,380
)
Prepaid expenses, other current assets and
other assets(2)
(15,074
)
(48
)
Accounts payable(3)
(1,682
)
3,159
Accrued compensation and employee
benefits
(5,351
)
(716
)
Operating lease liabilities
(1,214
)
(1,745
)
Other liabilities(4)
13,564
2,345
Deferred revenue(5)
(2,346
)
21,661
Net cash (used in) provided by operating
activities
(17,876
)
18,836
Cash flows from investing
activities:
Purchases of property and equipment
(1,429
)
(919
)
Capitalized software development costs
(500
)
—
Purchases of investments
(388,870
)
(128,330
)
Maturities and sales of investments
461,648
164,098
Net cash provided by investing
activities
70,849
34,849
Cash flows from financing
activities:
Proceeds from repayment of shareholder
loan
—
26,003
Payment of deferred offering costs
(105
)
(2,325
)
Proceeds from exercise of Class A common
stock options
11,305
4,536
Net cash provided by financing
activities
11,200
28,214
Net increase in cash, cash equivalents and
restricted cash
64,173
81,899
Cash, cash equivalents and restricted cash
at beginning of period
116,255
33,604
Cash, cash equivalents and restricted cash
at end of period
$
180,428
$
115,503
Cash and cash equivalents
$
167,436
$
114,603
Restricted cash included in other
assets
12,992
900
Total cash, cash equivalents and
restricted cash
$
180,428
$
115,503
Supplemental disclosure of cash flow
information—cash paid for income taxes
$
625
$
323
Supplemental disclosures of non-cash
investing and financing activities:
Purchases of property and equipment
included in accounts payable and accrued liabilities
$
52
$
146
Unpaid liabilities related to intangible
purchases
$
2,500
$
—
Deferred offering costs included in
accounts payable and accrued liabilities
$
—
$
2,994
Vesting of early exercised stock
options
$
1,908
$
1,325
(1)
Including changes in related party
balances of $(5,796) and $(150) for the six months ended October
31, 2021 and 2020, respectively.
(2)
Including changes in related party
balances of $15,323 and nil for the six months ended October 31,
2021 and 2020, respectively.
(3)
Including changes in related party
balances of $28 and nil for the six months ended October 31, 2021
and 2020, respectively.
(4)
Including changes in related party
balances of $12,598 and nil for the six months ended October 31,
2021 and 2020, respectively.
(5)
Including changes in related party
balances of $9,819 and $14,780 for the six ended October 31, 2021
and 2020, respectively.
C3.AI, INC.
RECONCILIATION OF GAAP TO
NON-GAAP FINANCIAL MEASURES
(In thousands, except
percentages)
(Unaudited)
Three Months Ended October
31,
Six Months Ended October
31,
2021
2020
2021
2020
Reconciliation of GAAP gross profit to
non-GAAP gross profit:
Gross profit on a GAAP basis
$
42,292
$
31,260
$
81,673
$
61,244
Stock-based compensation expense (1)
3,049
248
4,472
480
Employer payroll tax expense related to
employee stock-based compensation (2)
—
—
65
—
Gross profit on a non-GAAP basis
$
45,341
$
31,508
$
86,210
$
61,724
Gross margin on a GAAP basis
73
%
76
%
74
%
75
%
Gross margin on a non-GAAP basis
78
%
76
%
78
%
75
%
Reconciliation of GAAP loss from
operations to non-GAAP loss from operations:
Loss from operations on a GAAP basis
$
(55,676
)
$
(14,524
)
$
(92,193
)
$
(17,849
)
Stock-based compensation expense (1)
32,540
5,201
46,452
7,681
Employer payroll tax expense related to
employee stock-based compensation (2)
583
—
1,438
—
Loss from operations on a non-GAAP
basis
$
(22,553
)
$
(9,323
)
$
(44,303
)
$
(10,168
)
Reconciliation of GAAP net loss per
share to non-GAAP net loss per share:
Net loss on a GAAP basis
$
(56,739
)
$
(14,944
)
$
(94,198
)
$
(14,794
)
Stock-based compensation expense (1)
32,540
5,201
46,452
7,681
Employer payroll tax expense related to
employee stock-based compensation (2)
583
—
1,438
—
Net loss on a non-GAAP basis
$
(23,616
)
$
(9,743
)
$
(46,308
)
$
(7,113
)
GAAP net loss per share attributable
common shareholders, basic and diluted
$
(0.55
)
$
(0.39
)
$
(0.91
)
$
(0.39
)
Non-GAAP net loss per share attributable
common shareholders, basic and diluted
$
(0.23
)
$
(0.26
)
$
(0.45
)
$
(0.19
)
Weighted-average shares used in computing
net loss per share attributable to common stockholders, basic and
diluted
103,746
38,054
103,058
37,673
(1)
Stock-based compensation expense for gross
profits and gross margin includes costs of subscription and cost of
professional services as follows. Stock-based compensation expense
for loss from operations includes total stock-based compensation
expense as follows:
Three Months Ended October
31,
Six Months Ended October
31,
2021
2020
2021
2020
Cost of subscription
$
2,364
$
159
$
3,185
$
343
Cost of professional services
685
89
1,287
137
Sales and marketing
13,555
2,190
19,690
3,045
Research and development
10,256
648
13,014
1,106
General and administrative
5,680
2,115
9,276
3,050
Total stock-based compensation expense
$
32,540
$
5,201
$
46,452
$
7,681
(2)
Employer payroll tax expense related to
employee stock-based compensation were immaterial and as such were
excluded in periods prior to January 31, 2021. Employer payroll tax
expense to employee stock-based compensation for gross profits,
gross margin and loss from operations includes employer payroll tax
expense to employee stock-based compensation as follows:
Three Months Ended October
31,
Six Months Ended October
31,
2021
2020
2021
2020
Cost of subscription
$
—
$
—
$
—
$
—
Cost of professional services
—
—
65
—
Sales and marketing
215
—
516
—
Research and development
217
—
399
—
General and administrative
151
—
458
—
Total employer payroll tax expense
$
583
$
—
$
1,438
$
—
Reconciliation of remaining performance obligations (“RPO”)
to Non-GAAP RPO:
The following table presents a reconciliation of RPO to Non-GAAP
RPO:
As of October 31,
2021
2020
RPO
$
465,526
$
267,352
Cancellable amount of contract value
63,766
37,119
Non-GAAP RPO
$
529,292
$
304,471
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211201006144/en/
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