C3.ai Reports Earnings: Non-GAAP EPS and Revenue Exceed Expectations
Feb 26, 2025
C3.ai Reports Impressive 26% Revenue Growth in Q3 FY2025
C3.ai delivered a strong earnings performance in Q3 FY2025, exceeding revenue expectations and showcasing notable growth in strategic partnerships.
C3.ai (AI 0.42%) is a prominent enterprise artificial intelligence (AI) company that announced impressive results in its fiscal third quarter of 2025, which was released on February 26, 2025. The company reported revenues of $98.8 million, representing a significant 26% increase from the same period last year and surpassing analyst predictions of $98 million. Its non-GAAP earnings per share (EPS) improved to $(0.12), a better outcome than the anticipated $(0.25). While the company continues to face losses, this quarter indicates meaningful progress in its strategic initiatives.
| Metric | Q3 FY2025 | Q3 FY2025 Estimate | Q3 FY2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $(0.12) | $(0.25) | $(0.13) | +7.7% |
| Revenue | $98.8M | $98M | $78.4M | +26.0% |
| Gross Profit (Non-GAAP) | $68.2M | — | $54.7M | +24.7% |
| Subscription Revenue | $85.7M | — | $70.4M | +22.0% |
Source: Analyst estimates provided by FactSet. Management expectations are derived from guidance given in the 2024-12-09 earnings report.
Overview of C3.ai and Its Operations
C3.ai is recognized as a pioneer in the enterprise AI sector, known for its innovative model-driven architecture and comprehensive AI solutions. This unique architecture enables swift development and deployment of AI applications. The company's recent shift towards generative AI solutions alongside strategic partnerships has been crucial for its growth trajectory. Generative AI is a rapidly evolving field attracting considerable industry interest. A key factor contributing to C3.ai's success is its strengthening partnerships with technology leaders such as Microsoft Azure and Amazon's AWS, which expand its market reach and distribution capabilities.
Quarterly Achievements and Strategic Advancements
Several notable developments occurred during the quarter. The most pronounced achievement was the 26% year-over-year revenue growth, totaling $98.8 million. This was driven by an impressive 22% increase in subscription revenue, peaking at $85.7 million. The strong performance surpassed both market expectations and management's forecasts, underscoring the effective execution of strategic objectives. However, operating expenses remained elevated, particularly in sales and marketing, which amounted to $61.2 million, impacting overall profitability. Despite this, the non-GAAP loss from operations was narrower than anticipated, reported at $(23.1 million).
Noteworthy during the quarter was the expansion of strategic partnerships. Particularly, the partnership with Microsoft saw a remarkable 460% increase in collaborative agreements across various sectors. The joint sales initiative with Microsoft targeted over 600 global accounts, highlighting the strength of this collaboration. Additional partnerships with AWS and McKinsey & Company QuantumBlack enhanced C3.ai’s distribution capabilities and product deployment strategies.
Furthermore, the adoption of generative AI solutions grew substantially with 20 new pilot programs initiated during the quarter. Significant collaborations with the U.S. Department of Defense and Liberty Coca-Cola Beverages showcase the scalability and industry demand for C3.ai's generative AI capabilities, which are pivotal for its continued growth and competitive positioning.
Despite these notable advancements, the company continues to grapple with profitability issues, reporting a GAAP operating loss of $(87.6 million) with research and development costs reaching $59.4 million.
Future Outlook
As C3.ai looks to the future, it anticipates continued revenue growth, projecting fourth-quarter guidance to range between $103.6 million and $113.6 million. This reflects confidence in its ongoing strategic initiatives. The full-year fiscal 2025 revenue guidance remains optimistic, expecting to reach between $383.9 million and $393.9 million.
For investors, C3.ai's commitment to expanding its strategic partnerships and enhancing AI innovation seems promising. Although the journey towards profitability necessitates careful expense management, the company's strategic direction and collaborations, particularly with tech giants such as Microsoft, suggest significant growth potential in the upcoming quarters.
C3.ai, Earnings, Revenue, Growth, Partnerships