C3.ai (AI) stock is tumbling in Thursday's session after the artificial intelligence (AI) application software company beat top- and bottom-line estimates for its fiscal first quarter but came up short of expectations on one key metric.
In the three months ended July 31, C3.ai's revenue increased 20.5% year-over-year to $87.2 million, thanks in part to a 20% surge in subscription revenue growth to $73.5 million. Its net loss per share improved to 5 cents from 9 cents in the year-ago period.
"We had a solid start to the fiscal year, with rising demand for enterprise AI driving our sixth consecutive quarter of accelerating revenue growth," said C3.ai CEO Thomas Siebel in a statement. "C3.ai is the original enterprise AI company. Our unwavering commitment to solving the most challenging problems in the enterprise has led us to what we believe are the highest levels of customer satisfaction in the industry."
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The headline results beat analysts' expectations. Wall Street was anticipating revenue of $86.9 million and a net loss of 13 cents per share, according to Barron's. However, subscription revenue came in well below expectations of $79.2 million.
For the second quarter of fiscal 2025, C3 AI said it anticipates revenue to arrive between $88.6 million to $93.6 million. The midpoint of this range, $91.1 million, matches what analysts are guiding for. The company added that it continues to expect revenue of $370 million to $395 million for the full fiscal year.
Is C3.ai stock a buy, sell or hold?
C3.ai had a strong start to 2024, and was up nearly 30% for the year to date in late February. However, shares quickly turned tail and are now down roughly 30% since December 31. Unsurprisingly, Wall Street is on the sidelines when it comes to the AI stock.
According to S&P Global Market Intelligence, the average analyst target price for AI stock is $25.40, representing implied upside roughly 20% to current levels. Meanwhile, the consensus recommendation is Hold.
Financial services firm Needham is one of those with a Hold rating on the tech stock.
"We assigned a Hold rating to C3.ai's shares following the company's announcement it would shift from a subscription model to a consumption model," says Needham analyst Mike Cikos. "Historically, these transitions have been difficult to navigate from an execution standpoint. Revenue is depressed near-term as new customers are onboarded and [it] typically take three to four quarters to ramp consumption levels. Meanwhile, profitability suffers as the operating expenses base builds customer success initiatives."
Related Content
-
Stocks Struggle Ahead of November Jobs Report: Stock Market TodayOracle and Broadcom continued to fall, while market participants looked ahead to Tuesday's jobs report.
-
7 Dr. Seuss Quotes Retirees Should Live ByYou're off to great places! Why Dr. Seuss is the retirement guru you didn't know you needed.
-
Fed's Rate Cuts Could Have Impacts You Might Not AnticipateUnderstanding how lower interest rates could impact your wallet can help you determine the right financial moves to make.
-
Stocks Struggle Ahead of November Jobs Report: Stock Market Today
Oracle and Broadcom continued to fall, while market participants looked ahead to Tuesday's jobs report.
-
Past Performance Is Not Indicative of Your Financial Adviser's ExpertiseMany people find a financial adviser by searching online or asking for referrals from friends or family. This can actually end up costing you big-time.
-
I'm a Financial Planner: If You're Not Doing Roth Conversions, You Need to Read ThisRoth conversions and other Roth strategies can be complex, but don't dismiss these tax planning tools outright. They could really work for you and your heirs.
-
Could Traditional Retirement Expectations Be Killing Us? A Retirement Psychologist Makes the CaseA retirement psychologist makes the case: A fulfilling retirement begins with a blueprint for living, rather than simply the accumulation of a large nest egg.
-
I'm a Financial Adviser: This Is How You Can Adapt to Social Security UncertaintyRather than letting the unknowns make you anxious, focus on building a flexible income strategy that can adapt to possible future Social Security changes.
-
I'm a Financial Planner for Millionaires: Here's How to Give Your Kids Cash Gifts Without Triggering IRS PaperworkMost people can gift large sums without paying tax or filing a return, especially by structuring gifts across two tax years or splitting gifts with a spouse.
-
'Boomer Candy' Investments Might Seem Sweet, But They Can Have a Sour AftertasteProducts such as index annuities, structured notes and buffered ETFs might seem appealing, but sometimes they can rob you of flexibility and trap your capital.
-
AI Stocks Lead Nasdaq's 398-Point Nosedive: Stock Market TodayThe major stock market indexes do not yet reflect the bullish tendencies of sector rotation and broadening participation.
