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."
Sign up for Kiplinger’s Free E-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
-
Nvidia Earnings: Live Updates and Commentary August 2025Nvidia's earnings event is just days away, and market participants are zeroed in on the AI bellwether's quarterly results.
-
Ten Cheapest Places to Live in TennesseeProperty Tax Moving to Tennessee might be within your reach. Homeowners in these counties pay some of the lowest property tax bills in the state.
-
Nvidia Earnings: Live Updates and Commentary August 2025
Nvidia's earnings event is just days away, and market participants are zeroed in on the AI bellwether's quarterly results.
-
Should You Claim Social Security Early or Late? A Financial Adviser Weighs InThere isn't a wrong age to start claiming Social Security, but there are factors that everyone should consider to avoid leaving money on the table.
-
Three Things Financially Confident People Do, From a Pro Who KnowsIf you have any worries about your retirement future, take back control with these three tips.
-
How Much Do I Need to Retire? A Financial Professional Breaks Down Your OptionsWhat it all boils down to is will you be comfortable in retirement? Some people may rely on formulas, while others just aim for $1 million nest egg.
-
Despite Our Grumbles, America Still Delivers on the Dream: Perspective From a Financial Pro Who's Seen StuffSome of us might complain about the state of our nation (and those concerns are legit), but America still offers unparalleled opportunities and mobility that many people around the world only dream about.
-
Dow Rips 846 Points to New All-Time High: Stock Market TodayFed Chair Jerome Powell seems ready to cut interest rates in the fall but will still rely on incoming economic data about inflation and employment.
-
Bonds Pay in Good and Bad TimesBonds can act as a financial safety net through good times and bad. But different bonds carry different returns and risks, so do your homework before investing.
-
When You Need Capital Quickly, Think 'Ready, Set, Fund': A Financial Adviser's StrategyInvestors must be able to free up cash to meet short-term needs from time to time. This strategy will help you access capital without derailing your long-term goals.
