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C3.ai (AI) Q3 Loss Narrows Year Over Year, Revenues Rise

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Zacks Equity Research
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C3.ai, Inc. AI reported third-quarter fiscal 2021 adjusted loss of 23 cents per share, which was narrower than adjusted loss of 27 cents per share reported in the year-ago quarter. The Zacks Consensus Estimate for loss was pegged at 16 cents per share.

Revenues of $49.1 million beat the consensus mark by 2.3% and increased 19% year over year driven by rapid adoption of its model-driven AI architecture and services.

Markedly, on Dec 11, 2020, C3.ai completed its initial public offering. Hence, the fiscal third-quarter results is its first quarterly earnings report since becoming a publicly traded company.

C3.ai, Inc. Price, Consensus and EPS Surprise

C3.ai, Inc. Price, Consensus and EPS Surprise
C3.ai, Inc. Price, Consensus and EPS Surprise

C3.ai, Inc. price-consensus-eps-surprise-chart | C3.ai, Inc. Quote

Quarter Details

C3.ai’s subscription revenues (86.9% of revenues) increased 23.3% year over year to $42.7 million. Professional service revenues (13.1% of revenues) decreased 3.7% year over year to $6.4 million.

The company demonstrated continued product leadership in enterprise AI. In the fiscal third quarter, C3.ai released C3 AI v7.17, offering significant functional enhancements, performance improvements, and a new Integrated Development Suite (IDS) to accelerate AI application development.

Moreover, in partnership with Microsoft MSFT and Adobe ADBE, C3.ai announced the availability of C3 AI CRM, a family of industry-specific AI-enabled CRM applications. In addition, the company released C3 AI Ex Machina, a mass-market, cloud-native, low-code/no-code application that enables the democratization of data science.

In the reported quarter, non-GAAP gross margin expanded 100 basis points (bps) on a year-over-year basis to 75.9%.

Research and development (R&D), sales and marketing (S&M) and general and administrative (G&A) expenses increased 52%, 22.8% and 54.7% on a year-over-year basis to $18.7 million, $28.5 million and $8.2 million, respectively. Moreover, as a percentage of revenues, R&D, S&M and G&A expenses expanded 830 bps, 180 bps and 380 bps, respectively.

C3.ai expanded its investments and market penetration in the reported quarter. In partnership with Shell, Microsoft, and Baker Hughes, the company formed the Open Energy AI Initiative, an open marketplace for C3 AI energy applications.

Moreover, C3.ai increased its investment in the C3.ai Digital Transformation Institute (DTI), funding seminal AI COVID research and issuing a new call for papers to fund innovative research in applying AI and digital transformation to energy and climate security.

For the third quarter of fiscal 2021, the company reported non-GAAP loss from operations of $11.9 million compared with non-GAAP loss from operations of $8.4 million reported in the year-ago quarter.

Balance Sheet & Cash Flow

As of Jan 31, 2021, C3.ai had total cash, cash equivalents, and short-term investments of $1.12 billion.

Operating cash outflow was $5.8 million as of nine-months ended Jan 31, 2021.

Guidance

For fourth-quarter fiscal 2021, C3.ai expects revenues between $50 million and $51 million. Non-GAAP loss from operations is expected between $27 million and $28 million

For full-year fiscal 2021, C3.ai expects revenues between $180.9 million and $181.9 million. Non-GAAP loss from operations are expected between $49.1 million and $50.1 million.

Zacks Rank & Stocks to Consider

C3.ai currently carries a Zacks Rank #3 (Hold).

Marvell Technology Group Ltd. MRVL is a better-ranked stock in the broader technology sector, currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Marvell Technology Group is scheduled to report quarterly earnings on Mar 3.

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