C3.ai's (NYSE:AI) Q3 Sales Beat Estimates, Stock Jumps 12.9%

Max Juang /
2024/02/28 4:14 pm EST

Artificial intelligence (AI) software company C3.ai (NYSE:AI) beat analysts' expectations in Q3 FY2024, with revenue up 17.6% year on year to $78.4 million. The company expects next quarter's revenue to be around $84 million, in line with analysts' estimates. It made a non-GAAP loss of $0.13 per share, down from its loss of $0.04 per share in the same quarter last year.

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C3.ai (AI) Q3 FY2024 Highlights:

  • Revenue: $78.4 million vs analyst estimates of $76.14 million (3% beat)
  • EPS (non-GAAP): -$0.13 vs analyst estimates of -$0.28
  • Revenue Guidance for Q4 2024 is $84 million at the midpoint, roughly in line with what analysts were expecting
  • Free Cash Flow was -$45.14 million compared to -$55.13 million in the previous quarter
  • Gross Margin (GAAP): 57.8%, down from 66.6% in the same quarter last year
  • Market Capitalization: $3.61 billion

“We had a great quarter. Total revenue of $78.4 million grew 18% year-over-year, exceeding our guidance range. Customer engagement grew 80% year-over-year,” said C3 AI CEO and Chairman Thomas M. Siebel.

Founded in 2009 by enterprise software veteran Tom Seibel, C3.ai (NYSE:AI) provides software that makes it easy for organizations to add artificial intelligence technology to their applications.

Data Infrastructure

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Sales Growth

As you can see below, C3.ai's revenue growth has been unremarkable over the last two years, growing from $69.77 million in Q3 FY2022 to $78.4 million this quarter.

C3.ai Total Revenue

This quarter, C3.ai's quarterly revenue was once again up 17.6% year on year. We can see that C3.ai's revenue increased by $5.17 million quarter on quarter, which is a solid improvement from the $867,000 increase in Q2 2024. Shareholders should applaud the re-acceleration of growth.

Next quarter's guidance suggests that C3.ai is expecting revenue to grow 16% year on year to $84 million, improving on the 0.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 17.7% over the next 12 months before the earnings results announcement.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. C3.ai burned through $45.14 million of cash in Q3 , increasing its cash burn by 37% year on year.

C3.ai Free Cash Flow

C3.ai has burned through $92.87 million of cash over the last 12 months, resulting in a negative 31.3% free cash flow margin. This low FCF margin stems from C3.ai's constant need to reinvest in its business to stay competitive.

Key Takeaways from C3.ai's Q3 Results

It was great to see C3.ai improve its gross margin this quarter. We were also glad its revenue outperformed Wall Street's estimates. On the other hand, cash burn remains high. Overall, this quarter's results seemed fairly positive. The stock is up 12.9% after reporting and currently trades at $33.52 per share.

So should you invest in C3.ai right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.