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    C3 AI Announces Fiscal Second Quarter 2025 Financial Results

    12/9/24 4:05:00 PM ET
    $AI
    Computer Software: Prepackaged Software
    Technology
    Get the next $AI alert in real time by email

    Revenue Accelerated 29% Year-Over-Year and Guidance Raised for FY 2025

    C3 AI and Microsoft Strategic Alliance to Accelerate Enterprise AI Adoption

    C3.ai, Inc. ("C3 AI," "C3," or the "Company") (NYSE:AI), the Enterprise AI application software company, today announced financial results for its fiscal second quarter ended October 31, 2024.

    "We had an outstanding quarter with strong top- and bottom-line performance to mark our seventh consecutive quarter of accelerating revenue growth," said Thomas M. Siebel, Chairman and CEO, C3 AI.

    "It is difficult to overstate the potential of the Microsoft–C3 AI strategic alliance," said Siebel. "By establishing C3 AI as a preferred AI application provider on Azure and creating a Microsoft-scale go-to-market engine, we're making it easy for businesses to adopt and deploy C3 AI applications. This is an inflection point for Enterprise AI, driving growth."

    Fiscal Second Quarter 2025 Financial Highlights

    • Revenue: Total revenue for the quarter was $94.3 million, an increase of 29% compared to $73.2 million one year ago.
    • Subscription Revenue: Subscription revenue for the quarter was $81.2 million, constituting 86% of total revenue, an increase of 22% compared to $66.4 million one year ago.
    • Subscription and Prioritized Engineering Services Revenue Combined: Subscription and prioritized engineering services revenue combined was $90.8 million, constituting 96% of total revenue, an increase of 27% compared to $71.3 million one year ago.
    • Gross Profit: GAAP gross profit for the quarter was $57.8 million, representing a 61% gross margin. Non-GAAP gross profit for the quarter was $66.3 million, representing a 70% non-GAAP gross margin.
    • Net Loss per Share: GAAP net loss per share was $(0.52). Non-GAAP net loss per share was $(0.06).
    • Cash Balance: $730.4 million in cash, cash equivalents, and marketable securities.

    Microsoft Azure Strategic Alliance

    • The Company signed a new global alliance agreement with Microsoft on September 30 for an initial five-and-a-half-year term ending March 2030 to accelerate growth in Enterprise AI.



      Under the terms of the Microsoft–C3 AI strategic alliance agreement:

      • All C3 AI Enterprise AI and C3 Generative AI solutions are now available on the Azure Price List.
      • All C3 AI Enterprise AI and generative AI software solutions are now orderable on the Azure Marketplace.
      • All C3 AI solutions are all sellable by the entire Azure sales organization globally.
      • Azure sales personnel will receive commissions, quota credit, and special bonuses on Azure–C3 AI sales.
      • Azure sales personnel will receive design win credit for each Azure–C3 AI sale.
      • All C3 AI products are orderable on Microsoft paper incorporating the Microsoft enterprise licensing agreement that Microsoft has in place with 95% of the Fortune 500, dramatically shortening C3 AI sales cycles.
      • Microsoft will subsidize C3 AI pilots and C3 AI production deployments over the term of the agreement.

    Partner Network

    C3 AI reinforced its leadership in Enterprise AI, strengthened by a thriving partner ecosystem to accelerate Enterprise AI adoption.

    • In Q2, the Company closed 62% of total agreements with and through its partner network.
    • C3 AI and Capgemini extended their partnership to advance Enterprise AI for business transformation. Capgemini will establish a dedicated global C3 AI practice to deliver scalable, rapid Enterprise AI solutions for joint clients across industries.
    • Google Cloud and C3 AI jointly closed 20 agreements, an increase of more than 180% year-over-year. C3 AI was featured in Google's Public Sector Summit held in Washington, DC. Both companies also co-hosted six executive roundtable discussions focused on various industries across North America and LATAM.

    Business Highlights

    C3 AI had continuing momentum with significant Federal and commercial successes and strengthened strategic partnerships.

    • The Company closed 58 agreements including 36 pilots.
    • The Company entered into new and expanded agreements with ExxonMobil, Koch, Dow, Holcim, Shell, Duke Energy, Boston Scientific, Rolls-Royce, Cameco, Mars, ESAB, Flex, Worley, the Defense Logistics Agency, and the U.S. Department of Defense, among others.
    • The Company expanded its footprint across State and Local Governments, closing nine agreements across California, Texas, Michigan, Idaho, New Mexico, Washington, and Florida.

    Federal Momentum

    Federal business demonstrated strong execution, securing key wins and expansions across multiple agencies.

    • The Company entered into new and expansion agreements with the U.S. Department of Defense (DoD), the U.S. Air Force, the U.S. Navy, the U.S. Army, the U.S. Marine Corps, the Defense Logistics Agency, the Chief Digital Artificial Intelligence Office (CDAO), and the National Science Foundation.
    • The U.S. Army's Program Manager for Intelligence Systems & Analytics has selected C3 AI and ECS to transform its intelligence collection management with C3 AI Decision Advantage, to be delivered under a $23 million award. This AI application unifies data from multiple systems to streamline tasking and collection, including digitizing scheduling workflows. These modernization efforts make it easier for the Army workforce to quickly provide real-time, predictive intelligence to leaders for enhanced, accelerated decision making.
    • The U.S. Air Force Rapid Sustainment Office (RSO) continued the expansion of sensor-based algorithms with C3 AI with a new contract. The PANDA application, which is the designated U.S. Air Force (USAF) System of Record for all CBM+ and Predictive Maintenance, will expand to include new systems on two monitored aircraft (KC-46 and KC-135).
    • The Defense Logistics Agency, a cornerstone of the U.S. Department of Defense's supply chain, expanded its use of the C3 AI Contested Logistics application to drive efficiency and productivity across its workforce, ensuring supply network resilience and availability in contested environments. DLA uses C3 AI Contested Logistics to streamline workflows and decision making for risk management, sustainment, scenario-based planning, proactive readiness, and predictive maintenance across the DoD. Together, C3 AI continues to support DLA to enhance warfighter readiness, drive operational efficiency, and improve mission effectiveness across the globe.

    C3 Generative AI

    C3 AI further strengthens its competitive edge in generative AI, affirming its market leadership.

    • In Q2, the Company closed 15 C3 Generative AI pilots with Boston Scientific, Rolls-Royce, the U.S. Navy, the National Science Foundation, and others, including various government agencies in Texas, Washington, and New Mexico.
    • The Company converted multiple C3 Generative AI pilots to production, including Dow, Flint Hills Resources, Cargill, Norfolk Iron & Metal, and Florida Crystals, among others.
    • C3 AI launched the C3 Generative AI Accelerator Program, a three-day workshop designed to help organizations implement generative AI solutions quickly and effectively.



      "Our recent partnership with C3 AI has been a significant boost to our Data Analytics team. Throughout our engagement with C3 AI, our team members have been able to get hands-on experience through generative AI trainings provided by C3 AI," said Ben Dubois, Director of Data Analytics, Norfolk Iron & Metal. "Additionally, we participated in their first C3 Generative AI Accelerator Program, where our team had the opportunity to develop a generative AI prototype application in just three days. We look forward to continuing to build on everything that was accomplished in our first pilot project."

    • C3 AI was awarded a foundational U.S. patent (US 12,111,859) for generative AI agents. Key patented technologies include:
      • AI Orchestrator: The C3 AI orchestrator coordinates multiple AI agents, invokes specialized machine-learning models or mathematical tools as necessary and handles all data types and tasks.
      • Autonomy: Meaning the AI agents can operate independently to perform tasks across various business functions like sales, service, marketing, and commerce. AI agents can be fully customized to fit the specific needs of any industry or business process, using tools that are already familiar to programmers and data scientists.
      • Multimodal Model Integration: The system integrates advanced multimodal models to break down inputs into a series of instructions for a multiplicity of AI agents.
      • Natural Language Summarization: The technology generates comprehensive summaries from varied data sources, significantly improving decision making.
      • Traceability and Security: C3 Generative AI agents provide full traceability to both structured and unstructured data sources, enforces comprehensive enterprise access controls, high data security, minimal hallucinations, and are LLM agnostic.

    Financial Outlook:

    The Company's guidance includes GAAP and non-GAAP financial measures.

    The following table summarizes C3 AI's guidance for the third quarter of fiscal 2025 and full-year fiscal 2025:

    (in millions)

    Third Quarter Fiscal 2025

    Guidance

     

    Full Year Fiscal 2025

    Guidance

    Total revenue

    $95.5 - $100.5

     

    $378.0 - $398.0

    Non-GAAP loss from operations

    $(38.6) - $(46.6)

     

    $(105.0) - $(135.0)

    A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. Stock-based compensation expense-related charges, including employer payroll tax-related items on employee stock transactions, are impacted by the timing of employee stock transactions, the future fair market value of our common stock, and our future hiring and retention needs, all of which are difficult to predict and subject to constant change. We have provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for our historical non-GAAP results included in this press release. Our fiscal year ends April 30, and numbers are rounded for presentation purposes.

    Conference Call Details

    What:

    C3 AI Second Quarter Fiscal 2025 Financial Results Conference Call

    When:

    Monday, December 9, 2024

    Time:

    2:00 p.m. PT / 5:00 p.m. ET

    Participant Registration:

    https://register.vevent.com/register/BI383ae1e1c80b4221a65de6c2c2baf582 (live)

    Webcast:

    https://edge.media-server.com/mmc/p/xf8dudjw (live and replay)

    Investor Presentation Details

    An investor presentation providing additional information and analysis can be found at our investor relations page at ir.c3.ai.

    Statement Regarding Use of Non-GAAP Financial Measures

    The Company reports the following non-GAAP financial measures, which have not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), in addition to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.

    • Non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share. Our non-GAAP gross profit, non-GAAP gross margin, non-GAAP loss from operations, and non-GAAP net loss per share exclude the effect of stock-based compensation expense-related charges and employer payroll tax expense related to employee stock-based compensation. We believe the presentation of operating results that exclude these non-cash items provides useful supplemental information to investors and facilitates the analysis of our operating results and comparison of operating results across reporting periods.
    • Free cash flow. We believe free cash flow, a non-GAAP financial measure, is useful in evaluating liquidity and provides information to management and investors about our ability to fund future operating needs and strategic initiatives. We calculate free cash flow as net cash used in operating activities less purchases of property and equipment and capitalized software development costs. This non-GAAP financial measure may be different than similarly titled measures used by other companies. Additionally, the utility of free cash flow is further limited as it does not represent the total increase or decrease in our cash balances for a given period.

    We use these non-GAAP financial measures internally for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP. Our presentation of non-GAAP financial measures may not be comparable to similar measures used by other companies. We encourage investors to carefully consider our results under GAAP, as well as our supplemental non-GAAP information and the reconciliation between these presentations, to more fully understand our business. Please see the tables included at the end of this release for the reconciliation of GAAP to non-GAAP financial measures.

    Other Information

    Professional Services Revenue

    Our professional services revenue includes service fees and prioritized engineering services. Service fees include revenue from services such as consulting, training, and paid implementation services. For service fees, revenue is typically recognized over time as the services are performed.

    Prioritized engineering services are undertaken when a customer requests that we accelerate the design, development, and delivery of software features and functions that are planned in our future product roadmap. When we agree to this, we negotiate an agreed upon fee to accelerate the development of the software. When the software feature is delivered, it becomes integrated to our core product offering, is available to all subscribers of the underlying software product, and enhances the operation of that product going forward. Such prioritized engineering services result in production-level computer software – compiled code that enhances the functionality of our production products – which is available for our customers to use over the life of their software licenses. Per Accounting Standards Codification (ASC) 606, Prioritized engineering services revenue is recognized as professional services over the period in which the software development is completed.

    Total professional services revenue consists of:

     

    Three Months Ended October 31,

     

    Six Months Ended October 31,

     

    2024

     

    2023

     

    2024

     

    2023

     

    (in thousands)

     

    (in thousands)

    Prioritized engineering services

    $

    9,661

     

    $

    4,852

     

    $

    20,310

     

    $

    13,100

    Service fees

     

    3,515

     

     

    1,928

     

     

    6,623

     

     

    4,690

    Total professional services revenue

    $

    13,176

     

    $

    6,780

     

    $

    26,933

     

    $

    17,790

    Use of Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "anticipate," "believe," "continue," "estimate," "expect," "intend," "may," "will" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Forward-looking statements in this press release include, but are not limited to, statements regarding our market leadership position, anticipated benefits from our partnerships, financial outlook, our sales and customer opportunity pipeline including our industry diversification, the expected benefits of our offerings (including the potential benefits of our C3 Generative AI offerings), and our business strategies, plans, and objectives for future operations. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks and uncertainties, including our history of losses and ability to achieve and maintain profitability in the future, our historic dependence on a limited number of existing customers that account for a substantial portion of our revenue, our ability to attract new customers and retain existing customers, market awareness and acceptance of enterprise AI solutions in general and our products in particular, the length and unpredictability of our sales cycles and the time and expense required for our sales efforts. Some of these risks are described in greater detail in our filings with the Securities and Exchange Commission, including our Quarterly Reports on Form 10-Q for the fiscal quarters ended July 31, 2024 and, when available, October 31, 2024, although new and unanticipated risks may arise. The future events and trends discussed in this press release may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, or events and circumstances reflected in the forward-looking statements will occur. Except to the extent required by law, we do not undertake to update any of these forward-looking statements after the date of this press release to conform these statements to actual results or revised expectations.

    About C3.ai, Inc.

    C3.ai, Inc. (NYSE:AI) is the Enterprise AI application software company. C3 AI delivers a family of fully integrated products including the C3 AI Platform, an end-to-end platform for developing, deploying, and operating enterprise AI applications, C3 AI applications, a portfolio of industry-specific SaaS enterprise AI applications that enable the digital transformation of organizations globally, and C3 Generative AI, a suite of domain-specific generative AI offerings for the enterprise.

    C3.AI, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (In thousands, except per share data)

    (Unaudited)

     

    Three Months Ended October

     

    Six Months Ended October 31, 2024

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

    Revenue

     

     

     

     

     

     

     

    Subscription(1)

    $

    81,162

     

     

    $

    66,449

     

     

    $

    154,618

     

     

    $

    127,801

     

    Professional services(2)

     

    13,176

     

     

     

    6,780

     

     

     

    26,933

     

     

     

    17,790

     

    Total revenue

     

    94,338

     

     

     

    73,229

     

     

     

    181,551

     

     

     

    145,591

     

    Cost of revenue

     

     

     

     

     

     

     

    Subscription

     

    35,038

     

     

     

    30,937

     

     

     

    68,330

     

     

     

    61,371

     

    Professional services

     

    1,460

     

     

     

    1,179

     

     

     

    3,215

     

     

     

    2,558

     

    Total cost of revenue

     

    36,498

     

     

     

    32,116

     

     

     

    71,545

     

     

     

    63,929

     

    Gross profit

     

    57,840

     

     

     

    41,113

     

     

     

    110,006

     

     

     

    81,662

     

    Operating expenses

     

     

     

     

     

     

     

    Sales and marketing(3)

     

    55,643

     

     

     

    49,895

     

     

     

    107,768

     

     

     

    93,780

     

    Research and development

     

    55,715

     

     

     

    50,399

     

     

     

    108,642

     

     

     

    101,267

     

    General and administrative

     

    21,770

     

     

     

    20,215

     

     

     

    41,470

     

     

     

    40,104

     

    Total operating expenses

     

    133,128

     

     

     

    120,509

     

     

     

    257,880

     

     

     

    235,151

     

    Loss from operations

     

    (75,288

    )

     

     

    (79,396

    )

     

     

    (147,874

    )

     

     

    (153,489

    )

    Interest income

     

    9,560

     

     

     

    10,480

     

     

     

    19,563

     

     

     

    20,602

     

    Other income (expense), net

     

    13

     

     

     

    (638

    )

     

     

    41

     

     

     

    (877

    )

    Loss before provision for income taxes

     

    (65,715

    )

     

     

    (69,554

    )

     

     

    (128,270

    )

     

     

    (133,764

    )

    Provision for income taxes

     

    257

     

     

     

    226

     

     

     

    529

     

     

     

    374

     

    Net loss

    $

    (65,972

    )

     

    $

    (69,780

    )

     

    $

    (128,799

    )

     

    $

    (134,138

    )

    Net loss per share attributable to Class A and Class B common stockholders, basic and diluted

    $

    (0.52

    )

     

    $

    (0.59

    )

     

    $

    (1.02

    )

     

    $

    (1.15

    )

    Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted

     

    127,870

     

     

     

    118,656

     

     

     

    126,434

     

     

     

    117,125

    (1)

    Including related party revenue of $10,581 for the six months ended October 31, 2023.

    (2)

    Including related party revenue of $5,804 for the six months ended October 31, 2023.

    (3)

    Including related party sales and marketing expense of $810 for the six months ended October 31, 2023.

    C3.AI, INC.

    CONDENSED CONSOLIDATED BALANCE SHEETS

    (In thousands, except for share and per share data)

    (Unaudited)

     

    October 31, 2024

     

    April 30, 2024

    Assets

     

     

     

    Current assets

     

     

     

    Cash and cash equivalents

    $

    121,274

     

     

    $

    167,146

     

    Marketable securities

     

    609,100

     

     

     

    583,221

     

    Accounts receivable, net of allowance of $486 and $359 as of October 31, 2024 and April 30, 2024, respectively

     

    159,987

     

     

     

    130,064

     

    Prepaid expenses and other current assets

     

    27,458

     

     

     

    23,963

     

    Total current assets

     

    917,819

     

     

     

    904,394

     

    Property and equipment, net

     

    84,198

     

     

     

    88,631

     

    Goodwill

     

    625

     

     

     

    625

     

    Other assets, non-current

     

    43,647

     

     

     

    44,575

     

    Total assets

    $

    1,046,289

     

     

    $

    1,038,225

     

    Liabilities and stockholders' equity

     

     

     

    Current liabilities

     

     

     

    Accounts payable

    $

    20,611

     

     

    $

    11,316

     

    Accrued compensation and employee benefits

     

    41,755

     

     

     

    44,263

     

    Deferred revenue, current

     

    35,663

     

     

     

    37,230

     

    Accrued and other current liabilities

     

    23,979

     

     

     

    9,526

     

    Total current liabilities

     

    122,008

     

     

     

    102,335

     

    Deferred revenue, non-current

     

    127

     

     

     

    1,732

     

    Other long-term liabilities

     

    65,193

     

     

     

    60,805

     

    Total liabilities

     

    187,328

     

     

     

    164,872

     

    Commitments and contingencies

     

     

     

    Stockholders' equity

     

     

     

    Class A common stock

     

    125

     

     

     

    120

     

    Class B common stock

     

    3

     

     

     

    3

     

    Additional paid-in capital

     

    2,077,044

     

     

     

    1,963,726

     

    Accumulated other comprehensive income (loss)

     

    521

     

     

     

    (563

    )

    Accumulated deficit

     

    (1,218,732

    )

     

     

    (1,089,933

    )

    Total stockholders' equity

     

    858,961

     

     

     

    873,353

     

    Total liabilities and stockholders' equity

    $

    1,046,289

     

     

    $

    1,038,225

     

    C3.AI, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (In thousands)

    (Unaudited)

     

    Six Months Ended October 31,

     

     

    2024

     

     

     

    2023

     

    Cash flows from operating activities:

     

     

     

    Net loss

    $

    (128,799

    )

     

    $

    (134,138

    )

    Adjustments to reconcile net loss to net cash used in operating activities

     

     

     

    Depreciation and amortization

     

    6,092

     

     

     

    6,220

     

    Non-cash operating lease cost

     

    203

     

     

     

    454

     

    Stock-based compensation expense

     

    111,721

     

     

     

    104,049

     

    Accretion of discounts on marketable securities

     

    (7,618

    )

     

     

    (8,755

    )

    Other

     

    418

     

     

     

    —

     

    Changes in operating assets and liabilities

     

     

     

    Accounts receivable(1)

     

    (30,051

    )

     

     

    (8,567

    )

    Prepaid expenses, other current assets and other assets(2)

     

    (1,993

    )

     

     

    (665

    )

    Accounts payable(3)

     

    9,294

     

     

     

    (2,918

    )

    Accrued compensation and employee benefits

     

    (4,815

    )

     

     

    (2,551

    )

    Operating lease liabilities

     

    (1,215

    )

     

     

    7,804

     

    Other liabilities(4)

     

    19,284

     

     

     

    1,709

     

    Deferred revenue(5)

     

    (3,172

    )

     

     

    (7,296

    )

    Net cash used in operating activities

     

    (30,651

    )

     

     

    (44,654

    )

    Cash flows from investing activities:

     

     

     

    Purchases of property and equipment

     

    (1,739

    )

     

     

    (16,631

    )

    Capitalized software development costs

     

    —

     

     

     

    (2,750

    )

    Purchases of marketable securities

     

    (365,926

    )

     

     

    (489,871

    )

    Maturities and sales of marketable securities

     

    348,750

     

     

     

    412,554

     

    Net cash used in investing activities

     

    (18,915

    )

     

     

    (96,698

    )

    Cash flows from financing activities:

     

     

     

    Proceeds from issuance of Class A common stock under employee stock purchase plan

     

    5,009

     

     

     

    5,055

     

    Proceeds from exercise of Class A common stock options

     

    4,472

     

     

     

    10,163

     

    Taxes paid related to net share settlement of equity awards

     

    (5,787

    )

     

     

    (9,686

    )

    Net cash provided by financing activities

     

    3,694

     

     

     

    5,532

     

    Net decrease in cash, cash equivalents and restricted cash

     

    (45,872

    )

     

     

    (135,820

    )

    Cash, cash equivalents and restricted cash at beginning of period

     

    179,712

     

     

     

    297,395

     

    Cash, cash equivalents and restricted cash at end of period

    $

    133,840

     

     

    $

    161,575

     

    Cash and cash equivalents

    $

    121,274

     

     

    $

    149,009

     

    Restricted cash included in other assets

     

    12,566

     

     

     

    12,566

     

    Total cash, cash equivalents and restricted cash

    $

    133,840

     

     

    $

    161,575

     

    Supplemental disclosure of cash flow information—cash paid for income taxes

    $

    534

     

     

    $

    281

     

    Supplemental disclosures of non-cash investing and financing activities:

     

     

     

    Purchases of property and equipment included in accounts payable and accrued liabilities

    $

    117

     

     

    $

    7,293

     

    Right-of-use assets obtained in exchange for lease obligations (including remeasurement of right-of-use assets and lease liabilities due to changes in the timing of receipt of lease incentives)

    $

    1,345

     

     

    $

    778

     

    Vesting of early exercised stock options

    $

    216

     

     

    $

    294

    (1)

    Including changes in related party balances of $12,444 for the six months ended October 31, 2023.

    (2)

    Including changes in related party balances of $(810) for the six months ended October 31, 2023.

    (3)

    Including changes in related party balances of $248 for the six months ended October 31, 2023.

    (4)

    Including changes in related party balances of $(2,448) for the six months ended October 31, 2023.

    (5)

    Including changes in related party balances of $(46) for the six months ended October 31, 2023.

    C3.AI, INC.

    RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

    (In thousands, except percentages)

    (Unaudited)

     

    Three Months Ended October 31,

     

    Six Months Ended October 31,

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

    Reconciliation of GAAP gross profit to non-GAAP gross profit:

     

     

     

     

     

     

     

    Gross profit on a GAAP basis

    $

    57,840

     

     

    $

    41,113

     

     

    $

    110,006

     

     

    $

    81,662

     

    Stock-based compensation expense (1)

     

    8,311

     

     

     

    8,993

     

     

     

    16,719

     

     

     

    17,509

     

    Employer payroll tax expense related to employee stock-based compensation (2)

     

    171

     

     

     

    297

     

     

     

    527

     

     

     

    838

     

    Gross profit on a non-GAAP basis

    $

    66,322

     

     

    $

    50,403

     

     

    $

    127,252

     

     

    $

    100,009

     

     

     

     

     

     

     

     

     

    Gross margin on a GAAP basis

     

    61

    %

     

     

    56

    %

     

     

    61

    %

     

     

    56

    %

    Gross margin on a non-GAAP basis

     

    70

    %

     

     

    69

    %

     

     

    70

    %

     

     

    69

    %

     

     

     

     

     

     

     

     

    Reconciliation of GAAP loss from operations to non-GAAP loss from operations:

     

     

     

     

     

     

     

    Loss from operations on a GAAP basis

    $

    (75,288

    )

     

    $

    (79,396

    )

     

    $

    (147,874

    )

    $

    (153,489

    )

    Stock-based compensation expense (1)

     

    57,038

     

     

     

    53,169

     

     

     

    111,721

     

     

     

    104,049

     

    Employer payroll tax expense related to employee stock-based compensation (2)

     

    1,090

     

     

     

    1,274

     

     

     

    2,362

     

     

     

    3,774

     

    Loss from operations on a non-GAAP basis

    $

    (17,160

    )

     

    $

    (24,953

    )

     

    $

    (33,791

    )

     

    $

    (45,666

    )

     

     

     

     

     

     

     

     

    Reconciliation of GAAP net loss per share to non-GAAP net loss per share:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Net loss on a GAAP basis

    $

    (65,972

    )

     

    $

    (69,780

    )

     

    $

    (128,799

    )

     

    $

    (134,138

    )

    Stock-based compensation expense (1)

     

    57,038

     

     

     

    53,169

     

     

     

    111,721

     

     

     

    104,049

     

    Employer payroll tax expense related to employee stock-based compensation (2)

     

    1,090

     

     

     

    1,274

     

     

     

    2,362

     

     

     

    3,774

     

    Net loss on a non-GAAP basis

    $

    (7,844

    )

     

    $

    (15,337

    )

     

    $

    (14,716

    )

     

    $

    (26,315

    )

     

     

     

     

     

     

     

     

    GAAP net loss per share attributable to Class A and Class B common shareholders, basic and diluted

    $

    (0.52

    )

     

    $

    (0.59

    )

     

    $

    (1.02

    )

     

    $

    (1.15

    )

    Non-GAAP net loss per share attributable to Class A and Class B common shareholders, basic and diluted

    $

    (0.06

    )

     

    $

    (0.13

    )

     

    $

    (0.12

    )

     

    $

    (0.22

    )

    Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted

     

    127,870

     

     

     

    118,656

     

     

     

    126,434

     

     

     

    117,125

     

    (1)

    Stock-based compensation expense for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Stock-based compensation expense for loss from operations includes total stock-based compensation expense as follows:

     

    Three Months Ended October 31,

     

    Six Months Ended October 31,

     

     

    2024

     

     

    2023

     

     

    2024

     

     

    2023

    Cost of subscription

    $

    7,827

     

    $

    8,514

     

    $

    15,521

    $

    16,570

    Cost of professional services

     

    484

     

     

    479

     

     

    1,198

     

    939

    Sales and marketing

     

    20,802

     

     

    18,226

     

     

    39,635

     

    35,005

    Research and development

     

    17,999

     

     

    16,685

     

     

    36,430

     

    33,718

    General and administrative

     

    9,926

     

     

    9,265

     

     

    18,937

     

    17,817

    Total stock-based compensation expense

    $

    57,038

     

    $

    53,169

     

    $

    111,721

     

    $

    104,049

    (2)

    Employer payroll tax expense related to employee stock-based compensation for gross profits and gross margin includes costs of subscription and cost of professional services as follows. Employer payroll tax expense related to employee stock-based compensation for loss from operations includes total employer payroll tax expense related to employee stock-based compensation as follows:

     

    Three Months Ended October 31,

     

    Six Months Ended October 31,

     

     

    2024

     

     

    2023

     

     

    2024

     

     

    2023

    Cost of subscription

    $

    163

     

    $

    282

     

    $

    489

     

    $

    791

    Cost of professional services

     

    8

     

     

    15

     

     

    38

     

     

    47

    Sales and marketing

     

    450

     

     

    463

     

     

    922

     

     

    1,468

    Research and development

     

    231

     

     

    415

     

     

    595

     

     

    1,232

    General and administrative

     

    238

     

     

    99

     

     

    318

     

     

    236

    Total employer payroll tax expense

    $

    1,090

     

    $

    1,274

     

    $

    2,362

     

    $

    3,774

    Reconciliation of free cash flow to the GAAP measure of net cash used in operating activities:

    The following table below provides a reconciliation of free cash flow to the GAAP measure of net cash used in operating activities for the periods presented:

     

    Three Months Ended October 31,

     

    Six Months Ended October 31,

     

     

    2024

     

     

     

    2023

     

     

     

    2024

     

     

     

    2023

     

    Net cash used in operating activities

    $

    (38,693

    )

     

    $

    (48,590

    )

     

    $

    (30,651

    )

     

    $

    (44,654

    )

    Less:

     

     

     

     

     

     

     

    Purchases of property and equipment

     

    (815

    )

     

     

    (5,293

    )

     

     

    (1,739

    )

     

     

    (16,631

    )

    Capitalized software development costs

     

    —

     

     

     

    (1,250

    )

     

     

    —

     

     

     

    (2,750

    )

    Free cash flow

    $

    (39,508

    )

     

    $

    (55,133

    )

     

    $

    (32,390

    )

     

    $

    (64,035

    )

    Net cash provided by (used in) investing activities

    $

    22,635

     

     

    $

    (11,898

    )

     

    $

    (18,915

    )

     

    $

    (96,698

    )

    Net cash provided by financing activities

    $

    3,512

     

     

    $

    3,055

     

     

    $

    3,694

     

     

    $

    5,532

     

     

    View source version on businesswire.com: https://www.businesswire.com/news/home/20241209723558/en/

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