Enterprise software provider C3.ai Inc. NYSE: AI is starting to see the fruits of its labor. As one of the first stocks to rise during the 2023 year of artificial intelligence (AI), C3.ai had high growth expectations. However, the gains were moving at a snail’s pace as its low double-digit revenue growth paled in comparison to triple-digit growth from AI giants like NVIDIA Co. NASDAQ: NVDA and Super Micro Computers Inc. NASDAQ: SMCI. To make matters even worse, the company switched to a consumption-based pricing model that would be reflected in short-term pain for weak YoY sales comparisons as revenues get stretched out.
$28.96 +0.41 (+1.44%) (As of 06/28/2024 ET)
- 52-Week Range
- $20.23
▼
$44.90 - Price Target
- $31.30
C3.ai competes in the computer and technology sector with other AI software developers like UiPath Inc. NYSE: PATH and large cloud providers like Amazon Inc. NASDAQ: AMZN, Amazon Web Services, Alphabet Inc. NASDAQ: GOOGL, Google Cloud Platform and Microsoft Co. NASDAQ: MSFT Azure.
What Does C3.ai Actually Do?
Besides having a descriptive stock symbol, what exactly does C3.ai have to do with AI? The company offers a user-friendly AI platform with pre-built solutions for a number of industries ranging from defense, financial services, telecommunications, healthcare, and manufacturing to oil and gas, utilities, and transportation. Its 120 AI applications produce over 1.7 billion predictions daily for 24 Fortune 500 companies and growing. In addition to industry-specific pre-built AI modules, users can access C3 Generative AI on cloud marketplaces.
The explosive growth in AI comes from the hardware and infrastructure side, while the enterprise software side is still ramping up at a slower pace.
C3.ai Shares Surge on a Bull Flag Breakout Pattern
The daily candlestick chart on C3.ai illustrates a bull flag breakout pattern. The flagpole formed after triggering the market structure low (MSL) breakout above $21.11. Shares climbed up to $26.84, peaking as shares pulled back to $23.68 in a parallel channel of lower highs and lower lows. The Q1 2024 earnings release triggered the bull flag breakout, surging through the $25.64 resistance and climbing to a $29.57 peak. The daily relative strength index (RSI) rose back up through the overbought 70-band. Pullback support levels are at $27.50, $25.64, $23.68, and $21.11.
C3.ai's Narrowing Losses in Fiscal Q4 2024
C3.ai reported a fiscal Q4 2024 EPS loss of 11 cents, beating consensus estimates for a loss of 30 cents by 19 cents. Revenues rose 20% YoY to $86.59 million, beating $85.89 million consensus analyst estimates. This marks the fifth consecutive quarter of revenue growth driven by quarterly subscription growth.
Full-Year 2025 Projections: C3.ai's Path to Revenue Expansion
C3.ai provided in-line guidance for fiscal Q1 2025, with revenues expected between $85 million to $89 million versus $85.89 million. Fiscal full-year 2025 revenues are expected to be between $370 million to $395 million versus $367.70 million consensus estimates.
C3.ai Launches 30 Generative AI Products, Driving Market Interest
C3.ai CEO Thomas Seibel noted that quarterly revenues accelerated from 11% in fiscal Q1 2024 to 18% in Q3 to 20% in Q4 2024. It was also the 14th consecutive quarter since becoming a public company that they’ve met or exceeded their revenue guidance. Subscription revenue accounted for 92% of total revenue, up 41% year over year.
The company launched 30 generative AI products in the 2024 fiscal year and is overwhelmed by market interest in them. For example, in fiscal Q4 2024, C3.ai received over 50,000 inquiries from over 3,000 businesses.
C3.ai’s Consumption Pricing Model Boosts Revenue Growth
The adoption of its consumption pricing is accelerating. This model provides greater visibility. It caused total contract value (TCV) to plummet from $16 million in fiscal 2019 to $900,000 in the quarter. This sharp decline has been expected as the company returns to accelerating revenue growth with its consumption pricing.
CEO of C3.ai States that Enterprise Demand for AI is Intensifying
Seibel pointed out that the demand for enterprise AI is "intensifying," and the company's first-to-market advantage enables it to capitalize on it. Seibel added, “Our Enterprise AI applications have been adopted across 19 industries, underscoring increasing market diversity. Our federal revenue grew by more than 100% for the year. The interest we are seeing in our generative AI applications is staggering.”
C3.ai analyst ratings and price targets are on MarketBeat.
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