Shares in C3.ai climbed after the company reported a narrower-than-expected loss for its fiscal third quarter earnings while revenue topped estimates. Guidance for AI stock met expectations.
The software maker reported January quarter earnings after the market close on Wednesday. On the stock market today, AI stock popped 24.5% to 37.25 to close at 36.97.
In fiscal Q3, C3.ai said it lost 13 cents per share on an adjusted basis. That compared with an 6-cent loss a year earlier.
Revenue rose 18% to $78.4 million. Wall Street analysts polled by FactSet had predicted a loss of 28 cents a share on revenue of $76.1 million.
Pilot AI Projects Increase
"Generative AI use cases continue to influence customer engagement, with 17 of 29 total pilots signed in the quarter driven by generative AI," said Kingsley Crane, analyst at Canaccord Genuity, in a report. "So far, the company has been converting pilots into full-time customers roughly near the assumed spend levels of $210,000 per quarter, even if some pilots have pushed a bit beyond the initially planned six months and started a bit lower than $500,000 contribution over two quarters. If C3 can continue the sequential growth in product revenue we've seen over the past three quarters, the firm is on track to grow over 30%."
For fiscal 2025, analysts currently model revenue growth of 19.3%, up from 14.6% in the current fiscal year.
At KeyBanc Capital, analyst Eric Heath said in a report: "Management noted that its initial assumptions around a consumption pricing model transition are largely tracking, though customers are opting for multiyear subscription contracts at the conclusion of their pilots, as opposed to the month-to-month arrangements it expected."
For the current quarter ending in April, the company predicted revenue of $84 million at the midpoint of guidance. Further, analysts projected revenue of $83.9 million.
"Profitability was much better than guided, as the non-GAAP operating loss of $25.8 million was 40% less than modeled," said Oppenheimer analyst Tim Horan in a report.
"The company is prioritizing pilot trials and transitioning to consumption priced services, pressuring growth and margins short term, but is over the worst. C3's short interest is 34% of float so stock will remain volatile."
AI Stock: Profitability Pushed Out
AI stock had gained about 3% in 2023 ahead of the C3.ai earnings report. Shares are up 33% over the past year.
The company has told analysts it expects revenue growth to reaccelerate as more AI pilot projects ramp up into commercial production.
The software maker has backed off its target to turn profitable on an adjusted basis by the fourth quarter of this fiscal year amid growing investments.
Also, C3.ai had a Relative Strength Rating of 47 out of a best-possible 99 heading into the earnings report, according to IBD Stock Checkup.
The software maker helps companies build artificial intelligence applications, and targets the energy, financial services and defense markets. But it hasn't disclosed pricing for new generative AI products.
Meanwhile, C3.ai is one of many AI stocks to watch.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
