C3.ai Inc.’s stock took a tumble on Thursday after the company released its first-quarter financial report. While the company’s revenue exceeded analyst expectations, concerns about subscription growth and price target cuts from analysts resulted in a negative market reaction.
C3.ai reported a first-quarter revenue of $87.21 million, surpassing the consensus estimate of $86.94 million. The company also reported an adjusted loss of 5 cents per share, outperforming estimates for a loss of 13 cents per share. Total revenue increased by 21% year-over-year, with subscription revenue climbing by 20% year-over-year to $73.5 million. The company generated $8 million in net cash from operations during the quarter and recorded $7.1 million in free cash flow. C3.ai announced that it ended the quarter with $762.5 million in cash, cash equivalents, and marketable securities.
“We had a solid start to the fiscal year, with rising demand for Enterprise AI driving our sixth consecutive quarter of accelerating revenue growth,” said Thomas Siebel, chairman and CEO of C3.ai. “C3 AI is the original Enterprise AI company. Our unwavering commitment to solving the most challenging problems in the enterprise has led us to what we believe are the highest levels of customer satisfaction in the industry.”
C3.ai forecasts second-quarter revenue to be between $88.6 million and $93.6 million. The company projects full-year revenue in the range of $370 million to $395 million, compared to estimates of $383 million. Several analysts adjusted their price targets for C3.ai following the earnings report. Piper Sandler analyst Arvind Ramnani maintained a Neutral rating but lowered the price target from $29 to $24. Morgan Stanley analyst Sanjit Singh kept an Underweight rating and reduced the price target from $23 to $21. Wedbush analyst Daniel Ives maintained an Outperform rating but lowered the price target from $40 to $30. Needham analyst Mike Cikos reiterated a Hold rating.
C3.ai shares reacted negatively to the company’s subscription revenue performance and the price target cuts from analysts. The stock plummeted 18.7% to $18.70 at the time of publication on Thursday. This decline highlights the market’s sensitivity to the company’s subscription growth trajectory and the cautious outlook from analysts.
