AI - Earnings call transcript Q3 2021

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the C3.ai Third Quarter Fiscal Year 2021 earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question-and-answer session [Operator instructions]. I would now like to hand the conference over to your speakers today. Paul Phillips, Vice President of Investor Relations at C3 AI. you. Thank sir. ahead, go Please

Paul Phillips

of our afternoon, the Chairman everybody. the third of issued ended results, release earnings for David Financial call. following today Vice site accessed to XX, me Chief CX.ai. on a ir.cX.ai. on details regarding is webcast to of Barter, the closed of Chief And both conclusion quarter press as the of This Executive today, welcome call well we results, on President Phillips, third Paul section being which available Tom This supplement CX.ai's Relations our at fiscal and for which quarter XXXX. IR a Web With relations with the as markets Siebel, call be site a are Web is Good After our Investor and year January call be the and Officer. replay XXXX, our Officer; investor can will

summarized results update actual any the to a statements press are differ variety statements from we subsequent reflect be statements considered be disclaim subject of as During in today's to any cause issued under should may or business today. as materially today, These looking laws. any obligation and our These to that release will our to uncertainties call, of representative of securities looking of not forward federal views forward date. that outlook. only are our risks We could These that considered risks we related expectations. statements views make and

certain please SEC, to affect financial to and prospectus. is measures. reconciliation of GAAP non-GAAP other during including our the call, measures refer our material filings A further a financial press factors important risks release. to the will For that we of in our today's course non-GAAP included Also of with our the could refer results, discussion

Please dynamics may we your greater to of business are comments discuss in be Tom in to that, our Tom. the may incremental or may our his or the questions, the over to continue prepared at responses this our results. With prepared times quarterly our we let remarks, usual into metrics to advised me additional call or provide Finally, for provide to that presentation that turn detail future. insight not

Tom Siebel

everyone. to Thank with opportunity spend you, good you great Paul, afternoon. the and my to afternoon, some pleasure time have this It's

we're we So progress about make Overall, globally. company really and market the the the talk let's pleased continue talk that the with about market. to quite in

and AI is break pure as to software This continue the a ground play. market. enterprise only We large rapidly growing

continue to innovate. We

with ecosystem We increased continue to distribution associated expand capacity our market associated that. the partner and

believe to establish continue leadership. to are in we global enterprise We position AI positioned demonstrate software. leadership increasingly a market that technology I well

strong operating total All our highlights. year quarter. million that quarter ago. year ago year from million the of of non-GAAP a XX% compared revenue, year was ago. X% loss and or quarter the representing for operating from XX% $X.X $XX.X a expenses to million increased a Non-GAAP up million, $X.X the to million the for the talk decrease $XX.X revenue, quarter revenue financial Revenue for was a it Subscriptions let's from was about revenue million. to a $XX.X quarter increased third in Services So an third of all, of have in XX% increase was XX% mix. earlier. of subscription $XX.X was

a software analysts according the CEO grow top significant standard about of any of in continues our AI across by digital and professional solutions, enterprise board the to interest AI addressable virtually an opportunity by We every we that on increasingly the AI enterprise regions. XXXX. market remains globally. XXXX, my enabled transformation market. agenda was Digital pipeline increasing think that in focused the career. opportunity and $XXX enterprise that This substantially see for we I have industries transformation, at and to all about extraordinarily talk by market largest to and billion $XXX of robust seen all state overall demand billion When Let's the large and are is in

me the customer quarter. address wins third in Let the a of few significant

Infor. Firstly,

ranging sell AI Infor We brand. suite existing CX.ai reliability, have solutions evolve formed Infor, the Under to the CX.ai to Infor a ERP into based CX.ai Machina, applications to their partnership solutions integrating that a of a strategic scale produce writing multibillion many CRM, and dollar and to CX.ai terms wide applications with CX.ai Infor and next relationship be provider. Infor predictive AI deploy with the market, will analytics agreement, customers software the based the This develop, a code. empowers insights under application and Ex CX.ai market including anyone customers, without broader with generation Infor to will

Johnson leading Controls with company talk I building a Milwaukee. Johnson Controls Johnson supply security selected Secondly, and billion inventory their about manufacturer energy fire, to HVAC equipments optimization. $XX.X for in want CX.ai and recently is chain for of services. Controls

the Finally, to we Army, US aircraft I about improve talk work opportunity expanded States readiness. an our want with United to at where Aviation Army

and high our recently system level Wars synthesizing with of incoming began sources for coming I suite, data provide single and ground analytics data a of This improved the image. within sensors support awareness. This unified work think on commanders addition, tactical information tech, to on generation Raytheon, AI based technology. battlefield multitude about diversification. into the talk that risk very a CX.ai enable will want to station Star very, of decision Army's will from based next industry partner sensor massive is automated we In US situational processing amounts

than year across sales. increasing sectors, third our way the geographical significant in million our market QX increased a total year sales sales is mass period financial X% to vertical high and Life our a channels; markets. sciences, the geographic major as expansion growth in benefits We're ago. software in quarter mid-market and than partner By vertical diversify year to as sales, accounted from in 'XX from seeing our in the is; to million ago. with the date accounts, average compared year to to compared growth global strategic for less to to strategy include and We in same services year fiscal partnerships. a to year sciences business expansion, average to fiscal the XX% 'XX progress. same market subscriptions sales less and pipeline. life contract date of Manufacturing growth contributions over the ago. period of year importantly, date of horizontal year tech the healthy to 'XX the of fiscal XX% contract these in Core X% in for period industries. $X.X High and compared continue and diversification, for from fiscal year business accounted in gas evolution organizations one, accounted to increasingly of our diversity efforts of to increased tech of This enterprise At date, two, approximately direct well realized our ago. and year in sector fiscal year X% market We our significant year $XX.X XX% the approximately increased compared accounted business for oil vertical market in same our time, ecosystem sales XXXX in the same for X% for business fiscal international our subscription X% 'XX and volume decreased Addressing example, both value substantial 'XX.

significantly the us key globally. We to customers we as strategy In established ecosystem continue build with this and see a with area quarter, financial our growth activity, and third and engagement and to reach you services going Microsoft, activity market for increase our expand partner, powered CX.ai. industries in such by AML enabling ENGIE, and expanded Infor, serve our partner Shell, partnerships our Raytheon, compliance forward. Hughes, In Baker expect accelerated sector, industry can to hub FIS continued FIS the across

first with The dollar deep financial under dramatically Raytheon solution $XX combined initiative. FIS, the CX.ai’s growing CRM crime of machine will sector, product first intelligent defense learning between improve our and domain a detection. deal expertise joint the In technology, ground This Microsoft with defense our the industry We customer. part represent to a and advanced financial US of broad effectiveness leverages CX.ai. AI technology CX.ai FIS for alliance release Fortune station closed plus with to globally. the AI provide partner industry market a believe engaged XXX billion Army’s CRM we significant and the of

Infor we comprehensive applications I with applications using formed integrate As referenced Infor customers and CX.ai suite channels. market these existing enabling many CX.ai applications, its the all through to and earlier, Infor its to to alliance a

the of me we the as advisor expanded market of market to leadership Snabe, we as that expect the coming see some times, to across Jim key the time. focused an Jim also trusted we Chairman Directors. as a Mayers, on SAP horizontal the Board both efforts as You company formerly We co-CEO company our for he has and strengthening vertical increased in to of leverage rely will a been CX.ai on and And of markets with of leadership. come can Zeeman's, been I've a make for partner Chairman to ecosystem lot he’s to this addition of for growth. some company's advisor advisor point expand quarters,

Okay.

to unique leading he CX.ai and company the global a is class leadership great to we company, expertise a As work set addition to as our establish and of Board. enterprise world skills software a brings

to been continue the In and is of McGinn, Alteryx. now Administration; Assistant Sajid Secretary of SAP President country Attali, President of special relationships, in Chancellor first George advisor Navy a board Bank former includes Javid, former and is former President deputy Administration; okay, in former Ledgett, global establishing Europe presence US Reconstruction advisory any NSA Matthew, expand President the and Home has to director Parliament The of really, Obama board advisory the COO in building and Development the industries. the our of and who that Danny for France; in customer important founder Rick and and Franck of in and in addition, the former we really Admiral Obama European Jacques of formal the of and in Cohen, former Member UK; Exchequer who Secretary

the we have into the street wall have financial noticed journal you Now, or been branding investing tuned I have watching know that channels you reading or been Bloomberg, times in or those financial who the of we significant virtually running Europe. expanded globally. financial networks all in branding business campaign with presence AI major cable and our and the And radio include TV to and States spots United on enterprise

also our as and as EMEA to advertising APAC, UK, United well expanded include the We States.

known increasing, relations public PRV, internet brand sediment volume, leader. brand news have recognition are including We social AI market substantially and enterprise Leading and as frequency. becoming sediment, equity indicators media of increasingly the search been

market sustainability strong. increased solutions on back and Let’s energy market is so interest we AI market. and for it and is and are is sustainability talk energy fast sustainability. the coming seeing about energy Well, the fire This enabled in

Over achieve last new Baker and prioritize where meet reduction Sustainability No use carbon Management and is $X Ford, customers grid also example top addressing third a innovative governments efficiency Management the the quarter, managing emissions, Institutions their a X globally announcements the effort their York industrial of recall customer application its in utilities new first goals. difficult that have enabling Energy not and many their York to we and to climate company which the for its A Microsoft, iconic energy including applying AI and building of is way this zero such Management, CX.ai efficiency to large reliable solutions companies Fortune CX Power We're expanded They in support find and have and product We're from you carbon energy entire Energy to providing in that large approach. is very others ENGIE challenges doubt, BP, targeting flood US solution a infrastructure, innovative meet identify administration cost energy XXX to requires investment in alone, And a energy own more production commitments. market our help trillion and we're a investment many will also greenhouse In their but management is energy novel sustainability has Transformation digital Energy Shell, our started as cutting manage this CX.ai committed technology edge entirely goals. Authority organizations zero ENGIE, JetBlue, year our call -- doubled. American built service, ENGIE climate Ohio XXXX. carbon CX.ai our clearly climate commercial efficiency and with lead only lower to new deployed in optimize issuing offering built use technology to New and goals. security. the on a Scope energy with working CX.ai Authority. the research has core and with set their the next an with in and deployed you've their very their gas leader [enabler], great gas lower use that announcing CX priority since help companies, to investments climate seen as has CX New Management. to number Airlines, space. we to Smart deployed globally, transformation have and reach emissions a State and usage and of to of energy future. research of ENGIE, the papers Many for Institute, Amazon, problem Power partner footprint ambitious net energy and Hughes, goals the ENGIE a customers excited sustainability wave One reduce security. across we delivering on the with use to been Columbus. Energy XXXX, safer, campus XXX the Energy University, carbon and technology example, for optimize Digital and energy our significantly also CX.ai cleaner, greenhouse by and

through know crisis. CX.ai was who by based feedback get will recognized for new pandemic. place We employee the and of among a provided the We to the best is engagement to pandemic. top computing opportunity. you employee the you I with during companies well take to Many look positioned enthusiasm ranking levels during satisfaction work Glassdoor as the CX.ai. were in for Glassdoor, are cloud those This of a encourage that the interested months ranked through XX are this COVID Glassdoor employee of extraordinarily the six high at on of feel first stellar

public our you As few company strong capital and XX% an on company. months by roughly expanding know, the XXX today. are approximately focus went we in since short In and to human aggressively December, the increased placed headcount exceptionally a CX.ai, we've

third XX administered interviews engineering applicants, we attract almost Of We and from massive pool. received we've In continue quarter, XX,XXX and to candidates science processed offers we data interest software that have the XXX X,XXX over data over global job hired been that, the assessments. accepted. XX,XXX an XX with and job employees additional conducted we full time

concepts essentially the to significant to applications been and to a devices patents elect develop a One see attempt some in it we a US methods enterprise are have interest enterprise licensing development Office of platform. and the that offer. of property driven and an we companies the and applications. technology applying trademarks for copyrights, US and of applications robust substantial software, company's This foreign their Big AI And date. and systems, family picture, patents product with and to awarded patent technology we important US Patent of enterprise AI to is and awarded secures property continue architecture now is secures license patent we with of having IP and The working the pending. XX most clear XX recently been office that AI us solutions to us as unique protect This differentiation. aspects foreign at patents, the and growing broad intellectual this a CX awarded a entitled patent for CX.ai and of form internally enterprise our model combination secrets, and intellectual to foreign a AI growing fundamental trade CX.ai

to continue to establish on a progress fronts maintain in make significant global enterprise all objective AI. leadership We our position and and

for We our market believe aggressively on to this details company, well getting to continue addressable partner the financial $XXX just David over David? started. will address further We very across Barter, our to results our that. billion ecosystem. plus our opportunity business and I it the CFO, expand geographies, and grow and are industries third we positioned With we turn are diversify quarter, in

David Barter

enterprise delivered Revenue We about we're the our the growing adoption optimistic the third quarter Tom. demand for quarter, a performance you, and up year in AI. we’re seeing Thank momentum continued strong in million, $XX.X a third software. from was increased of ago, reflecting XX% and business

of decrease $XX.X an from During a $X.X million, from the was third increase a ago. revenue ago. year million, a X% quarter, Professional subscription revenue of year services XX% was

our diversification We also an of revenue mix. increasing saw

the in delivered industry that XX% Geographically, some third over quarter of our our as life from drove such of contributions and EMEA different XX% services highlighted revenue. revenue financial including growth newer quarter our revenue. was verticals, and verticals, over Our APAC by six approximately sciences of

Finally, it's efficiency. operating improving important to note the

and revenue model subscription non-GAAP partners. our of vertical. each market model XX% quarter our into reach important This It significantly is while usage increased selling marketing leveraged is year-over-year the increased An sales of XX% aspect industry extends year-over-year. expense sales a that

Baker million. over partners term benefit market possess partner overtime. year AI for growth a total value a $XXX sales in applications. agreement. enterprise the ahead. expertise will base their our Their Hughes, predictable commitment. five and vertical will to offers years increases to our domain the with worth commitment and of It the is a very gas, contraction five year contract includes agreement and CX.ai a This oil the leverage It specific is significant noting AI us deep provide Our respective This that in our enterprise is commitment from customer that contract markets, with

commitment 'XX 'XX. to million For fiscal compared fiscal million $XX in example, year year the $XX Baker in is Hughes

visibility. RPO adjusted healthy use to our includes This It continues obligations. note important we to backlog. provide that to remaining metric contractual Our us is backlog measure our revenue performance GAAP with

cancellation QX, contracts was RPO and prior RPO year. the Our million, the of million. $XXX.X the $XXX up At adjusted with Within Hughes commitment. GAAP RPO, end from the was the adjusted clause Baker XX%

cost commitment Baker Hughes a was contracts and was with Our million. $XX.X cancellation the million, $XXX.X

reconciliation Web With the we existing our quarter XX.X% adding healthy new and it and with is backlog, million, our to XX.X% market new expanding of compared and was footprint This Operating and non-GAAP new our year to increased indicated. can in between to XX% expansion file third the gross quarter customers up unless the non-GAAP in A to our to partners discussing $XX.X section earnings In was compensation and verticals. expense. IR was within financial continue revenue will on from visibility press driven to non-GAAP It This adding prior large ago. margin. industry the site GAAP our a and I unusually stock based The on release. comes year referring an XX% the margin by profitability, SEC. the Gross difference to provided be subscription existing focus coverage year found from in XX.X% be period. otherwise GAAP compared with increased customers, in in expenses that measures ago. contractual a expense is measures

can are making in CRM described, two Tom initiatives. growth. CX.ai order new are market to that Ex to bring R&D CX.ai significant enhance Machina and we products such As in our investments

for brand $X.X and margin education also including leadership. or XX.X% or year AI force. sales are Operating the a a go million in XX.X% margin in investing ago. of was direct QX $XX.X investing awareness, market our to also enterprise expansion of We We're market a our loss million compared of to efforts, thought

$XXX.X Initial in with third our ended billion and proceeds December. flows. sheet million from the our This equivalents. in cash Offering to net includes Public We balance and cash Turning of cash quarter $X.XX

increased in period picture Our million headcount. to quarter sales, basis. QX margin outflow recommended timing was to our a investments and free vary. The operating cash million. $XX.X for is of a due cash marketing $XX.X cash and flow of and This order $X.X capture led to of CapEx four collections calculated million. rolling can In on outflow in complete our billings the primarily was

historical the a negative the million $XX.X of due at For transaction XX%. that our the the our Deferred sizes. perfect cash important for revenue free quarter. measure was to four quarters, note a not last to variability large to quarter revenue to margin is the timing of our customers, business and quarter flow and It's invoices was end deferred our

In billing terms vary. addition, our

not arrangements, build inception. contractual will some instead billing duration For we But a over the at arrangement. we the customer of are periodically

in So deferred these customers’ revenue. revenue commitments do appear not

we in As revenue, generate an at end deals is quarter, this of several our of third deferred but the revenue. amount will $X.X example, that not million the booked

Looking to the fourth quarter.

to growth in revenue range. is total million a the of approximately of in the at expect expected representing $XX loss million million, million. We to be year-over-year from to midpoint XX% of $XX range $XX $XX the be range to Non-GAAP operations

as to For $XX.X range. the the full this include tax the and at and stock expect non-GAAP to our be pleased public to year portion expected non-GAAP of the between our be revenue XXXX, Historically, total stock compensation growth $XX.X related range in operations to stock difference a and has in GAAP approximately periods, performance first representing with expense Non-GAAP range quarter of our million. GAAP between summary, fiscal guidance, to the of loss been and In in million, measures payroll to with compensation expense. limited measures $XXX.X employer million in from the we based we fiscal our for midpoint will million financial future of expense are full $XXX.X year XX% difference the the reporting transactions. year-over-year is fourth Beginning quarter and company. XXXX strong

multiple in joining value a for results on our well call. Our drivers, enterprises market for outlook of capitalize you reflect market positioned With increasing all Thank from continued to generating large multibillion and range. growing increasingly dollar growth stakeholders. we're an across today's investments demand opportunity,

over call turn the for I'll Now the to operator Operator? questions.

Operator

the from Sills line BofA Securities. of first Instructions] question [Operator comes Brad Your with

Brad Sills

partnerships for about vertical of these kind some How some from What you much. these the from perhaps are that market through help you see are talked leverage newer relatively some the here to you I of partners? are partner could understand here. company. these new for focus these you'll Obviously, partnerships? FIS, like to the you Raytheon ones get you ask Thank committed expected that are together? us going wanted How verticals about to so of leverage resources

Tom Siebel

I’ll fill this to going because as of one it’s kind Well, we're market know, to three sales you marketing across plains. related.

in NVIDIA. We partners Microsoft marketing sales geographic all have sectors, Asia market horizontal building also IBM and a And can with vertical expect oil but we say in get in leveraged market -- each of we market health, the We're goal like the the largest, okay, is be that cetera. align across Pacific, gas, markets of and vertical a utilities, these And would services, organization then organizations in each North will partner. America, Europe. financial precision that in et have in you

So classic Baker case Hughes. is the

Rule dollar salespeople not there’s financial XX or a that a cash product built Shell, gas So needs money I to line in is a oil sales number think, say relationship we’ve there gives and around this liquidity, aligned with If virtually Bank Hughes, inter it's anti billion the meet applications active largest, Rosneft what Bank XX,XXX of whether selling And Volcker laundering, you a have sales very XX and is with large Gazprom, capacity. whether Chartered couple and we financial it's and access Baker a companies, of successful And Aramco, company you. services one banks, with, banking not of compliance, XX America. have we’re lending, Standard as have lot of ADNOC, services of management, with motion know with now securities in in world. -- XX,XXX us the oil look of and roughly, oil to us people we large with we the day at we've that

I so to FIS, XX,XXX these $XX access banking does their with or our And which in have customers the we now revenue around roughly the entire billion partnership world organization. think people sales through with $XX from billion their think are I the banking,

entire FIS So this is the organization. sales

up. of to to they're relates I of doing. ton These sales it how people. has, our And as selling now look dollars many a people have I'll in billions solutions sales core As software. they're Infor software sell Infor, know it it's don't But to guys what

Adobe, doing we're what companies time with, in we're we're like okay, with in and manufacturing doing with what and we're in by in dealing we're Infor, oil Hughes, okay, what banking FIS, gas particularly, in So the Microsoft doing what CRM, with doing Baker roll you with and before we're of the people if And to strategy market out selling that world. around on I dealing execute think years, tens with the here. of the we literally us able three successfully for thousands honestly, two, are this put the else we're in anybody next gets lights can

strategy. this core the to is So

coordinating the this head Gene us. name Chief you like And know for ever [Indiscernible] we and believe a competence the by Accenture, people me partners. executive And who of on senior Officer in this. at here expect be a of vertical spending it's to initiative significant has We to time market then specifically core Reznik, the was [encountered] of very brought nobody before. up think I this a who amount and Strategy

in So we expect our increase that and coming significant think competitive market be market. these will additional a investment -- here partners the quarters, a announcements in give advantage us with expect will the we vertical there

Brad Sills

if then some embedding of these into one categories. please, the platform may, I concept horizontal CX’s more, of And

partnerships? as up and from When for partnerships partners they're you Thanks. with you of ramp these one those two CRM. the know CX.ai partnership leverage does a here the early. enabled you those particular? How you'll to for then see quickly do with integration market? a early think go of an in remind mentioned I it win partner of new take You out ERP. to us where standpoint an are little Can Microsoft Infor bit kind on

Tom Siebel

think now, Hughes about we quarters. this I did at Baker guys. not five right, mistaken if I'm Is

do Dave, And you… Okay.

David Barter

Seven quarters.

Tom Siebel

Seven quarters.

stand So I correctly. guys,

I large Baker mean, Hughes together you. to I is market. spooled and bringing building they're up. Okay, we're four company, And probably a thank products we’re global fully think

We're already up. We have brand spooled we have is FIS new. marketplace. products new. Infor two Granted in the is that relatively fully Granted

we're start I think And four two, get turn a can things take going it's up but flywheel quarters one, so at know, is to not 'XX, expect to with. 'XX, you think, mean in, And overnight revenue get this you once I to building it'll us you a I you the be out going us going. year really and momentum -- three, force capacity when get be spooled reckoned to significant calendar that looking these

Operator

question Your Andrews comes Needham. from the of Jack next line with

Jack Andrews

your I could to a is Machina to little a I bit of you you've on market if from believe product. solutions Ex sold. this the that strategy around the go offering different see expand historically want somewhat

should to be existing of family? And we to base brand just customers something your draw do is this Ex customers CX.ai about the that effectively how you your expect or strategy? thinking uptake be So the some to Machina from expect you mainly new in

Tom Siebel

with some is basically community, this stack online had this market are and we overflow, the product. for we've years, done now is as market been working training, the the we've the a in mass all Ex the a So and and that documentation, work we the offer Machina we've where releasing product are

all serving and Alteryx, this an allowing be point as on by this the pivot see drop doing who you associated market get, you of democratization and of people spreadsheet is served would that’s no think code, with drag be code, WYSIWYG, can data with is same data needs science. science, tables, You what Excel okay, to what is expansion people the of the normally a AI, And basically analytics low happen solution. a currently doing click which we data something through for has XXst that this a to century kind I level what from is PhD to not MIT here see hiring, it's to of the just happen. going XX that of scientists million mean, democratization science when And a and going is piece, quarter is version we've not happen. data released of

about. all apply that's science we're can to Machina to Ex have mortals to to data benefits, and tools mere provide achieve the their what where So is the business going

about Alteryx successful. -- to fine it that is think some need. I it same But but think, it'll proceed, market it, I'm continue be company. serves it'll so has a And sure

some supports computer run on on as a on you Machina computer And its Windows a on as any Now constraints. browser. has any Ex want Alteryx It'll premise that run will long machine.

want cloud of you science Defense, it's as organizations use as amount a data couple long to Alteryx science So at And you UnitedHealthcare, dealing petabytes, doing doesn't Department as native. we're will data XX,XXX. not gigabytes. Aneel, Shell, rows data as it of any entirely exceed allow two Well, as as of gigabytes. as like ALteryx doesn't many hundreds exceed it we're perform of basically on want with you will long

native application think the so on entire the nobody cloud where reactor under about nuclear interface And surface that a century CX.ai knows platform. is WYSIWYG XXst the that’s a

do do I so you it. free a that on you day your And a is a now, and web right encourage you sign so. mass it's after encourage to trial, it's market market up free you on product, can trial, I to -- available buy And the get XX the today

a something. you month I it or think cost $XXX

you and developing we'll on production on It's tried area be of before of to the trial some Machina, so be tested sign and we'll an a send where thoughts you able customers. the your it. product encourage or get everybody of up a call, Ex I looking and at proven an find, email after and thousands click for buy product free go CX.ai, And to now me

Operator

with Michael of line the from comes question next Keybanc. Your Turits

Michael Turits

was follow if really that seems In promising on little I've wondering Microsoft and that creation to why down pleased there So fill a I I a XXX was us the value you tell And going and forward? the bit got what up. was the deal. Fortune partnership, can see

Tom Siebel

selling. most I mean, market these with that, aligned and we and market would have enterprise partners guys. ours a is of with to a are Google, market number that go the with of we significant as go these strong lot to go to But AWS, really kind we Microsoft, the DNA organization or is say guys I of with we

so them. been align with we've to And able

largest looks government Some a computing, partner. cloud others, world, are it to organizations these understand these relates believe and to they be it and to do Shell with like And enterprise great think the mean, to on we're they process United going speed a to they dial know not guys, and with, be we're the I with I mean And they the of that me because I guys that reckoned are the with really force come sell as how in States to there. with unfamiliar entirely also.

Judson don't a roll And that and with guess we're we're together guns, they're in and whole of to spool a place get around the we’re but hesitate selling make guys out doing they off utilities, Satya customer, so confident banking. big really really to those with the in make I'm a along or working need hundreds them with to transactions selling met, transactions, they'll in the them we're or transactions they JP Microsoft make oil some enterprise of strong. And close so there's it’s deal with or [Multiple well. gas, pipeline them or selling to here we they we're commitment commitment gets whoever if commit need that Speakers] a sure I

Michael Turits

And you macro be to Tom, prognosticated I could minute. for just get a if here

perspective of a But this most people opening XX% that's do? these X% macro did from you in obviously, sequential, indication that projects to growth is done mean, doing things the -- of sequential But right. You up quarters. lot quarter. seven you've larger you're an in kinds almost demand or are that a I the from that And

Tom Siebel

I under services not courtesy control whether really disaggregating we're you you services to so that's question we're pretty want really to no two, Well, and what our services so guys as it? line a think And we revenue company. on I software focused those give there's line. And the think or focused healthy. was our and of keep we're company a it’s growth, subscription And on XX% the like wasn't

Okay.

I Now, blowing were -- and coming glowing. XXXX mean, to of let's we in and January talk about

And XX%, was our -- I as and last it size XX%, February, mean, $XX you was rate was fiscal year came like, I average thank When world what growth mean we're say going. know okay, our back our understand COVID think, XX%. in million. you. I blowing then stopped. I just transaction and think top I line, did okay,

Okay.

Francisco in New closed, knows County nobody okay, else San closed, And and Lower for were so York London Paris even the beach Chicago there closed. closed, mean, business. was closed, God closed, I

we hit February, okay, a April, speed speed May So the timeframe, in bump, in hit of, the say, first two a we bump. March, I would quarters

you that feel 'XX, an public year sudden, I increased guys talking business company. all that a this accelerate we're seeing rates. significant to take into to they start And acceleration on August, get mean place, start mean, we acceleration. get making AI. you we see June, we it’s idea July, our in once comfortable stimulus focusing a no getting, the the then of September, Okay, will on all of the in see will began and we as And we about you 'XX starts digital there's transformation, start fiscal people question focusing growth believe a which see to --

rate optimistic. what? be healthy I a year, a the business overall to pretty fiscal will market. And year, in rapidly and David, is But we this how think this so this know I believe which growth And grow we're

David Barter

April, point the yes, guidance of mid [XX%]. I think, the be In we would in

Tom Siebel

may I’d the like accelerant fiscal point dragging has year, like anchor hurt boat okay, [XX%], massive us. a we’re turned Mid QX of an from a this fine. But is COVID of decelerant But it guidance to salary. optimistic together behind QX to and We're next soon, cocktail Yes. COVID And so hopefully, like about it will say the York. two us, was this a for we're New we be years. all in behind -- get

Operator

Dan comes of Ives the with line question next from Your Wedbush.

Your line is open.

Dan Ives

changed I to your went to just almost with mean, over anecdotal to the like of there CIOs? maybe talk CEOs from a talk the compare you conversations of you I drivers last So have conversations maybe months, when it feel I it nine pull. really it ago. and a push some more can six Tom, a about customers and the of year mean, with about could maybe Thanks. some the

Tom Siebel

papers to I be all it IPO because have, brand. to it’s the going should on anticipate your and finance it, as financing at just look for I going And the I guess event, is the did you not effects of business. important growth. tell the to I this

so, effect on been IPO has I because and of of perceived credibility gravitas the slipping, huge the the guess and the And in the associated kind I'm really PR business.

the works much substantial of hire There's of we it make want the virtually faster. virtually return pipeline, default know, to in growth the going position are executive there's senior discussion today, a we The is are how work. so increase And the that into are conversations coming if a you happening nobody who companies seeing it and -- to call. won't we're

do way, what has are mean, of terms list. I terms, happened we've effect go in Google And in company enterprise these a Analytics, moved search in way like We where has you the so or on look AI frequency kind the we play when been of CX.ai go search on extraordinarily up you positive. and -- of and sometime, at do in the

since the think things as I is -- contributed, contributing. that IPO think the say the I IPO it's So I -- economy global

and this hurry billion fact day, in I trading the the the is AI. digital and think $XXX transformation government on a is that government focus

So we're the in I time. right place at think the right

have have We solution a good significantly. things changed and think I

Operator

line next Murphy question the JP Mark comes Your with from of Morgan.

Mark Murphy

and commented bit of a is Tom, pipeline commodity a don't and year have cycle recovery I a think your because in deal today energy I'm seen particular excitement just into we wondering Wondering and on more cycle? super is quite oil to the different during script. tough to and maybe And times, how ago. PETRONAS response. pipeline, typical versus feel inclination a you've on the oil about you pandemic modernize if how can more super in spend gas company that does pressure in more a different comment that. or

Tom Siebel

old This mean, other’s relationship Well, more sentences. an as school you is was oil must a you school there’s energy these funny day, market, -- guys between you Hughes we two of in positive. culturally Mark, expert kind oil be been know, and but I but that April, watch. be the tech And companies two we couldn't all, When so different. barrel. because find And first it's gas Baker February, XXX with of switched company And it extraordinarily and companies, would it's times is don't -- fascinating to March, first the high on. a today $XX company, pretty to negative finish yet into and I are new each we get a pretend talk

or downward oil for there's know. might at on the prices just situation, might after in a $XX guys have chilling and we can think to how that business, then And themselves were is, couldn't a all might Saudi I themselves that pressure $XX I I because off and they dusted a at of predicting at over as at predicted lifting it And reality companies mean was Shell, like billion these have they right? had you at figure be enough. make I one the barrel barrel, think look of And the fast world think a the kind the that picked if holy be at it futures on oil people they looking they the a you of nobody to EURXXX there a world. economics be the You which lot look Aramco would largest but company time, lay cost. off, fifth oil they -- okay, company moly, be in And reeling, effect reasons barrel, over. out little being oil, energy the believe no $XX both I I we over business, started wasn't recall, that look barrel a today, $XX roughly money, think of And

at the I out stuff of barrel. ground $X comes about that think a

choice reinvent themselves these the or of the who slowly rest and or Shell, either then have you large global of Exxon guys, these Rosneft, they whether out running have to it's Gazprom, So go business. are enterprises

And to Shell, highly are themselves. so these They've decision to people. really bright you I educated the mean, places like mean and guys I -- these get not made reinvent are

Rosneft, a AI the these So of mean oil And proving I to this pressure itself this the focus thinking they're their oil big coming ADNOC, from It's future. I the renewable Aramco, at Gazprom, going about and a -- are is think electricity revenues bulk we Shell think of change. energy the be to use on are see the an in all companies But -- fluctuations and as I really guys big company. they with renewable. who accelerant we're are turning you into the -- table.

Mark Murphy

RPO quick on number as few heard the if a or I I'm quarter? different you correctly. not that a clarify that sequentially follow-up, GAAP could backlog cake sure how layers for David, And did in January And behave just I the know there's you.

I'm just RPO that behave any GAAP how fingertips by we portion at just have see or current So perhaps XX sequentially? that then did or your chance, the next wondering, And later? month’s you do the do RPO

David Barter

the Q, RPO is the see in Well, current the million. but current you'll $XXX RPO

Mark Murphy

just And in the then sequential change RPO? what the GAAP total was

David Barter

So GAAP total last was RPO, looking it our from when it and at XXX, it's quarter, XXX.X. look at actually you you're

GAAP XXX.X So XXX.X RPO. to be the precise, is

TomSiebel

way Mark, job, the Road. happened we're commitment software kind okay? of we that's lot we that If have good customer Sand not doing, ringing changes we what we're give is a on back ruthless the say, over that okay, we to of a was okay, best and commitment were pretty did buy, to of about our focused multiple business, did business where engaged doing -- we and old like, without holding hard pre-December, in we doorbells finance -- transactions, the not the okay? the One our a nonrefundable were irrevocable, we days, the that here, from did position Hill Now we're stop, -- now and years,

more, in I transactions pretty well focused with capitalized. we is on market transactions, effect we're business order would gone we've engaging make for we've flexible where And think share, have organizations, Another okay? okay? more to that market We're multiyear where willing right are being do consider towards revenue have say, it I prospectively. assets but But -- but we're make could to upon sure business. a pressure does get But on will to -- And that easier business to going of that cancelable -- and RPO, with decision it that RPO, to gets it's have and decision contracts think bust our in the doing based sure percentage engaging negative become canceled. transaction it signed. pressure does performance. And some I nothing to downward Well, is you some did on the the upward on we're be

David Barter

XX.X, in piece XX.X And to Mark, XX%. up mind, from sequentially cancelable that the so with went

Mark Murphy

a there's So off of if RPO then so and the but it's kind rolling I'm of a estimation? out in off little revenue. you piece clauses the shifting term the contracts, little is it's the that hearing more inclusion mix correctly, because cancellation just is little GAAP into long netting positively more little fair Is the the a that a for cancelable piece a

TomSiebel

-- increased RPO positive also plus it's it's year-over-year… And cancelable,

David Barter

Year-over-year, it is up. Sequentially, it was off a bit. little

Operator

with of Your Bank. next Deutsche question comes from the line Patrick Colville

Patrick Colville

guess I want So I question. just part think but we mean, on just it now, got I a two I've to touched clarify. I just just

up quarter, just it help about adjusted in me XX%. the off the So billings, the I was RPO RPO between Because if at was delta look billings I think understand X%, and whereas that.

So help that understand just might me be? why

David Barter

on you're perhpas correct? my think was, Is I revenue. to at in looking in Well, and billings deferred think remarks I -- tried include that prepared I it

Patrick Colville

Exactly.

David Barter

Yes.

were in at flowing being pieces deferred. million of a to tried the deals some portion in we line I not isn't in called the think And that our quarter more flexible, comment is of end almost $X.X our I deferred. what that out with what so of flowing highlight through are And Tom's remarks through where on happened there

an impacting think I that's is, math that there. extent, to what's that So your

Patrick Colville

And contribution the are you to the Baker in quarter? prepared Hughes out call

David Barter

as part The RPO? of Hughes Baker contribution

Patrick Colville

As revenue. part of

David Barter

Hughes we in think portion, will actually our I The be including Baker XX-Q.

And so will published. revenue that's where be that

Operator

line Hynes Canaccord. with from next question Your of comes DJ the

David Hynes

to with of think replicate new the how just new the and trying building when influenced to much expertise about much think into Tom, you're how about that markets. which that you domain by partnering? grow I'm you as vertical, development as CX falls efforts of enter continue you model you is Lighthouse account on how

Tom Siebel

the across Force, one of is America, the And realized that the market markets, of by really of of real story it's at Bank customer is that churn for of AI-based the means of whether these maintenance it's because the we've whether gems accounting paper Air not yet lot it's installed or is all process predictive a across code Shell, based Georgia-Pacific, the whether at whether for loss predictive entire we're AI optimization, same hydrocarbon of installing base done. beauty it's the at that's XX% manufacturing the what

-- know machine don't turbine, the gas works twin works order need for we exactly in build for don't turbine models is model the turbine. digital a -- the same. the or the predictive how turbine first you sources, principles interface. build So are to XX% of a data the that of maintenance All a the changes know to need user code learning to and

So we that is the trivial. agree user interface

sets into very aggregating of image. idea this large realized federated data true have unified We

update you quite sensors. aggregated for this ontology, It's example, is business, -- Look will weather, enterprise what every Palantir aggregate at from services, day. Palantir of media, ENGIE that XX what ontology. is not For that regard billion big XXX train do sources, extra their think, a is Taking, do rather says the presentation and social will then through image, ontology, what that times that that million sentence price data is okay? organization magic, federated services ontology. calls This this we've Palantir okay? a now we we media, through and the Palantir a software. large we XX -- an weather takes data train I to that that rows does, is trillion And of XX social it's and right? when into And So it up. with

ML. Baker work have would XXXs AI we production And create -- because oil with for projects, our built the don't Shell, about We Gas. they Hughes, build Smartband X,XXXs, LNG people So Shell, operations. offshore Queensland And rig. you largest production to that's people ML, analytics knows matter for application I offshore we when many between Today, able working our say XXX on predictive don't operations application applications. all team we built is Hughes partners We've flight. anything anything team they maintenance are in that's in LNG operates, But optimization of projects about people built and do an to experts, their Baker at of both for rig/ did in Australia, we Earth, their what nonclassified we're about and their AI, six At before about a actually know how know space maintenance devices want the six have on VAR, with do, and and churn God to and subject know using is we grid customer mean how they but for to anything what predictive I the know which to you. say, don't in

not. a Martin Strike based AI predictive idea assure how do do at we we're for you Fighter we Joint know Only Lockheed Fighter, Joint Strike the that. think you, operates. have people As any doing F-XX maintenance the I

apply F-XX that laundering We're predictive to and matters Strike the build bank, we're subject it, so the the same experts beauty for can Joint And of to they their where code where for do money able Fighter. tools, what anti a we've maintenance what is done. able do in

And don't we think constrained be domain by so expertise. will I

getting Infor, relates energy the where said, that it partnerships efficiency. like We're to through like FIS, Baker it, extent need as it. Now and again, we’re to that like it Hughes getting being we ENGIE,

you of build. around of need nuclear But application to what build they maintenance So predictive we the to went a that. side for I as beauty and had do a kind not reactor that all clear that's

Operator

Peggy Your with Morgan line next question Stanley. from Yu the comes of .

Peggy Yu

last touch color through Wanted the of us interest pipeline greater give if continued the substantially to trends, pipeline, bit we to to pipeline pretty on First, especially little year? on quarter. seeing conversion and you a customer mentioned grow see has go the as could you've

Tom Siebel

have question. trends? I'm conversion it's legitimate don't And that pipeline sorry, Peggy, a answer. I

Next have don't answer. I the time we will it. have I'll talk,

out be very, give a call good would And you sorry, I'm I it's absolutely misleading? I and would rarely, so me. It's anything my of you get caught heels very question. And caught

Peggy Yu

apologies. My

Tom Siebel

the Yes, price for day. you the win

Peggy Yu

obviously, So QX talk slightly improvement, the down. you head I into the of around guess, go a puts QX, so and takes are we as What Looks you good some margins like trends seems be the to margins pretty could there? and QX? about -- saw

Tom Siebel

QX margin is XXX down? that How what… was

David Barter

we I think in highlighted guidance loss table. operating the the non-GAAP that

Tom Siebel

little going margin company. could as to is we being this are know. contribute a bit in compression focused market. is, I as software lucrative particular be being QX I software it the things company, think one in I a that We're focused to of services mean not on a on

That Finance professional in not Yahoo! now every said, at customers and services work look professional then we're order going that third to we've I be services providers Okay? the and enabled. business, facilitate we're to outsource okay? being with supplement to our too, in some going party

Services, I large XX So think and Global others. we have about this ecosystem of providers, third there's party IBM’s like

put upward goods pressures downward sold on, you our little time, at piece will on of to out services contract of actually know the give of the keep And pressure some me margins, we sorry, same a which pressure bit cost downward I'm will business. so them, a on and

that's -- trend, not but about. a that's And it's macro what so what that's all

Operator

Your with next of question Piper Arvind comes from Ramnani line the Sandler.

Arvind Ramnani

partnerships. have I vertical a your on question

to Are get As ingrained? points or I working pipeline? at the partnerships, these isn't important that service newer from will to your NFIs Fi as deals are you're looking And tracking a to quite the out. trigger wanted with partnership more switch very you the with it's particularly certain you there that you ones versus of how are progress indicated, understand part ones strategy. And

success at managing partnerships? how of important kind just conceptually, So you're these

Tom Siebel

in on instrumentation we're next by goals going are going what's next vertical, what's on expected We what's the step the revenue, year, this on year of business working have activity partner, here kind year, of after, together, revenue the with with each what which very, what's quarter. what's growing pipeline, the with deal, what are very deals each the the at of impressive business, rate the each for

metrics very tight we that. on So have

we you're the kind is that to here, when a operations. this partners Arvind, yet to still could have of sales And the tracking the where relates working as where making not enabled the of get state on going one to AI one I one sometime, have I have, We're we finger Fortunately, pulse point mean we believe we believe can. we that point for But the it art. of show and business will. we work? that that CRM focused to of we you the metrics doesn't and the system deployed is we haven't that have that it. we are gotten absolutely successful. every we this with to need replace on said, them We That

Operator

with Pat next comes question JMP. Walravens of from Your the line

Pat Walravens

I'd like ask And if can, two. I to

The look they is, grew this, CX for at XX% 'XX. investors, first in as fiscal

You fiscal the hit revenue going 'XX, COVID. midpoint And at in then is XX%. to grow

rate of So term business? this long should the about sort for we how growth think durable

Tom Siebel

the believe expand. will growth We rate

Pat Walravens

about can you things right? the with with with Army typically CX the you won big Tom, defense more a US or the bit competitive, the about is those has mean, Who And I competition? little opportunity the broadly, how that industry? talk then talk that are super just deal Raytheon? So

Tom Siebel

this that's this I close Now I true. do. And can that you, that on everyone not believes that call our assure we every -- know I is deal

to customer until guys did of talked hours XXst. XXXX, for a I August talk about XX fact, nothing As day. a December, about you or matter like from And but a XX, to I never prospect.

it opportunity I to freaking little a as China and of military that we're that session the in in and and year a about to have AI be So And it's you defense hold government, AI. don't about defense, this somehow tens think as the particular like -- it. of today, dollars United is is going I know investing and on And action. for on United I there’s the States, spending with government big about about would lot it very the Intel, applying historically been major And billions huge. initiative talk States to under talk to of Raytheon it. as deal can relates talk we How anything much transaction, to

the Assistant position anything now of I get on us going to I forward, think Navy, there, be the Ledgett, that going three boards growing phone to in rapidly intel, and I see think former structure and you Rick Deputy virtually the ever forward. as of will us Friday which beyond like to impact joining this branches secretaries we I an should that you how, have they're a to military, and business? seeing, okay? Secretary mean, do. our this former there. very it to I Danny we're expect way, of why can not one that going how we of going mean, past US of immediate and investment Director segment opportunity our the we're think, to his market the -- of no Yes, the do of advice substantial figure No navigate advisory XX% But our help is to federal a business? And NSA, the become how with to contractor. is we be one very, large expect McGinn, make out limitless. be making But a relates of defense we're

Operator

time… further no at are There this questions

Tom Siebel

to we up. that think might be we at might last about be I correct? the Is this -- wrap

Operator

Yes. no are at questions this time. There further

Tom Siebel

Okay.

a closing on a provide couple just we'll put me Let wrap then of and comments, this.

So thoughtful first were everybody, thanks, extent attention of I all, I One from and your didn't have And that I that apologize. Pat Morgan questions And the your two was from to. was think one to Stanley. there for the and answer questions.

way. out I you, follow-up? out In we get guess figure we can't Okay. we this a to Speakers] Can can we'll a to do Reg to need [Multiple world back So of -- way figure I FD, the

So we'll this. do

we architecture driven that that operate predictive a market. We third enabling well CX.ai AI think and We enterprise I never technology of than think range positioned really quarter highly think address this demonstrating And opportunity. that potential quarter model are scale. to develop $XXX pleased in complex clear differentiated illustrate this we're strongly I market to they the enter believe really applications fourth of results. growing believe and across that efficiently XXXX, industries in has power been positioned rapidly with we addressable and we is wide I more fiscal of enterprises the rapidly our greater billion as are leadership to AI.

a powerful building are We brand.

resources second are capital human to Our none.

market customer limiting. themselves, competitive be Our to does landscape partners' and successes the and appear speak not for

thank with our we the great months to sharing you And great a time. you in much We forward for ahead. and progress all So so wish and you day look week. your years a

your and today. courtesy the for time you thank So

Operator

conference gentlemen, for Thank concludes participating. today's this call. you and Ladies

disconnect. You now may

C3.ai (AI) 2 Mar 212021 Q3 Earnings call transcript