AI - Earnings call transcript Q3 2025

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Operator

Good day, and thank you for standing by. Welcome to the C3 AI Third Quarter Fiscal Year 2025. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Amit Berry. Please go ahead.

Amit Berry

afternoon. Good CX XXXX, for XX, which to of third XXXX. earnings year fiscal ended AI's welcome the call quarter and on January at My lead Berry, Amit CX. Relations name and is Investor I and are With on Chairman Executive Financial the today Hitesh me Tom Chief Lath, call and Siebel, Chief Officer. Officer; Investor release accessed both as section the our well Relations press issued supplemental market through of our at regarding to we today, details After results which as be can third the closed our website our a with quarter of results ir.cX.ai. on a This of following IR being the webcast, call conclusion is replay and will the be available our call. website

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

figures our material with a refer discussion please other the a to basis discussed be For important noted. further SEC. factors, and risks on the of All non-GAAP will otherwise filings unless

non-GAAP Also, is included refer as measures, press to to we of during GAAP measures call, a in today's certain non-GAAP reconciliation financial release. our

or detail business this continue presentation the response give or remarks our not Please in incremental prepared in provide to questions, the usual at Finally, in that to additional we advised our that results. into quarterly dynamics future. greater discuss to and are may be we your times may to our our insight of may metrics

with that, to the let over And call Tom. turn me

Thomas Siebel

everyone, the you, us about business talk our quarter. and afternoon joining third results you, Matt, for this to thank for Thank

accelerated and is in going large is genic Let which the Clearly, II it interest This has us. market me and okay, what's clearly AI of kind some growing. enterprise for growing is been and this huge by a rapidly provide on for business rapidly been generative becoming -- introductory comments. AI, has

that as some with Defense continues with Now for that Missile in today. we're work will believe AI generative some recall background, of the associated began United XXXX classified of I we you Agency a work matter doing that States

And most -- November do. so of advantage in world we AI of as when became well to generally of were it, I we became the technology aware prepared take believe, generative XX this

are call associated like AI with organizations, everybody familiar kind many language government which on models problematic wrestling is corporations really the of issues problems agenetic agencies, Now with the these with and problems liability hallucination, opening IP attacks, where problems unimodal new data exfiltration, well problems data cetera. like up or like being we're now et exposure, documented, bimodal are vectors, attack cyber that sources,

authentication, the of we did, of which we the that really what factor that Now omnimodal software Agent okay, you'll recall by address combining work -- with associated data identity, security dollars you. did of CX platform. fusion, have where issues engineering these and AI we billions

and problems. those agentic solved really context these layer, orchestration using AI by platform So we've the models CX the all language of in

of the as in so CX is a on Earth. today AI the result, And installed secure generative some planet most installations

Coke Agency, all agencies, these problems. we've others States United intelligence of include Department Defense where Industries, many Nucor would solved and of These Missile Defense

self assisted using interesting. we're and really about can dealing what swarms issues help coordination have that with people able And the we health dealing range is so address we're issues. wider it's some or we're thinking becoming large whether -- -- address government is wider interesting operate it's Medicaid, and whether space, I -- just is of to -- whether whether we're AI the generative very delivery of plants generative services, very you, hypersonics of it's Medicare, about every using it dealing And day, impairment whether whether think we're services, it to

do and today when so and historic, to that for this you before. proposing believe never is it I done is something And been has --

small we the call second is small quarter. details much quarter CX and have And on results results business and this call we're built financial Hitesh other answer from -- and have. done I'm I of of business what the then strip brief handle taken is our AI we to -- be really going the we we of AI the what consists the generative substance loaded model from on language quarter our results So and after the have more the and generative -- and model, third to going kind Hitesh of any available let you will and of which quarter, a you questions provide to CX will language specific

to me for, call way. first meet think, introduce and ladies allow AI. this you please conference I done gentlemen, Agentic So the Please ever to CX

and themes the CX analysis further advancements for is growth, across the stage Here summarizing AI QX. and demonstrated setting QX, the strategic strong In QX major financial in performance QX.

sales our our we point also accelerating us development inflection Microsoft positioning by alliance believe expansion but others, of for ecosystem, AI be will significant in revenue This cycles, and shortened growth critical a AWS, role reaching QX Azure, by reach a including our revenue was in played industry supported an driving to growth. most -- market accelerated which not partner Microsoft, XX% robust Google with partnership sales year-over-year growth this the in $XX.X to enterprise expanded $XX.X leadership. million, which in The strategic Our with was our the XX% QX, increasing subscription million. only

year-over-year. non-GAAP to QX, was reached million, revenue our a Building margin. on million, QX grew gross by million, increase representing profit from the XX% Subscription momentum revenue $XX.X a $XX.X gross XX% $XX.X total XX%

our financial yielded and our In our closed efficiency. operational announcement of industries, partnership different than X million, AWS agreements QX, theme with to key quarters our a Ignite, of the Since expansion non-GAAP A XX $XX.X across been we has better McKinsey million Microsoft across deepening These underscore million. $XX.X $XX.X guidance particularly Our and strength operating continued both and to XXX% improved results alliances, Microsoft significant at marking strategic increase with results. QuantumBlack. the quarter-over-quarter. loss Microsoft,

motion. sales nearly Microsoft an and co-sell XX% Our with shortened cycles effective by thanks to

excited joint onboarding to joint We with numerous sales XXX% led qualified have we field. see and integrated and running This have eligible as our Microsoft's we accounts in pipeline sessions. the efforts opportunities. infrastructure, These with customer disciplined showing we is approach about pursue surge enthusiasm global year-over-year the in are XXX as a sales already recognized partnership Microsoft data-driven measurable target outcomes, enablement

mention. global Under execution new Our AWS focus expanded and enhancing reach agreement, on QX speed. deserves in alliance further AWS AI strategic advanced enterprise offering and together, the will our particular CX AI with solutions

with enterprise business alliance complements driving leverages record announced transformation is McKinsey leadership McKinsey's AI. in our with This development. our And QuantumBlack advising another partnership expertise in in transformations our pivotal large-scale top QX and in AI of agreements of success with QX, track and our strategic modern operational McKinsey partners, the our QuantumBlack's driving strategy. the cornerstone Customer importance gap ecosystem our remains forward. of XX% In between business delivered collaboration in our were a solutions, enterprises our foresight in impact. highlighting bridging

Air clients Nucor U.S. Power and U.S. QX, such as the new Diagnostics the we of expanded Sanofi, Defense, Quest Force, Authority, New federal U.S. Navy Wholesome, GSK, among Shell, Department with Flex, agreements In Agency. the and agreements Worley, others. York sector, the Defense we Corporation, Swift, and closed In secured ExxonMobil, with Missile the

with work XX and our expanded state various states. governments closing agreements across also We local

Our including generative focus U.S. Mars, closed AI CX Department Liberty traction. continues clients Defense various on agencies. and we pilots XX with Coca-Cola Beverages, drive In to of AI and generative customer government innovation QX, the

reliable our Our safe, CX to outcomes. solutions drive with ability business measurable and demonstrates generative AI that success deliver AI secure

A position. the and including significant modal enhance of and innovations We was further over in AI agentic highlight as of accuracy advancements high-quality market reasoning strengthening planning and as and These agentic AI. orchestration data. agentic our our well made continued leadership autonomy, in in models QX omni angentic-AI QX retrieval efficiency further

of and latest use involving speeding systems trend significantly up This efficient more The for scaling data, deployment and agents bodes cases development, that and which deep a new will Our AI. across proliferation enabled embedding generative enterprises. integration models between AI emergence the The time series accelerate has another includes series CX foundation unifies of new, data. of is model work maintenance and adoption. like inference AI foundational of for model, series AI's DeepSeek time and time simplifies lower cost CX adoption well models

with business tangible wins that building from translating to inference customer this uniquely that capitalize the XXX in to specific of growth deliver further is outcomes. enterprise-ready, applications decreases, shifts cost our AI AI the over CX applications As on shift potential. QX advanced positioned into illustrate models AI focus are

For member streamline improve market instance, predict support leveraging service. and our is AI to respond while solutions is to better fluctuations, demand and CX to using AI generative customer SMITRx

over have Looking for ahead, CX built QX and the foundation position AI sustained we QX growth.

global AWS Our and increased execution dramatically sales strategic McKinsey Microsoft, reach QuantumBlack with alliances speed. our have and

all contract we shortens and AWS sales QX, Cloud cycles. on vehicles. our contract their Google significantly solutions immediately enter rapidly This we and now Microsoft, using the are As portals, can our orderable

the AI stage Our years. coming for agentic-AI partner sets acceleration generative ecosystem, combined in with continued our in leadership and the

market enter to been about to been XXXX has services The this. QX, our direct our been and Fiscal on all product has ensuring has enlarged a the organized continually never and will is years better share. sales company provide we realizing never and to support The stronger. As and our market be never company dramatically on never The be been of growth greater opportunity expand expanded will ecosystem. positioned distribution family capitalize focus has larger. XXXX both and properly capacity

for years. and have is applications. our This progress plans quarters we all to service achieve at groundwork the people, conclusion, a global confident to the for and We substantially quarter, Google of goals experienced Cloud and in sales am we accelerator. distribution inflection distributing In the cloud our laying growth servicing solutions execution AWS, legion globally. McKinsey point made leadership AI our AI capacity professionals I have increase Microsoft, the and enterprise and the enterprise a CX coming amazing now last these

let our my Officer AI to Financial this business AI and for Hitesh agentic additional over commentary now results. CX at you, colleague, Chief CX me Lath, Thank the Hitesh? turn on

Hitesh Lath

noted. these our sell our We Tom. on to million distribution licenses to note adoption our XX% revenue now will XX% versions customers $XX.X non that was licenses AI of otherwise to increased quarter. recap This results AI quarter our million. demonstrate you, 'XX. provide color that revenue additional software I year-over-year Hughes All large Subscription partners $XX.X unless figures million was to will them of and year-over-year year-over-year sale customers for revenue software effectively enable Total enable strategic during from and the XX% of Thank to representing accelerate business. fiscal them also increased the a revenue non-GAAP are in quarter. Baker financial their quarter total XX% of applications are to during Professional the third Revenue grew to $XX.X I companies. across CX revenue. this XX% their to by million. revenue services demonstration represents total of our of $XX.X to

or Prioritized Engineering revenue was TES, $X.X Services, million.

of stay quarters, in within generally professional prior revenue said we the for total services expect fiscal we XX% 'XX. to including revenue, XX% to As PES

Gross XX% PES profit and total was for for XX%. loss at high remained the an to and combined subscription services $XX.X million compared million. and our the was increase net year for million margin XX% gross accounted quarter $XX.X the for operating X for $XX.X million, of over was loss Professional was was Our million ago. XX%. margin and of revenue, quarter revenue quarter Gross $XX.X $XX.X

partner expense focus including operating expanding focus which time. and to due on strategic dramatically was impact loss management. to spend, advertising guidance our organization reduce particular, continued marketing manifest over Our sales expanding the better will In elected ecosystem, to substantially than of and our on we

share net per Our loss non-GAAP was $X.XX.

compared used negative of to to in also first to cash cash quarter of Free last net Our year. in flow months operating $XX.X $XX.X was X as last activities flow for million million negative the year as the compared for the months was the negative third X in million. Free negative $XX million improved the $XX.X year. of first $XXX.X million cash quarter

balance end and We concerns very $XX.X of for marketable cash third our the continue remains to unbilled was the bad capitalized less million million, closed receivable at not be we of Total $XXX.X do debt quarter accounts than quarter, well $XXX.X $XXX,XXX in and equivalents At with receivables regarding collections. securities. and million. allowance including cash, have

of health accounts receivables general The remain strong. our

the quarter, XX X-month conversion third are being are had signed in either to subscription XXX the pilots. still currently At During contract. they for X- duration, the quarter, of a signed we which or all their or active. some extended are This consumption pilots, end we or cumulatively negotiated XXX contract of for to or term consumption subscription converted means to original

We network about are distribution and with and excited Microsoft, our McKinsey. expanding initiatives go-to-market AWS

the see term, moderation mix due which of a carry margins gross phase some of life revenue to cost our continue the to pilot near to in customer expect in higher the of greater during We cycle. pilots

investments our business, additional we our force, and sales research in near in moderation partner operating ecosystem, to in due including and making term We margin also customer our support, development. are expect in the some

to cash for we be fiscal on but negative in business, for continue track QX. cash investments to the remain free 'XX As significant expect make we flow to positive flow be free

move I'll next on quarter. to guidance Now for our the

of for is year to QX $XXX.X Our $XXX.X 'XX fiscal revenue million. million guidance

full in revenue to million we range million. the $XXX.X of anticipating fiscal are the For $XXX.X 'XX,

the of from loss be non-GAAP for And $XX our operations non-GAAP guidance million. $XX from $XX Our to year million million million. in is for for operations range loss the to expected to is QX $XX

not have the situation pass to assumption government see on guidance that adverse stability. war indications could the those did the trade and is -- consequences be geopolitical results. we closed, on budget unknown Our global Were predicated or U.S. the of a of there business

begin Operator? question-and-answer With turn to that, call the I'd the like to operator to session. over the

Operator

first from coming the Our Timothy Instructions] [Operator Horan line of Oppenheimer. question with

Timothy Horan

number relationship bit on give pitches And to Great going Microsoft, that a that here with of on when going McKinsey. you little do in with pipeline? total Amazon, converting on at start will color Can job what's the more point you're think you the revenue? this

Thomas Siebel

of platform It preferred believe X we're that are solution. solution, Microsoft, engagements is and converting these revenue. today to over are we the companies just where with the involved with enterprise preferred they I with AI XXX involved we're

So I I mean, understand that.

I XX. and XX was of signed be between announced is it believe format I in because much if was the XX, the happened end quarter. We think memory agreement year this September of at would mid-stage in it November serves a correct. the Not Microsoft end for Ignite November that Microsoft. Chicago. the

then you the they to year, So were get the the you in or focused on to of to like January their of XXth get roughly whatever. business. work like get And people first the

a really And been with little bit Microsoft. month for so this over a at we've

industries. America, over And EMEA, XXX a in joint selling with America, you have what North in today, relationships South range Europe, across wide of engaged them we're

So that's just Microsoft, AWS. we okay? And have so now

for not are our is the simple co-selling arrangements, lot QuantumBlack months, McKinsey are These occupied agreements. are business it attention, have unusual. is that arrangements. this this X huge. distribution And a with in relations, team have these of and we okay, We okay? business. the -- and most ships last other whatever And about These were swarmed They was we executed. I to announced right these inked. were open we to They reason, talking all for the The some are respond are We guys. accordingly. are were agreements that are And thing by think time, do

know-how. accelerator So for This -- This there's a genuine is big growth it is CX. way is no not deal. a

Timothy Horan

some And a you XXX long does usually with only engagement you've it contract? Microsoft? been initial the from how the So since maybe announced just sign have until color take engagements deal

Thomas Siebel

Last closed. closed, quarter, many? Well, we said we closed We many have so how we've far. how already

Hitesh Lath

XX.

closed in Microsoft XX already. have agreements We

Thomas Siebel

that's quarter? already. I quick. So XX last mean, pretty

Timothy Horan

lastly, a just with going trends then little on And What's color remaining Great. bit just the more the on obligations. procurement there?

Thomas Siebel

question. I the didn't hear

of X if could... So guys you

Hitesh Lath

the Can please? you question, repeat

Timothy Horan

expect Yes, you going about just of trends talk remaining obligations, forward? should what SPXXXXXXXXX -- just kind Can we performance when the there

Hitesh Lath

the And of end the indicated indicator we've not at $XXX it ARPU is around of the the past, was RPO in our total The business. Yes. as quarter, million. leading

in term. should to in near decline expect you RPO continue our the some So

Operator

question the of Thank next JMP. with from you. Patrick Citizens Walravens coming line

Patrick Walravens

-- So would Tom, on you my the the let note February about that partnership okay XX. published add the talking all me congratulations be momentum. on you

you -- talk health what terms in you're just steps would be taking running sorry if that what setback but business, So the the and could about great. was of I think

Thomas Siebel

has a that was Yes. I bad after weeks degenerated autoimmune autoimmune I'm okay? turned -- disease, some disease -- down and of arteritis, symptoms disease so into an get autoimmune cell which into the optical kind identified lasted that And out and nerve. -- was kind so with came for attacks when February, I precursor and something then kicks in as like like flu-like flu we symptoms, sick giant that and Christmas, my pretty been of sorry, a this

impaired. of optical kind And so my paths vision so my fried, is

Now we we've with put relates of time around We've of to as done we personally, this with the of be same -- to same all I from -- the a that's that partners you has in all meeting this the our we this new discussed. -- so learn with with of team around spent lot it okay, how the mean, of the skills, opportunity were can new the I it time or reorganizing salespeople the business, we detail accommodations the me world. have all with this familiar spent here. company some imagine has personally and Tom of a lot business, intimately operating to details And okay? that place. management exacting you know

is the really about only e-mail. -- for place in can't accommodations thing do the put read I I

has so me, somebody e-mails reads I I have with what prove business respond, arrangements or I or the hot you. here SAP, our for competition Jim the the is and approve, here Jim, don't the course, So comment, of day. Chairman me far every of short on altitude of of the Co-CEO Snabe, you me a the In the put there kind in medical the of high we distinguished term, Chairman of directors. more community am to am office. a I in most I Allianz, one computer managing travel, I want -- made going real place, was who don't -- my know and so of Siemens. Chairman we've know Maersk, who they of certainly

assumed role in a you to he's Executive, assistant Paris or review Chief Jim executive for so to I special as that or at an need have London. we maybe to the what events the Shell in let's can't supposed And the say, Vivatech And was at be at filling okay? customer do, do Tom

And of I'm of managing the so am touch is you I day engaged business it's health how So more? just infirmities know little generally to can't every that a is how this -- me excellent, -- I like fully all that beyond Or know okay? is that answer see. details show My you those would details. I with and as you And in bit know the acceptable? the organized. had,

Timothy Horan

No, on this Everyone answer. very recovery, that details. Thank wishing speed is you a a Tom. complete is call

Operator

with from UBS. Austin next the line Our coming Dietz question of

Austin Dietz

so think, half to yes, for by, Tom Within Tom $X on a And the the Pro the Services front. first this or I fees relative of quarter, or Hides. outperformed services the health year. million question then,

so to Can ago drove to the year or quarter? I outperformance compared was services the $X.X you up quarter. just think speak maybe this it what million

Hitesh Lath

Yes.

is So Hitesh. this

as services it revenue, revenue professional services. Our services, installation from training prioritize well paid services services as and revenue engineering consulting includes

during consulting So and paid services from quarter. we training services, revenue services saw the implementation an uptick in

Okay. Got it.

Austin Dietz

feels demonstration those was the really quarter. over licenses outperforming helpful It And piece been then color demonstration on have licenses few pretty considerably last the it like this quarters.

Sort why about guess So year? And like think driving going been in much of we how those outperformance seeing are so I we forward? licenses demonstration what's should that? this

Thomas Siebel

Tom. is This

We're it's many mean very, and of they tens know AWS. on I I how very We're thousands, Let they're And in Azure now just all companies. predictive all have supply of they believe that guys. we complex buckets selling me to various selling these sell predictive we're for technology We're salespeople this. okay, widgets furnaces for But whether fabrics at consumer sell comment the or on, polyethylene a goods I tools chain maintenance. selling selling -- selling selling reliability. I okay? okay? these mean optimization need the come took solutions, don't packaged bag they We're or facilities. and CX

it first and the asking only that imperative, that for so generative for go And answering okay, absolutely a the can door Q&A, presentation, so in. complete also to we then these on AI with demonstration questions, the do kick sales but people not arm we and sales kits is in their come software customer can own, they demo

have the And continuing demonstration they're of so factor, obligations on in where ASC which the they must-do that form of need But independently we're people critical performance success but so you mean we to mean this these effective. okay? for work, in us, did selling overwhelmed result work in that sales not an is with they're increase on in also a it rational. way working under statement this not be and make pilot not with is demonstration of shows And revenue. a us months. there And and able that But organizations is successful, to we're them the do way XXX X making simply recognize licenses that period way -- in delivering. So I are important they to that so in us, interest by operate last absolute are their there we're the there call, big, selling the own, the revenue the on I the were just they're they're licenses on demo, not the them so people performance now X, was -- that the arm the to ongoing on

Operator

for the any Mr. remarks. Seibel And closing conference I like now turn call back to to would

Thomas Siebel

deployments and most it's and to for difficult so most here, it thank attention is Ladies and -- in it's time largest, -- one we enterprise and describe of of I of great the it's complex world's fascinating companies. the a and assure exciting verge you I professional -- it -- -- on we on this how the some are the AI it's lifetime, involved earth. your is building are and We gentlemen, continuous is you, the experience of much think

for So your today we keeping forward you thank and on all. look Thank as our you we you forward. attention to power progress posted

Operator

conference Thank This you may now concludes today's call. all for participating, and disconnect. you

C3.ai (AI) 26 Feb 252025 Q3 Earnings call transcript