Q4 2021 C3Ai Inc Earnings Call
[music].
Good day, and thank you for standing by and welcome to the C..3 AI fourth quarter fiscal year 'twenty 'twenty 1 earnings call. At this time all participants are in a listen only mode. After the Speakers' remarks, there will be a question and answer session to ask the question during the session.
And you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.
I would now like to hand, the conference over to your Speaker today, Paul Phillips. Please go ahead.
Good afternoon, and welcome to C..3 AI <unk> earnings call for the fourth quarter and full year fiscal 2021, which ended April 32021. This is Paul Phillips VP of Investor Relations of C..3 AI with me on the call today are Tom Siebel, Chairman and Chief Executive Officer, and David Barter Chief.
Initial officer.
After the market closed today, we issued a press release with details regarding our fourth quarter and full year fiscal results as well as the supplement to our results both of which can be accessed on the Investor Relations section of our website at IR Dot C..3 dot AI. This call is being webcast and a replay will be available on our IR web.
Site following the conclusion of the call.
During today's call, we will make statements relating to our business and may be considered forward looking under federal Securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date, we disclaim any obligation to update any forward looking statements of our outlook. These.
These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations for a further discussion of the material risks and other important factors that could affect our actual results. Please refer to our filings with the SEC also during the course of today's call, we will refer to certain non-GAAP financial measure.
A reconciliation of GAAP to non-GAAP measures is included in our press release finally at times and our prepared comments and responses to your questions. We may discuss metrics that are incremental to our usual presentation to provide greater insight into the dynamics of our business for our annual results.
Please be advised that we may or may not continue to provide this additional detail of the future with that let me turn the call over to Tom for his prepared remarks, Tom well. Thank you Paul and good afternoon, everyone.
I'm very pleased to give you an update on the state of the business bottom line Q4 was of great quarter, and and fiscal year 'twenty, 1 was a great year.
And I'm pleased to report the C..3 AI is well positioned to substantially accelerate growth and continue to gain market share in the coming year lets talk about our fourth quarter results, we exceeded our guidance for both revenue and.
Non-GAAP operating income.
Our bookings grew believe it or not over 500% and Q4 compared to the quarter of year earlier, our bookings grew 179% quarter to quarter.
Revenue in the fourth quarter was $62.3 million and increase of 26% year over year subscription revenue for the quarter was $43.1 million up from $36.8 million, a year ago and increase of 17% year over year.
Gross profit for the quarter was $40.6 billion of 78% gross margin compared to $32.1 million gross profit a year ago and an increase in gross profit of 26% year over year.
However, meaning performance obligations were $293.8 million compared to $239.7 million of your earlier and increase of 23% year over year and.
<unk> cancel orders are non-GAAP, RPI was $345.1 million compared to $246.9 million, a year ago and increase of 40% year over year.
Our total enterprise AI customer count at the end of the year with 89.
Representing an 82% growth rate year over year.
Now, let's take a look at fiscal year 'twenty 1.
In entirety.
Total revenue for the year was the $183.2 million up from $156.7 million, a year ago, and an increase of 17% year over year.
Subscription revenue for the year was $157.4 million up from $135.4 million, a year earlier and increase of 16% year over year.
Subscription revenue importantly, subscription revenue as a percentage of total revenue remains a.
The 6% constant year over year.
Gross profit for the year was $138.7 million of 76% gross margin compared to 117.9 billion gross profit a year ago, and an increase of 18% year over year.
Most importantly.
Our average contract value for the year continued to decrease from $16.2 million and fiscal year 19 to $12.1 million and fiscal year 'twenty to 7.2 million in fiscal year 'twenty, 1 providing <unk>.
Moving growth and bookings and greater revenue visibility going forward.
We experience continued customer momentum.
In the course of the year accelerating and the half of the year.
Specifically in the fourth quarter.
We expanded our enterprise AI footprint, and defense and intelligence financial services manufacturing oil and gas utilities and energy and sustainability.
We had a number of new enterprise production of application deployments at the United States Air Force Base from America Standard Chartered Bank, Coke and Coke industries, Meg energy, Duke energy and the engine.
C III and also initiated new enterprise AI projects with 3 M Con and F. I ask in for Coke Industries, New York Power Authority and shell.
And signed new contracts with Commonwealth Bank, George Washington University School of Medicine, and Health Sciences, and C ask 1 medical San Mateo County, Stanford Health care, Swift and Yoga Electric Corporation of Japan.
We enjoyed substantially expanded business agreements with existing customers included in the United States Air Force the.
The U S military rapid sustained office and the F 35 of Joy.
Program office.
Importantly, shell execute at a very significant and expansion that spans over slightly in excess of 5 years to significantly accelerate the deployment of C..3 AI.
And ml applications across shell global assets. This represents a major expansion of the partnership that C C.
And I and shell have forged over the past several years.
Again importantly.
The total number of C..3 add customers at the end of the year with 89 up from 49 at the end of the previous year and 82% increase year over year.
We continue to expand our partner market or the market partner ecosystem.
To extend our global distribution and service capabilities during the quarter C..3 expanded its relationship with strategic partner and financially and financial technology leader F. I S.
Drilling solutions for the financial services industry, including Us.
Credit intelligence powered by C..3 AI.
And this builds upon the previous and we announced launch of <unk>.
AML for anti money laundering compliance powered by C. III AI.
The company saw continued success and its partnership with Baker Hughes exceeding its fiscal year 'twenty, 1 revenue target for the alliance.
The company formed wide ranging of wide ranging strategic alliance with Infor, and ERP technology and cloud leader to jointly expand enterprise class AI solutions across industries and extend in force native machine learning capabilities.
Let's talk a little bit about product and technology.
It is difficult to overstate the significance of the rate of innovation and product engineering at C. III AI.
As of the end of Q4, we have released 20 enterprise AI applications and the general availability across 5 vertical markets. This in addition to the C. III AI suite itself.
And the course of the fourth quarter alone we.
We released 40 updates and upgrades to these applications and to give you a feel for the complexity of some of these deployments and we update 1 of our larger deployments in excess of 320 million times per day.
Operate at now and massive scale as of the.
The end of the year.
And the <unk> AI suite and applications, we're integrated with more than 800 unique enterprise and extra fries data sources and sensor constellations and we manage more than $4.8 million concurrent production AI models, we processed more than 1.5 billion.
AI predictions per day, and we evaluate over 30 billion and machine learning features daily.
Our service levels remain superlative.
And our customers 90, 999% product availability with exceptional performance characteristics characteristics for the C..3 AI suite over the course of the year.
Ladies and gentlemen, this would constitute the gold standard and the software and the industry.
The production release of X, Mark and now serving the needs of the citizen data scientist opens a new large and rapidly growing market opportunity for C..3 previously served by <unk> for.
For those of you interested I encourage you to go to our website and sign up for a free trial of that market. If you like it by it.
I am most enthusiastic about the advancements we are making and C..3 AI CRM.
<unk> represents the next generation of the now 80 billion dollar addressable CRM market and my market a market segment that I'm confident we will lead Keith.
Keep your eye on this space you can expect that number of exciting announcements and product releases from C. III in the coming year.
With shell and Microsoft <unk> expanded the open AI energy initiative and open marketplace for C. III AI applications announced in February of the open AI initiatives and accelerates the deployment and availability of the enterprise AI solutions to the <unk>.
Energy industry by providing a framework for energy operators and service providers of equipment providers and independent software vendors to offer interoperable solutions powered powered by the <unk> AI suite and Microsoft Azure.
Fiscal year 'twenty, 1 was a great year for C III.
The enterprise AI software market is rapidly growing.
And we see accelerating interest in enterprise AI solutions across industries geographies and market segments.
We are aggressively investing to extend our product and technology leadership.
And to expand our market partner ecosystem and associated distribution capacity.
As we continue to execute and delivering high value outcomes for our customers. We are increasingly well positioned to establish a global leadership position and enterprise AI application software.
Bottom line performance was strong across the board and we're planning for.
Salary and growth in the coming year.
And with that I'll turn it over to our CFO David Barter for.
For further for more complete color on.
On the quarter and of the year David.
Thank you Tom.
Yes.
We exceeded our guidance for both revenue and profitability and the fourth quarter. While also building significant backlog that will help drive future growth and fiscal year 2022 and beyond.
Revenue in the fourth quarter was $52.3 million.
Up 26% from a year ago due to increasing demand for our enterprise AI applications with particularly strong deal volume late in the quarter as reflected in our accounts receivable and deferred revenue calculated billings and remaining performance obligation.
Our fourth quarter revenue growth is a meaningful improvement over the 19% growth and Q3, and the 11% growth and the first half of the fiscal year, which reflected the impact of Covid had on our business.
Subscription revenue increased to $43.1 million and the fourth quarter, while professional services revenue grew to $9.2 million, reflecting strong customer implementation and activity and engagement with Baker Hughes that will make our virtual data lake and reliability applications, even more compelling for oil and gas customers.
In Q4, 82% of our revenue was from subscriptions and 18% growth from professional services.
On a full year basis, 86% of our revenue was from subscriptions and 14% was from professional services consistent with our revenue mix and fiscal year 2020.
We continue to anticipate subscription revenue mix and the upper 80 per cent range on the trended basis. However, there may be some variation and the revenue mix quarter to quarter.
Our revenue growth was highlighted by contributions from each different industry verticals, including some newer verticals such as high Tech life Sciences financial services and telco.
Over the course of fiscal year 2021. These newer verticals contributed 17% of revenue compared to 8% and fiscal year of 2020.
Geographically our revenue diversification and also increased as activity in EMEA and APAC continued to expand.
On a full year basis, EMEA, and APAC drove 34% of our revenue compared to 22% and the prior year.
Our sales execution in Q4 also drove a meaningful increase and our contracted backlog total remaining performance obligation or RPM at the end of the quarter was $293.8 million and increase of 23% from a year ago and of 19% sequential increase from the third quarter.
Current <unk>, which we expect to recognize and the next 12 months was $145.2 million and.
<unk> of 11% from the prior quarter.
In addition, we had $51.3 million of additional contracted backlog from contracts with the cancellation rate.
And when combined with our GAAP RVO. This produces a non-GAAP <unk> of $345.1 million.
Our non-GAAP <unk> and 40% from a year ago and this represents a sequential increase of 17% from the third quarter.
It is important to note that our non-GAAP RP O does not include any backlog associated with Baker Hughes that does not have and existing customer contract.
And just commitment at the end of the fourth quarter was $219.3 million and it leads to an adjusted <unk> of $564.4 million and increase of 31% year over year.
Before moving on I'd like to provide a brief update on our performance in the oil and gas.
Our revenue related to the Baker Hughes market partner relationship was $55.9 million and it exceeded its revenue and commitment of $55.3 million Baker Hughes partnership revenue increased 20% compared to $46.7 million of revenue generated in fiscal year 2020, and our financials of <unk>.
<unk> of the Baker Hughes partner revenue is reported as related party revenue as it is contracted directly with Baker Hughes and the balance of the revenue reflects situations, where C. III AI as the contractual relationship with the end customer of Baker Hughes, the assisted with the sales process.
In the fourth quarter the related party revenue was $13.8 million.
And the non related party component was $8.7 million for full fiscal year 2021 related party revenue was $35.4 million and the non related party revenue was $20.5 million.
Yeah.
Turning to expenses and profitability I will be referring to non-GAAP metrics, which excludes stock based compensation expense and the employer portion of payroll tax expense related to stock transactions.
GAAP to non-GAAP reconciliation is provided with our earnings press release.
Gross margin and the fourth quarter was 78, 3% up from 77, 5% of a year ago for full fiscal year, 2020, 1 and our gross margin was $76.4 per cent up from 75, 6% the margin expansion over the year was driven by subscription gross margin, which increased to 86%.
And up from 77% and the prior year.
Our operating loss was $15.4 million and the fourth quarter and favorable to our guidance of a loss of $28 million to $27 million in the fourth quarter head count increased by 56, and 11% sequential increase compared to the third quarter.
For the full fiscal year of head count increased by 130 for a year over year increase of 30%.
We thoughtfully invested throughout the year and we will continue to invest with focus on expanding our market leadership position as we scale our business.
Shifting to our balance sheet and cash flows we ended the year with 1.091 billion and cash and cash equivalents and investments.
Third to 1.12 billion at the end of the third quarter we.
We had and operating cash outflow of $31.7 million and the fourth quarter.
Including capital expenditures of 462000 free cash flow was an outflow of $32.2 million and the fourth quarter for.
For full fiscal year 2021, operating cash flow was an outflow of $37.6 million and free cash flow was an outflow of $39.2 million.
Reflecting on the deal activity and the fourth quarter accounts receivable increased to $65.5 million up 112% over the fourth quarter and the prior year.
Deferred revenue grew to $75.2 million.
A healthy 25% increase from the end of fiscal year 2020, as well as the 21% sequential increase from the third quarter.
Now turning to our guidance for fiscal year 2022, and the first quarter were beginning the year, where the healthy contracted backlog as I mentioned earlier current RVO increase sequentially, 11% last quarter, and our non-GAAP RPM of increased 17% sequentially.
And this level of growth provides us with meaningful revenue coverage and Q1, we expect subscription revenue will continue to expand and our subscription revenue mix will climb back to prior year levels.
Also we expect approximately $2 million less of professional services revenue in Q1, when compared to the prior quarter.
And our full year basis, we expect our subscription revenue mix increased slightly year over year, given our focus as a software company gross margin will continue to expand its important to keep in mind and C. III has been designed to be of structurally profitable business.
We expect gross margin to expand by another point in the coming years, driven by the growth of our subscriptions and finally it is worth noting that we will invest thoughtfully to expand our leadership position and the market investment will be higher in Q1, and then it will be more balanced for the remaining quarters of the year.
With that in mind for full fiscal year 2022, we anticipate revenue to be and the range of 200 of $43 million to $247 million non-GAAP operating loss and the range of $119 million to $107 million for.
For the first quarter of fiscal year 'twenty, 2 we expect revenue in the range of $50 million to $52 million.
And non-GAAP operating losses in the range of $35 million to $28 million.
In summary, we exceeded our guidance for revenue and operating income and the fourth quarter with our growth initiatives, well underway and the increasing demand for our technology. We believe we are and a strong position to lead and deliver an even better performance and fiscal year 2022.
Thank you for joining today's call and I will turn the call over to the operator for questions operator.
Yes.
Thank you at this time I would like to remind everyone in order to ask the question Press Star then the number 1 on your telephone keypad again that is star and then the number of 1 on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
We have our first question coming from the line of Daniel Ives with Wedbush. Your line is open.
Yes. Thanks.
Can you can you talk just about success that youre, having vertically speaking when I think about utilities.
And oil and gas versus financials or are you starting to see and you are just more and more penetration across verticals.
From a customer base.
Well, yes, I mean.
Again, we had a huge concentration and utilities.
And then a couple of years ago and into the oil and gas business and now that's a pretty big chunk of our business.
We've seen.
The initial success, that's quite significant and financial services with Bank of America, and instead of chartered bank and now with the relationship with Fas and a number of discussions, whereas the volume out of the world, We expect to see substantial expansion of financial services.
And as our products are used for anti money laundering customer churn.
The cash management Volcker rule compliance.
Margin lending.
And manufacturing remains a big business for us and particularly as it relates to the caustic optimization of the supply chain production optimization.
So.
I mean, we're.
Clearly the diversifying across a wide range of industries and I think we'll see pacing diversification of both in terms of additional industry segments and a wider range instead of only doing.
Very very large deals like we did 3 and 4 years ago and now we have a mix of large deals and medium deals small deals.
That is resulting in a substantial reduction and our average contract value.
So you know as fish.
As this plays out just like the relational database business did and the mini computer market did and CRM did I think that enterprise. The AI will be adopted across all sectors precision health travel transportation and aerospace you name it.
And.
And and we expect to play and all of those sectors.
Great and just a quick follow up.
Can you just talk about.
From a conversation with the Youre, having with customers when you're talking to CIO Ceos.
Here's how it's changed in terms of where C. III stands today versus even 6 months ago or a year ago I mean is it.
Is it really gone from to just more strategic.
And and it's almost more of a pull versus push can you just compare and contrast, especially just given what you've seen in the last 3.
30, 40 years. Thanks.
Well I think we really hit an inflection point after you know.
And if it means the first 2 quarters of this.
The calendar year or excuse me of calendar year.
20, okay with tough right and.
Yeah, we were doing these large enterprise transactions and then Covid hit Paris closed Rome closed London and closed New York close Chicago closed and so you know that that did that did slow us down.
Now when we get into May.
And May June July of last year, we saw a dramatic acceleration.
And this mandate towards digital transformation and seems to have made here and at the top of every day agenda.
And digital transformation and it very much about the application of enterprise AI.
Makes death more efficiently planned specified efficiently.
Deliver higher quality products EBITDA.
The hand of the SIB.
And we're satisfied customers hit flow of cost.
We are clearly more credible today and the market than we ever have been.
I think that.
I think we're doing a pretty good job of demonstrating thought leadership and in AI. The work that we're doing with major ratio and institutions like <unk>.
Illinois, Carnegie Mellon and Princeton.
Stanford Berkeley.
H.
Is it kind of really helping us at the high end.
But now.
Now, we have production and use cases and Peter.
All over the place and utilities, all over the place and manufacturing and financial services and aerospace and so.
And the.
Pipeline has never been larger okay, and the sales cycles are shorter than they've ever been so we're right now we're you know.
And we're pretty optimistic about true.
And what the next coming 2 years look like great. Thanks.
We have our next question coming from the line of Brad Sills with Bank of America. Your line is open.
Oh, great. Thanks, Thanks, guys for taking my question I wanted to ask 1 just about the general environment for AI and the sales audience are you seeing a change where.
And now Youre. Your deals are sponsored more by of data scientist owner, if you will or is it still very much the CIO sales at the line of business.
And it becomes more of the forefront of of.
The critical capabilities for these companies.
As the sales audience changing and are you seeing that more pervasive through these organizations.
Well, it's a good question, Brad and I think it is changing if you see like the uptake on X Mark and there were selling the basically individual data scientists and the citizen data scientist all of these organizations like $500 at the time or something.
And yeah. The uptake there is pretty substantial but I would say it varies from organization. The organization. Some place, it's starting and divisions and other places like Bank of America Saturday of against the very top or are at or near the top so.
Net.
You know where the.
And we started the body of are we started the middle we seem to make it for the top sooner or later.
And Oh.
The Bank of America, and standard chartered bank or a joke.
Yeah.
It's this is this is a rapidly growing hot market with a lot of people really interested.
And they've been I think they're a little bit frustrated with what they've been attempting to accomplish and the last 3 or 4 of 5 years, but haven't been able to accomplish so we.
Ill present, the prospect of being able to fix that and.
And.
Business is good.
That's great. Thank you Tom and then 1 more if I may please as you've pivoted towards these.
All of our deals.
The smaller land deals what does that mean for the expansion opportunity how is that different from some of these larger deals where you land bigger.
Should we see of greater velocity of expand deals and some of these early early wins that you perhaps for smaller and footprint. Thank you so much.
Oh I think that's a really good question and the answer is yes, I mean, as you get into selling the small and medium businesses selling CRM of selling X Mark and I mean, they're you're selling you know $500 of thousand at a time and that becomes a it becomes a net and our our game and you know and are all right. It's been really less important.
As a metric for us historically, because we were Atlanta and contracts that were.
And so long in duration and so large I mean, you can remember and fiscal year 2018, and 19 in New York here. When we were doing 30, or 40 and $50 million deals. All the time and you know that is clearly changing now so I think it's a healthy mix of large deals medium deals and and.
And you know and.
De Minimis transactions I would say $500 of months by our standards is certainly to many of us, but you know it.
And it certainly looks good and the long run and in terms of evening out and get the lumpiness out of bookings, so and I have to deal with that anymore.
That's great. Thanks, Tom.
Okay.
Thank you we have our next question coming from the line of Michael tourists with Keybanc. Your line is open.
Hey, Tom can you just give us a little bit more on the shell deal is the.
Is it an expansion and how does it impact if it does revenue going forward.
Well it is revenue and it's more revenue and it's more revenue so.
I think like existing contracts that we had in place with shell, Michael and I could be wrong on this I think it was the second or third contract, Okay, and it was about 4 years and duration.
Originally we did a couple of truck production trials with them.
And I forget what year and those were successful and then they expand and it's kind of a small enterprise deal and then they expand into a larger enterprise deal, which was 3 or 4 years of duration.
And now Sally is very much reinventing itself.
Around all aspects of its business with this initiative they call shall AI, which is the combination of basically C. III sitting on top of Azure and then the number of very very bright people who are.
Applying AI to basically all aspects of shelves business upstream downstream midstream and really importantly, renewables I think by 2050.
And I'm not really Privy to all of the shelves company, but well shelf strategy, but it looks to the me like it might become and electricity business anyhow. They were deploying you know many many successful applications.
The applications, they decided to renew their application of year before.
For it expired and so they entered into a new 5 year relationship with us.
And to kind of dramatically expand the number of assets.
To which they can apply of the C..3 applications from the C..3 stack, we work with them independently of that.
All of this open AI initiative, which you can think of as a marketplace, that's being sponsored by shell C III and Microsoft and it's a marketplace and which all of the energy providers can basically put the C..3 applications and they can trade them to 1 another so shell.
As a you know it's the strategic deal, it's 5 plus years and it is ear of book.
Well non refundable commitment and.
And it's a it's a.
It's a very substantial and important transaction that we think will serve.
Nothing of of Bell cow, and the oil and gas industry, because al Shellers perceived of.
We have taken a methodology leader in that space and so we think that will help fuel our oil and gas business, which is already.
Already quite healthy and and a lot of people think oil and gas is kind of yucky, but.
These guys are all of reinventing themselves as renewable energy companies and to deal with.
Very pleased to be able to play a role and that.
Thanks, Tom and.
David If you could could you talk to us a little bit about the move down market from from a couple of aspects..1 in terms of ex margin in terms of the progress there and how much might be built into the guide and then maybe what you are seeing the CV was like in the quarter.
And it's really moving down.
Michael we couldn't quite hear the second part of your question could you repeat of please.
So again I'm sorry about that.
All of that the move down market and maybe you could approach from a couple of angles is first of all of them how much traction with X market and how much is built into the guide for next year from ex Machina and on PCB and what was it not just in the year, but.
In the quarter and how effectively are you are you moving that down.
Great questions, Michael in terms of planning of the.
Wade.
We planned our business, we think about our revenue of our subscription revenue accelerating over the course of the year and as you can see and our guide we're looking at the midpoint of 26 going up to 34 and X market and certainly features and the so we have thought about it in terms of our go to market teams and we planned and detailed level as we thought about the outlook for the year and how to.
And continue to accelerate our growth.
Okay.
The X market and then in terms of T. C V and the quarter. We were at about 7.5 million of T C D and the quarter.
Okay Alright.
Alright, Tim and Tom Thanks, very much.
Thank you.
We of our next question coming from the line of Patrick Colville with Deutsche Bank. Your line is open.
Hey, Thank you so much for taking my question.
And the the presentation was plus 9 thinking is reached and the kind of hit here.
And how you see the market evolving just help me understand though just this quarter and I guess includes the annual guide.
It doesn't seem like the.
This is complex.
And as just yet subscription revenue is kind of basically flat sequentially and implicit in the gallant and the guide is it kind of flat again in the call.
Last quarter, So just help me understand.
And just the kind of puts and takes between the.
Fantastic of long term potential that you've articulated and we can see versus the kind of mid term and.
Translating into kind of dollars now.
But I think of it was kind of flat last year Q4 of Q1 wasn't it.
Patrick.
And I very seriously and correct.
And I think of that the growth projections that you have had others had for us and 1 of the incorrectly if a wrong the mob.
And for this year was about 9% of it and I think of it came in and about 17.
The.
We're seeing part of what's going on in Q1.
Is the.
The growth of the year is going to be a very healthy air Q1 will be of Berry.
The healthy quarter, we are raising guidance okay.
For Q1 over what the consensus was.
Part of what's going on in Q1, However is an artifact.
And you have to go back and look at book any switch I'm not going to disclose okay for like Q1, and Q2 of <unk>.
Ah.
The fiscal year 'twenty, Okay and.
And.
If you look at 19 and 20, you know, we're kind of thrashing around quarter end of quarter to quarter to quarter and bookings and there's kind of an artifact of the as it has some downward pressure on.
Q1, and we're thinking of as this as the revenue kind of water from bookings waterfalls out over say 36 months and.
And.
You know there was a quarter back there that wasn't very big and the term of the revenue was not very long and the quarter and as you know a little bit downward pressure on Q1, the key wanted to get a bit and it'll be up.
The final quarter and.
The year is gonna be of great year.
Great that's very helpful and then.
And as we've kind of the.
The fiscal first quarter and to kind of physical.
Fiscal second third and.
And for next.
And next year, I mean, just kind of.
And particularly the numbers the again the.
So I would suggest quite a material re acceleration I mean, I remember at the time of the IPO.
We were talking about a number of factors, including the exit from Corona virus, we're talking about the kind of lapsing of the debate and Hughes contract reset and then.
And you still the kind of key reasons for this reacceleration in subscription revenue and.
In the second half.
The fiscal 'twenty, 2 or the other factors that we should be aware of thank you.
Well I think what we saw was a reacceleration of bookings and the second half of fiscal year 'twenty 1 really.
And.
As we I mean of what we came into fiscal year.
'twenty, 1 blow and go out and I think wasn't the growth rate in fiscal year, 'twenty like 91% growth or something.
The 1% of 71% Okay sorry.
The big numbers Big number anyway.
And we've had zero okay. It was big and then we got kicked in the teeth of Covid, Okay and the.
And I think what Youre seeing is just what we saw and the second half of the year is just a reacceleration of business.
And he.
Covid is clearly over.
And our digital transformation is you know whether the interest and that is the more acute than it ever has been okay and the interest and enterprise AI is the more significant than it ever has been okay, and we're perceived job as a you know kind of more substantial more reliable provider than we are.
Ever have and so I think what we're just seeing as the acceleration of business. It's a good thing.
Great. Thank you so much for I appreciate you taking the time.
We have our next question coming from the line of Jack Andrews with Needham Your line is open.
Good afternoon, and thanks for taking my question.
Tom I was wondering if you could speak to just the hiring environment.
And its historic historically been a difficult for applicants to secure opportunities at C. III and so could you just speak to are you able to scale the organization and the way you want to in terms of.
Finding the right types of people to build out the organization. These days.
I reviewed those data to date, Jack and Greg Great question last quarter I think we had.
12000, the applicants okay job applicants from all over the world to C..3 a count of 12000, okay and ease of use.
Of this annualized as to roughly 50000.
And what we're in the heart of Silicon Valley. This is supposed to be of very very challenging hiring environment.
You know all of the of those 12000, I think we had interviews from 1 form or in other brother with almost 3000, and we hired and net of like 56.
So we have really the brightest and most.
The highly trained and experienced data scientists in the world and and and application engineers and sales people and and and sales leadership, Okay, and marketing leadership, who want to join us and so we're very very.
Fortunate and that rest of that we kind of the need to figure out what's going on and the and yes.
Get the bottle of this as we go forward, but the rate of interest and people coming to work, which etsy 3 has not slowed down okay, and our rate of interest and hiring people has definitely not slowed down.
And if you go and I encourage anybody who is interested.
2.
And with either of you get a pretty good feel for what the culture is like and what the morale is like if you go and look this up by the Glassdoor Dot com, but.
But yeah. It was it was I think 12050 people or 12500 people, who apply for jobs here and the last quarter, it's really rewarding.
And that's great and thanks for the color around that and just as a follow up question I think in your prepared remarks, you referenced strong deal volume late in the quarter. I was wondering if you could provide some more context around that was that something that just happened organically within your customer base or is that the result of maybe some of your partnerships really coalescing and.
Any further clarity would be appreciated.
I don't think I said anything like that.
I think Jack you may have heard it and 1 of my paragraphs.
And I missed that I was out of the room and so.
I think of all we were highlighting is the correlation Jack between our bookings and how that manifested in terms of accounts receivable deferred revenue and the and the strengthening of our performance measures like RPM.
And so we've got it okay.
You saw bookings percolate through the financial results.
Thanks.
We have our next question coming from the line of Mark Murphy with Jpmorgan. Your line is open.
Yes. Thank you Tom how is the signaling from some of your end markets that benefit from higher commodity prices like oil and gas.
Or higher inflation and interest rates.
Such as financial services.
I'm, just wondering because thats a pretty good portion of your customer base.
Is it is it safe to assume thats on much firmer footing versus a year ago, where you would see that driving.
The strong pipeline growth for later in this year.
So you have this huge.
Well, the oil and gas and I don't know what gas prices were a year ago and I remember about a year and a half ago you couldn't give away all the way right. It was like negative from $7, a barrel or something whereas of today, where you know better than I, but roughly 67 bucks or something like that so you can do yesterday and it.
Easier to do business the oil at $67 a barrel than it is at negative 37, and I can assure you of that and the.
And the banks all seem to be printing money around the world. So those of those segments do look.
<unk> healthier than they than they have and some time for us and we expect to see outsized growth in the segment.
We're not we're not stopping of the air I mean, you could expect us to be investing this year, and a big way and defense and intelligence and Thats been manifested and some of the hiring of that you've seen telco.
And we will put in and we've put together of larger organization around telco and you'd expect to see a large investment and precision health and so yes, we will be further penetrating the oil and gas businesses and the.
And.
The.
Banking business and.
And.
And those those those industries today look very healthy.
Okay.
As a follow up the I guess regarding the shell partnership extension. The are you able to comment on the dollar amount and I wasn't clear to me and whether that is reflected in the <unk> balance that we're seeing for.
For Q4 or is that something would would that manifest in the Q1 metrics.
That's an IPO and literally we closed it in Q4, and it's and RPM.
But in terms of the size of it.
You know I can tell you if you take all of our deals and the size of those some of the deals and divide by the number of deals, it's when I say sub $2 million and.
But the size of shy.
It's a good 1 and it's bigger than the bread box.
It didn't it let's say it didn't contribute to bringing our average total contract value down.
And it was a good 1.
Yes, okay.
And then just 1 final 1 David the on.
And the CRP, Oh, I think it grew well sequentially I think it grew 9% and 10%.
Year over year is there any perspective on.
And maybe how to drive that current piece of RP O a bit faster I think of prior analyst was commenting that we see it.
And the kind of longer term portions.
But can you look for instance, do you think that CRP of number could be it could be growing a little.
Faster of couple of quarters down the road.
Yes is the short answer.
Thank you.
We have our next question coming from the line of David Hynes with Canaccord. Your line is open.
Hey, Thanks, very much Tom you highlighted CRM is kind of the opportunity of that excites you. The most of it and I'm just curious like where do you see the most low hanging fruit and CRM and and whats the homerun vision for that market as you kind of re imagine that with AI.
Well im not sure its exciting because of excited you've made the most but I'm really excited about it okay. It's not going to be our biggest market I forget the market is going to be enterprise AI writ large think precision health think banking, you think oil and gas travel transportation and what have you that being said you know.
The guys you know CRM, today's and 80 billion dollar of addressable market. Okay. The next generation of CRM is all about AI enabled CRM, Okay and AI enabled CRM is basically when you take the days of it are in the CRM system and combine it with all sorts of axon.
And this day and lets take a hypothetical of of manufacturing company made at Boeing Okay. So of Boeing has all of these and they used to sell $60 billion worth of the commercial aircrafts and I have no idea of what they sell today, okay, but they have the they have a CRM system, probably sales force receivable or something and they're all kind of the same okay and they were they have all of the.
The sales forecast that the guys put in and the sales of the systems are just like the systems that you guys have at J P. Morgan Chase and every place else you know the sales guys just put whatever they need to get it and put in there to get the the the sales manager off the back okay and so they put in all of these records or and you have 35000 salespeople at Merck.
Each of which are putting you know 100 lines of garbage and so you get 350000 lines of kind of garbage and you're forecasting system and the Jacobs some of that and that's the most of your sales forecast well it really doesn't work that way now however, the data really aren't useless and if we think about this the hypothetical because we're not talking with them.
About this but let's think about Dave Calhoun at Boeing and he's got he's got the information that's in there of CRM system of our contacts about opportunities about deals that are supposed to close that loop tons and bank of America at at Southwest Airlines and it's just the information of the salespeople put in the I imagine.
And buying of that data with you know almost 9 times more of that or order of magnitude more exogenous data about the market think camp.
Commodity prices jet fuel prices for the equity prices of Boeing's customers Southwest Airlines Lufthansa of American Airlines and L. P on social media, Okay and L. P. On analyst reports equity prices of all of these companies GDP growth rates travel passenger <unk>.
<unk> is the country or is the country of piece, Okay and L. P and media if southwest Airlines as is.
<unk> now and saying you know a 15% lay off for whatever reason like airlines do from time to time and the stock just goes down 30%, what's the probability of the this order for like 100.737, Max is going to close this quarter or was that would be zero. Okay. So you can see how we can take all of those data.
Tens of thousands of signals from the market analysts reports news report stock prices commodity prices jet fuel prices GDP growth rates is the country of wars the country of peace and felt very precise machine learning models. The tell Dave Calhoun, what deals are actually going to close okay and not to.
And so there's more of let's say the Calhoun aside because the let's talk about <unk>.
Something like a load of the Procter and gamble, Okay, so proud of and gamble and not only needs to revenue growth.
Forecast revenue, so you need the forecast products, because they need to make the right amount of stuff at the right time to meet the demand function in order to realize the revenue right. So we can build and we have now demonstrated the.
We can build these AI models, okay that are literally an order of magnitude more precise as it relates to the revenue forecasting customer forecast. The next best product offer customer churn and then what's going on and in CRM did day and Youre going to see us releasing these products of this.
Year for banking, Okay for for aerospace, Okay for manufacturing for health care, what have you and.
And those products will be well perceived now we have done extensive market research and the levels of customer satisfaction and the CRM industry today and I'm, telling you the levels of cuts of these people hate their vendors okay.
And.
And show the levels of the customer satisfaction and our uniform, it's an $80 billion market and as you wait for that effect with its related to AI the intersection of AI and CRM I believe we're going to establish a leadership position and that market. We've hired some very.
The key people and CRM here, you'll be seeing some announcements soon or some other.
Other very key people, who are joining us and.
And that is going to be exciting and market and as people know, it's a market that I'm not entirely I'm familiar with and.
And.
And so we're going to have some fun there.
Do I think we're gonna put existing CRM the companies out of business. The way you know other great companies that are going to continue to survive will we established a significant toehold in that segment that is where people are interested in using AI for these things.
Don't bet against Us.
Yes, yes, okay. That's helpful.
And then maybe you could speak to the mix of kind of direct versus partner led business and maybe how that's different today versus what it look like the year ago.
100, and safe partner of lag okay. So.
And I guess, what part of the assisted I think is right. Okay, I'm not really certain and we really have any it's of great question, David and we're going to work and we go to market at massive scale I'd say with Microsoft Okay with Baker Hughes and now we're just kind of kicking into gear, okay, and with Fas, Okay and.
And for <unk>.
And I think we and ready to go to market with Singtel in Asia.
Partner assisted I mean.
It's <unk>.
I mean, I think our pipeline today is larger than it has ever been I think of it.
This is off the record and I'll never say it again, okay, it's probably off by 10%, but I think our pipeline for this year, it's like $1.6 billion or something okay, and so give me some slack out of that 1 guys. They don't have any numbers in front of me, but I think it's pretty directionally and it's about right.
I would say it would be my I would speculate the 50% of those transactions. We are engaged with the partner either Microsoft for Baker, Hughes or something like that to bring the deal.
Yes, Okay. That's helpful data point thank you.
Part of our ecosystem is up for an important part of the equation right can we really rely on the partner to close the deal for us and I'm not so sure of him right. After close of the ourselves okay, but the part of the assist.
Gartner happens to the soft yet.
Our jets and alpha off at Microsoft.
Pretty good sales guys I'm, telling you.
Thank you we have our next question coming from the line of Sanjay <unk> with Morgan Stanley. Your line is open.
Thank you for taking the question I wanted to follow up on the previous question.
And really relating to the customer count, which picked up pretty nicely I think.
You are up to like 89 customers from around 64 at the time of IPO and just wanted to get a sense of what's driving that is just the better for the spending environment or from a sort of go to market sales thats. The Houston sales hiring perspective, you're starting to see that sales productivity and really start to come.
And through the door to help them accelerate that that customer count philosophy.
And it says I think and there's 2 things that we're seeing that our other influencing that number 1 youll recall that.
The pre IPO, we were all of the elephant hunting, okay, we own the other major accounts group, Okay and since then we've been building kind of averages.
National Enterprise sales organization of Middle market sales organization and the mass market sales organization 1 of our we did a pretty large transaction. This quarter I believe took place out of the Microsoft on the.
Is there a marketplace that had done day in Asia.
It did okay, Okay, and and all you guys and I encourage you to go to C. III Dot AI Dot com <unk> Dot AI now, okay put any of your name of dress.
And.
And the credit card number and for 30 days use you don't use the X mark and up for free I mean of hundreds and hundreds of people are doing that okay. So and so and so please do it and and please also forget the dialed in and of 30 days of the cancel your subscription okay.
Yes.
Yeah.
But I think there's 2 things number 1 is remember you remember we set of couple of years ago, we're putting the deal we're going to expand the major accounts group, we're going to expand the enterprise group, we're going to put the middle market group for the place, we'll put a mass market group and place. We've we're doing all of that including Tele sales marketplaces of the Internet sales and then this is combined with the partner.
Ecosystem.
The at Microsoft.
AWS.
Baker Hughes or what have you. So it is the resulting and just a much larger diversity of different sized deals. So the strategy that we said, we're going to execute starting in and well before the IPO I mean, I mean I communicated this as early as early 2008.2018.
And we're executing it and it's working.
Makes total sense.
The follow up question is the topic that we've talked about.
For a couple of quarters, net which is around like the competitive environment and the third.
Look at.
The broader landscape, including C.
And that a lot of customers are stuck and proof of concept now.
Going back for that question.
Hum.
The customer sort of do the bandwidth of sort of fits together approach, where they come to Florida and.
And the platform like like the Q3, where are we in that journey D C.
<unk>.
Well I think everybody is kind of tried to build it themselves.
And that's what people do.
And the they tried to build of relation database systems themselves and they tried to build the ERP systems themselves they've tried to build their own share I'm systems themselves, how that worked for Morgan Stanley. Okay. I mean, they try okay.
And they tried to build all of those things for themselves, Okay, and I wish all day.
Okay, how would it work for JP Morgan Chase they tried to build all of the systems themselves and today Jpmorgan Chase is trying to build their own and AI platform day. After that comes out of crash. They tried to build the R. E. R. S E. ERP system. They tried to build their own CRM system to all of that came crashing down around them so they'll spend.
So I don't know how many hundreds of millions to billions of dollars trying to build their own the AI platform and then Jamie of the guard and they'll bring in some new CEO and a fire everybody and I'll buy it from a commercial vendor that's the way of this works. So virtually every 1 of our customer shell and GE Koch industries, and the United States Air Force Army Futures command.
Hi to build this themselves a.
Baker Hughes.
And that would be G.
And it didn't work out so well and so this is just the phase we've seen this over and over and over and the industry and it's just the.
And everybody's got to go through or they have to try it for themselves and crash and burn and a couple of times and then they buy it from a reliable vendor.
Alright, I appreciate the thoughts thank you.
Thank you and we have our next question coming from the line of RV and from 9 with Piper Sandler Your line is open.
Hi, Tom.
Yes, most of my questions have been aspect of it didn't have a couple of questions.
Yes.
And then a question on margin.
Overall, the product can you talk about the applicability of using the same code base across the.
Different industries or different applications.
Yeah, all of the Arvind I mean.
And there's a really good question.
And you and I have talked about this before but I really do appreciate you asking it. So yeah, we deliver I think you've got about 21 different AI products today across 5 different industries, and we have a family of products for manufacturing for a gas for financial services for.
For aerospace.
And.
What's the counter intuitive.
Is that whether we're doing.
Object identification for the space command.
Clearance of adjudication for the diverse intelligence agency.
For gastric optimization of the supply chain of Koch industries.
Or AI based predictive maintenance for shell for offshore oil rigs and all of which we do now these are separate products with separate documentation separate the user interfaces separate API aggregate data, but 90% of the codes that are running across all of those applications, whether it's the cash management and bank of.
Erica or predictive maintenance for offshore rigs at shell. It's the same code base and so thats counterintuitive and this is the beauty of this model driven architecture, and we have really broken the code on that okay. So we're able to everything we do is reusable.
And so and that's.
That's what people.
No.
We have broken the code, we all know all of the.
The lateral property of the patents have been awarded to US. It is it is it is our invention. Okay. This idea of using a model driven architecture for enterprise AI and <unk> and Iot applications. So it's a.
90% of the coast because of what changes from customer to customer or the data sources. The API that we use for the data for source trivial problem. Okay. The user interface expression of different from say anti money laundering too.
And predictive maintenance for a lot of pressure compressors and offshore all the race, but we can all agree I hope the the user interface is trivial and then the parts of the differs from.
The most from installation of the installation or the machine learning models and the machine learning models, we call I hope we can agree these are non trivial, but they constitute.
And maybe 3% of the code.
Perfect and then.
You've answered a couple of questions on guidance, but I, just maybe wanted to frame it a little bit differently.
And the midpoint of the guide.
Really adding.
$62 million in.
And revenue in fiscal 'twenty 2.
And then when I look at the fiscal 'twenty, which was which is of Goodyear.
And it may hit.
And you added $65 million. So it seems like the guidance has.
Our favorite of conservatism because you'll have.
62 million of adding but you also have some delays and some pent up demand from the.
The D&A and said you experienced last year net.
The.
And should kind of boost.
Revenue and more than 60 of Dominion. So I just wanted to get a sense of how considerate of the are you guide and maybe.
Well Evan.
You know me a little bit and.
No.
I hope that at the end of the day the.
And people believe that.
I was credible and I am credible C, we're focusing on being credible and.
What we wanted to do.
Is meet and exceed beat and exceed the beat and exceed so you know we're.
No.
You know I think that you know.
And you go I think of it I don't know how many enterprise application software companies are growing what's the what's the expected growth rate and the milligram of <unk> 33 per cent or something like 34% of 34% I mean, I don't know how many enterprise software companies are growing at 34% compound annual growth rates, but I am sure that would be and the top of that dollar I expect.
So not really of cactus stuff for it but I suspect it to the top decile and right now we approved.
And we intend to move and the top decile of this year and hopefully we can come back the next there.
Move up a little higher.
Terrific. Thank you.
We have our next question coming from the line of Pat Walraven with JMP Group. Your line is open.
Oh, great. Thank you and congratulations on the quarter, So Tom you've got oil and gas financial services.
Or am ex machina.
Hearing.
Can you just tell us for this year for this coming year what of your top 3 sort of strategic imperatives.
First of all.
And really good question.
The.
The strategic imperatives, Pat and you'll see a number of announcements coming in this area and there have been some announcements is making sure that we have the leadership in place.
Scale of this business globally.
And you've seen some of this with Ed Carr Joan.
You're seeing some of this in for.
Rob.
General cargo and the who's the chairman and C..3 federal the new.
New general manager of C..3 federal.
And you can expect that we will be adding a number of you saw this with.
Jim Snobby.
The co CEO of SAP.
SAP joining our board.
And we have been really really focused on bringing senior leadership into the company in the last 9 months.
And we're and you're going to see a number of announcements there.
That I think you'll agree I significant.
And I think that is the I mean, we have of the technology.
The market is.
And much bigger than we can address and rapidly growing.
The Technology Foundation, we have is very rich and it works.
We have we're leaving and a wake of string of highly satisfied customers I think we're doing a pretty good job of building brand equity the kind of.
Competitive dynamics of this market are not very significant.
Basically.
We are selling of vehicles and everybody else is selling ball bearings and wheels and carb right. So okay and.
We're selling vehicles, okay, and so the computer there's not much going on in terms of the competitive dynamics and so we just need to make sure that we have the season the leadership in place to scale this business.
And federal systems in Asia Pacific and Japan and Europe.
And manufacturing health care telecommunications aerospace et cetera, I think it's human human capital that's true.
And that that is the game and if you go and look on glass door any of you who are interested I would think of it of this focus on human capital and it's been consistent for many years and it will continue.
Great. Thank you.
Thank you and there are no further questions at this time I will now turn the call over back to Tom simple for closing remarks.
Okay, ladies and gentlemen, thank you for taking time out of your busy day, okay too.
To check in on us.
We appreciate your interest.
And.
You do know that we are you know it is now either June of 2021, and I am very pleased to report that there has been no day and the history of this company. When this company has been better positioned when the market has been when there has been.
And more market opportunity.
This company has been better positioned to seize the market opportunity and so as we approach. The next 234 years I can tell you we approach it with great enthusiasm and.
And.
Well.
And we'll see how this turns out when it's over but I think there is some probability that we might bill of a pretty substantial company here. So thank you for your interest. Thank you for your support and thank you for your questions and we wish you all the great day.
Okay.
This concludes today's conference call. Thank you for participating you may now disconnect.
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