Q4 2026 C3.ai Inc Earnings Call

June 3, 2026

Operator: Good day, and thank you for standing by. Welcome to the C3.ai fiscal Q4 and fiscal year 2026 Earnings Conference Call. At this time, all participants are in listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Amit Berry. Please go ahead.

Speaker #1: After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star 11 on your telephone.

Speaker #1: Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Amit Berry.

Speaker #1: Please go ahead.

Speaker #2: Good afternoon, and welcome to C3.ai's earnings call for the fourth quarter and full fiscal year 2026, which ended on April 30th, 2026. My name is Amit Berry, and I lead investor relations at C3.ai.

Amit Berry: Good afternoon and welcome to C3.ai's earnings call for the Q4 and full fiscal year 2026, which ended on 30 April 2026. My name is Amit Berry, and I lead Investor Relations at C3.ai. With me on the call today are Tom Siebel, Chairman and Chief Executive Officer, Stephen Ehikian, President, and Hitesh Lath, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our Q4 results, which can be accessed through the investor relations section on our website at ir.c3.ai. This call is being webcast and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws.

Speaker #2: With me on the call today are Tom Siebel, Chairman and Chief Executive Officer; Stephen Ahikin, President; and Hitesh Lath, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our fourth quarter results, which can be accessed through the investor relations section on our website at ir.c3.ai.

Speaker #2: This call is being webcast, and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws.

Speaker #2: 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 or outlook.

Amit Berry: 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 or outlook. 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. All figures will be discussed on a non-GAAP basis unless otherwise noted. Also, during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures, to the extent reasonably available, is included in our press release.

Speaker #2: 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.

Speaker #2: All figures will be discussed on a non-gap basis unless otherwise noted. Also, during today's call, we will refer to certain non-gap financial measures. A reconciliation of gap to non-gap financial measures to the extent reasonably available is included in our press release.

Speaker #2: Finally, at times in our prepared remarks, in response to your questions, we may discuss metrics that are incremental to our usual presentation to give greater insight into the dynamics of our business or our quarterly results.

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

Speaker #2: Please be advised that we may or may not continue to provide this additional detail in the future. And with that, let me turn the call over to Tom.

Speaker #3: Good afternoon, everybody. This is Tom. And just when you thought it was safe, I'm back. We have an enormous opportunity before us, and the opportunity is to create enormous value for our shareholders.

Thomas Siebel: Good afternoon, everybody. This is Tom. Just when you thought it was safe, I'm back. We have an enormous opportunity before us, and the opportunity is to create enormous value for our shareholders. The performance of this company has been staggeringly disappointing. We're looking at a turnaround opportunity, and the fundamental nature of this turnaround opportunity is to change everything about the way we manage this business. In the process, we're going to create enormous financial returns for our shareholders. Along these lines, I've been working with the senior executive leadership and the board for the last couple of months. We have restructured the company. We have restructured sales. We have restructured products. We have restructured services. We have put together a strategic plan. We have put together the objectives, and we have a clear plan in place to turn this company around and create value for our shareholders.

Speaker #3: The performance of this company has been staggeringly disappointing. We're looking at a turnaround opportunity and the fundamental nature of this turnaround opportunity is to change everything about the way we manage this business in the process.

Speaker #3: We're going to create enormous financial returns for our shareholders. Along these lines, I've been working with the senior executive leadership and the board for the last couple of months.

Speaker #3: We have restructured the company, we have restructured sales, we have restructured products, we have restructured services, we have put together a strategic plan, we have put together the objectives, and we have a clear plan in place.

Speaker #3: To turn this company around and create value for our shareholders. The restructuring of the company, first introduced by Stephen Ahikin in February, has been expanded and accelerated by my return.

Thomas Siebel: The restructuring of the company, first introduced by Stephen Ehikian in February, has been expanded and accelerated by my return. Headcount has been reduced from 1,075 to roughly 700. We have taken almost $135 million in annual operating cost out of the business structure. C3 AI Federal has been entirely reorganized under a new and highly experienced leader. The sales organization has been completely restructured globally under, again, a very highly experienced, seasoned chief revenue officer. In the past weeks, we have reorganized the company top to bottom. We have new leadership throughout the organization. We have restructured the company. We have restructured C3 Federal under new leadership. We have restructured C3.ai sales under new leadership. We have restructured products under new leadership.

Speaker #3: Headcount has been reduced from 1,075 to roughly 700. We have taken almost $135 million in annual operating costs out of the business structure.

Speaker #3: C3.ai Federal has been entirely reorganized under a new and highly experienced leader. The sales organization has been completely restructured globally under again a very highly experienced seasoned chief revenue officer.

Speaker #3: In the past weeks, we have reorganized the company top to bottom. We have new leadership throughout the organization. We have restructured the company. We have restructured C3 Federal under new leadership.

Speaker #3: We have restructured C3 Sales under new leadership. We have restructured Products under new leadership. We have brought together end products, the Platform group, the Applications group, the Product Marketing group, and the Customer Services group—all in one organization under senior seasoned leadership.

Thomas Siebel: We have brought together end products, the platform group, the applications group, the product marketing group, and the customer services group, all in one organization under senior seasoned leadership. We have restructured the service team. The objective's in place, the strategy is written, and we are now going to town. The company, just like sales, the products group has been completely redesigned and re-engineered. We've brought together under one senior leader, who's been with the company for 14 years, four functions, including the platform team, the applications team, the product marketing team, and the services team in one place. We have one organization basically responsible for designing the product, coding the product, quality assuring the product, and delivering the product to make sure that customers are successful.

Speaker #3: We have restructured the service team, the objectives are in place, the strategies are written, and we are now going to town. Just like the company, just like sales, the products group has been completely redesigned and re-engineered.

Speaker #3: We've brought together under one senior leader who's been with the company for 14 years, four functions, including the platform team, the applications team, the product marketing team, and the services team in one place.

Speaker #3: So we have one organization basically responsible for designing the product, coding the product, quality assuring the product, and delivering the product to make sure that customers are successful.

Thomas Siebel: The services organization has also been completely re-engineered and completely designed under a new senior leader who's been with the company for more than seven years. We've taken four layers out of that org structure from seven to three. The organization has been redesigned so that for every one of our customers where we're working on pilots or production deployments, we have a dedicated team assigned to the customer. They move in with the customer, and they stay with the customer until the project is done and the customer is successful. I am absolutely satisfied that the new structure is going to result in higher levels of customer satisfaction, more successful customer deployments, and more rapid expansion of our customer deployments into large enterprise expanding contract relationships.

Speaker #3: The services organization has also been completely re-engineered and completely designed under a new senior leader who's been with the company for more than seven years.

Speaker #3: We've taken four layers out of that orchestructure from seven to three. The organization has been redesigned so that for every one of our customers where we're working on pilots or production deployments, we have a dedicated team assigned to the customer that is moving with the customer and they stay with the customer until the project is done and the customer is successful.

Speaker #3: I am absolutely satisfied that the new structure is going to result in higher levels of customer satisfaction, more successful customer deployments, and more rapid expansion of our customer deployments into large enterprise, expanding contract relationships.

Speaker #3: As I look at the performance of the company in recent quarters, and particularly the sales performance, I mean, it is just unspeakably horrible. And it's surreal.

Thomas Siebel: As I look at the performance of the company in recent quarters, and particularly the sales performance, it is just unspeakably horrible, and it's surreal. Okay, this is resulting in market multiples for the company that are candidly well-earned, okay, and scathing analysis from analysts and sell-side analysts that are candidly well-deserved. I am here to fix that. Okay, as it relates to enterprise sales, this is not an area which I'm entirely unfamiliar with. I think just a return to fundamental hygiene and fundamental sales protocol, just the basics, will take this company a long way towards increasing shareholder value. The company is sufficiently well-capitalized to basically obviate any question of the need for a financing event. We have enough capital there to meet the mission that is before us. I want to give you an update on the restructuring that Stephen introduced last quarter.

Speaker #3: Okay. This has resulted in market multiples for the company that are, candidly, well-earned. And scathing analysis from analysts and sell-side analysts that are, candidly, well-deserved.

Speaker #3: I am here to fix that. Okay. And as it relates to enterprise sales, this is not an area which I'm entirely unfamiliar with. I think just the return to fundamental hygiene and fundamental sales protocol, just the basics will take this company a long, long way towards increasing shareholder value.

Speaker #3: And the company is sufficiently well capitalized to basically obviate any question of the need for financing and debt. We have enough capital there to meet the mission that is before us.

Speaker #3: I want to give you an update on the restructuring that Stephen introduced last quarter. We have expanded those objectives, and we have accelerated those objectives.

Thomas Siebel: We have expanded those objectives, and we have accelerated those objectives. We have reduced headcount by approximately 35% across all organizations. The workforce actions are in place. They are done. The cost controls are in place. The budget is in place. The plans are in place. The cost have been reduced by order of $135 million a year. We are well on our way to becoming a fully agentic enterprise, adopting these agentic tools to fundamentally change the way we do business across the enterprise and to dramatically increase the productivity in every aspect of our business. The products organizations today are largely leveraging AI tools for all programming activities. These agentic tools have been adopted across the organization, legal, finance, sales, marketing, wherever it may be, to increase productivity really dramatically across the enterprise.

Speaker #3: We have reduced headcount by approximately 35% across all organizations. The workforce actions are in place; they are done. The cost controls are in place.

Speaker #3: The budget is in place. The plan's in place. The cost has been reduced by order of 135 million dollars a year. And we are well on our way to becoming a fully agentic enterprise, adopting these agentic tools to fundamentally change the way we do business across the enterprise and to dramatically increase productivity in every aspect of our business.

Speaker #3: Organizations today are largely leveraging AI tools for all programming activities. These agentic tools have been adopted across the organization—in legal, finance, sales, and marketing.

Speaker #3: Wherever it may be to increase productivity, really dramatically, across the enterprise. Sales in particular are leveraging these agentic tools to focus on market development, business development, okay, and strategies to increase their penetration of existing customers and large global new customers.

Thomas Siebel: Sales, in particular, are leveraging these agentic tools to focus on market development, business development, and strategies to increase their penetration of existing customers and large global new customers. Across every function, our people in the organization are operating with an agentic AI-first mindset, increasing productivity across all business functions. This is now all about execution, we're going to have our heads down, every hour, every day, every month, every quarter. The early indications are that this is moving in the right direction. Our priorities are clear. They are well understood. They are articulated. The objectives are distributed, and they're understood. If we look at sales, for example, our go-to-market activities have changed significantly.

Speaker #3: Across every function, okay, our people in the organization are operating with an agentic AI-first mindset increasing productivity across all business functions. This is now all about execution.

Speaker #3: And we’re going to have our heads down, okay? Every hour, every day, every month, every quarter. And the early indications are that this is moving in the right direction.

Speaker #3: Our priorities are clear. They are well understood. They are articulated. The objectives are distributed, and they're understood. If we look at sales for example, our go-to-market activities have changed significantly.

Thomas Siebel: We're focusing on using technologies and agentic technologies focused on penetrating territories, penetrating large accounts with campaigns that will develop over multiple quarters and multiple years, rather than the narrow focus that was in place before, focused on relatively small opportunities that might be in place for any given quarter. The executive team, all of the employees at C3.ai, are laser-focused on doing whatever it takes with the objectives in place to return the company to significant quarter-to-quarter top-line revenue growth, to establish the company as one that generates free cash flow every quarter, and to establish the company as a company that generates non-GAAP profitability quarter after quarter after quarter. The opportunity to increase shareholder value at C3.ai is enormous, and that is exactly what we're going to do.

Speaker #3: We're focusing on using technologies and agentic technologies focused on penetrating territories and penetrating large accounts with a campaign that will develop over multiple quarters and multiple years, rather than the narrow focus that was in place before, focused on relatively small opportunities that might be in place for any given quarter.

Speaker #3: The executive team and all of the employees at C3.ai are laser-focused on doing whatever it takes with the objectives in place to turn the company to significant quarter-to-quarter top-line revenue growth, to establish the company as one that generates free cash flow every quarter, and to establish the company as a company that generates non-gap profitability quarter after quarter after quarter.

Speaker #3: The opportunity to increase shareholder value at C3.ai is enormous, and that is exactly what we're going to do. Talk is cheap, and rather than reinforce with idle promises that everybody will largely ignore, we're going to accept the challenge to deliver acceptable financial results—to deliver growth, to deliver cash generation, non-GAAP profitability generation—and let the results speak for themselves.

Thomas Siebel: Talk is cheap. Rather than rain forth with idle promises that everybody will largely ignore, we're going to accept the challenge to deliver acceptable financial results, to deliver growth, to deliver cash generation, non-GAAP profitability generation, and let the results speak for themselves. Game on. With that, let me turn this over to my colleagues. Our CFO, Hitesh Lath, is going to talk about the results of the quarter. Okay, Hitesh and Stephen Ehikian will be available to answer questions they may have. Thank you very much for your interest. I look forward to updating you as this develops at the end of Q1 and the end of Q2. Thank you.

Speaker #3: Game on. With that, let me turn this over to my colleagues. Our CFO, Hitesh Lath, is going to talk about the results of the quarter.

Speaker #3: Okay. And Hitesh and Stephen are kicking in. We'll be available to answer questions they may have. Thank you very much, for your interest. And I look forward to updating you as this develops after the end of Q1 and the end of Q2.

Speaker #3: Thank you. Thank you. Thank you.

Hitesh Lath: Thank you, Tom. Total revenue for the quarter was $51.6 million. Subscription revenue was $48.4 million, representing 94% of total revenue. Professional services revenue was $3.2 million, of which $2.1 million was revenue from Prioritized Engineering Services, or PES. Professional services represented 6% of total revenue during the quarter. Our subscription and PES revenue combined was $50.5 million and accounted for 98% of total revenue. Non-GAAP gross profit for the quarter was $19.3 million, and non-GAAP gross margin was 37%. Non-GAAP gross margin for professional services was 78%. Non-GAAP operating loss for the quarter was $54.4 million. Non-GAAP net loss for the quarter was $48.8 million and $0.33 per share. Our non-GAAP operating expenses for the quarter were $106 million. This reflects a reduction of $33.9 million as compared to the actual non-GAAP operating expenses of $139.9 million same quarter last year.

Speaker #4: Thank you, Tom. Total revenue for the quarter was $51.6 million. Subscription revenue was $48.4 million, representing 94% of total revenue. Professional services revenue was $3.2 million, of which $2.1 million was revenue from prioritized engineering services, or PES.

Speaker #4: Professional services represented 6% of total revenue during the quarter. Our subscription and PES revenue combined was $50.5 million and accounted for 98% of total revenue.

Speaker #4: Non-gap gross profit for the quarter was $19.3 million, and non-gap gross margin was $37%. Non-gap gross margin for professional services was $78%. Non-gap operating loss for the quarter was $54.4 million.

Speaker #4: Non-GAAP net loss for the quarter was $48.8 million, or $0.33 per share. Our non-GAAP operating expenses for the quarter were $106 million. This reflects a reduction of $33.9 million compared to the actual non-GAAP operating expenses of $139.9 million in the same quarter last year.

Hitesh Lath: Free cash flow for the quarter was -$54.8 million. We continue to be well-capitalized and closed the quarter with $575.4 million in cash equivalents, and marketable securities. During the quarter, we signed nine Initial Production Deployments, or IPDs. At the end of the quarter, we had cumulatively signed 417 IPDs, of which 251 are still active. This means they are either in their original three to six-month terms, or extended for some duration, or converted to ongoing subscription or consumption contracts, or are currently being negotiated for conversion to ongoing subscription or consumption contracts. Last quarter, we launched a restructuring plan which included expense reductions across our business to produce fuller cost savings of approximately $135 million. As Tom said, our headcount has been reduced from roughly 1,075 in January 2026 to about 700 today.

Speaker #4: Free cash flow for the quarter was -$54.8 million. We continue to be well capitalized, and close the quarter with $575.4 million in cash, cash equivalents, and marketable securities.

Speaker #4: During the quarter, we signed nine initial production deployments for IPDs. At the end of the quarter, we had cumulatively signed $417 IPDs of which $251 are still active.

Speaker #4: This means they are either in their original three to six-month terms, or extended for some duration, or converted to ongoing subscription or consumption contracts, or are currently being negotiated for conversion to ongoing subscription or consumption contracts.

Speaker #4: Last quarter, we launched a restructuring plan, which included expense reductions across our business to produce fully cost-savings of approximately $135 million. As Tom said, our headcount has been reduced from roughly 1,075 in January of 2026 to about 700 today.

Speaker #4: And we have already completed actions to realize almost 130 million of total planned savings. We are on track to meet or exceed our original cost-savings target.

Hitesh Lath: We have already completed actions to realize almost $130 million of total planned savings. We are on track to meet or exceed our original cost savings target. As we said on the last quarter's earnings call, some of the cost savings associated with the non-employee expenses will be fully realized starting with the H2 of fiscal year 2027. With these actions, we are well-positioned to materially improve our operating efficiency, free cash flow, and position the company for long-term success. Our founder and CEO, Tom Siebel, purchased 6.17 million shares of C3.ai stock at a price of $11.16 per share for net cash proceeds of approximately $69 million. The company has received the cash, and as of today, our total cash equivalents, and marketable securities balance is $673 million. Now I'll move on to our guidance for Q1 and fiscal year 2027.

Speaker #4: As we said on the last quarter's earnings call, some of the cost savings associated with the non-employee expenses will be fully realized starting with the second half of fiscal year 2027.

Speaker #4: With these actions, we are well positioned to materially improve our operating efficiency, free cash flow, and position the company for long-term success. Our founder and CEO, Tom Siebel, purchased $6.17 million shares of C3.ai stock at a price of $11.16 per share for net cash proceeds of approximately $69 million.

Speaker #4: The company has received the cash, and as of today, our total cash, cash equivalents, and marketable securities balance is $673 million. Now, I'll move on to our guidance for Q1 and fiscal year 2027.

Speaker #4: Our revenue guidance for Q1 of fiscal year 2027 is $50 million to $54 million. Our guidance for non-GAAP loss from operations for Q1 is $40.5 million to $48.5 million.

Hitesh Lath: Our revenue guidance for Q1 of fiscal year 2027 is $50 million to $54 million. Our guidance for non-GAAP loss from operations for Q1 is $40.5 million to $48.5 million. Please note that the midpoint of this guidance is based on non-GAAP operating expenses of $96.5 million, which is $31.6 million lower than the actual non-GAAP operating expenses of $128.1 million same quarter last year. Our revenue guidance for fiscal year 2027 is $210 million to $240 million. Our guidance for non-GAAP loss from operations for fiscal year 2027 is $128 million to $160 million. I'd like to turn the call over to the operator to begin the Q&A session. Operator?

Speaker #4: Please note that the midpoint of this guidance is based on non-gap operating expenses of $96.5 million which is 31.6 million lower than the actual non-gap operating expenses of $128.1 million same quarter last year.

Speaker #4: Our revenue guidance for fiscal year 2027 is $210 million, to $240 million. Our guidance for non-gap loss from operations for fiscal year 2027 is $128 million, to $160 million.

Speaker #4: Now I'd like to turn the call over to the operator to begin the Q&A session. Operator?

Speaker #5: Thank you. As a reminder, if you would like to ask a question, please press star on one of your telephones. One moment while we compile the Q&A roster.

Operator: Thank you. As a reminder, if you would like to ask a question, please press star on one of your telephone. One moment while we compile the Q&A roster. Our first question for the day will be coming from the line of Pat Walravens of Citizens. Please go ahead.

Speaker #5: Our first question for the day will be coming from the line of Patrick Wahlberg of Citizens. Please go ahead.

Speaker #6: Oh, great. Thank you. And Tom, it's good to see you back, and it's good to see the insider buying. Can you just start very big picture and help us?

Pat Walravens: Oh, great. Thank you. Tom, it's good to see you back, and it's good to see the insider buying. Can you just start very big picture and help us? You can't fix something until you understand what went wrong, and you've spent a lot of time figuring out what went wrong. In fiscal 2025, this company was doing $389 million in revenue. This year you're guiding to $235-ish, $230 at the midpoint. Just fundamentally, what happened? Where did the revenue go?

Patrick Walravens: Oh, great. Thank you. Tom, it's good to see you back, and it's good to see the insider buying. Can you just start very big picture and help us? You can't fix something until you understand what went wrong, and you've spent a lot of time figuring out what went wrong. In fiscal 2025, this company was doing $389 million in revenue. This year you're guiding to $235-ish, $230 at the midpoint. Just fundamentally, what happened? Where did the revenue go?

Speaker #6: You can't fix something until you understand what went wrong, and you've spent a lot of time figuring out what went wrong. So, in fiscal 2025, this company was doing $389 million in revenue, and this year you're guiding to $235 million, $230 million at the midpoint.

Speaker #6: So, just fundamentally, what happened? Where did the revenue go? Well, thanks, Pat, for the question. And if you look at this scenario, I mean, the company used to do $90–100 million in a quarter and used to do 43 deals.

Thomas Siebel: Well, thanks, Pat, for the question. If you look at this scenario, the company used to do $90 million, $100 million in a quarter. It used to do 43 deals. It used to do bookings were very large numbers. You look in the last five quarters, sales just fell off the cliff. The product is great. The customers are happy. There's no question of market size. Come on, I've been talking about enterprise AI since 2010, and I was the only person in the world talking about it until probably 2022, till November 2022, when we had a little inflection point there. Now Tom's not the only person in the world who thinks there's a market in enterprise AI. We have a great product, we have a huge market, we have satisfied customers, and the sales discipline has just been surreal, Pat.

Speaker #6: It used to do bookings for a very large number. You're looking at the last five quarters—sales just fell off a cliff.

Speaker #6: And the product is great. The customers are happy. There’s no question of market size. I mean, come on. I’ve been talking about enterprise AI since 2010, and I was the only person in the world talking about it until probably 2022—until November 2022, when we had a little inflection point there.

Speaker #6: And now Tom’s not the only person in the world who thinks there’s a market in enterprise AI. And so, we have a great product.

Speaker #6: We have a huge market. We have satisfied customers. And the sales discipline has just been surreal, Pat. I mean, this is in that that's where the revenue numbers come from.

Thomas Siebel: That's where the revenue numbers come from. That's where the RPO comes from. That's where the profitability or the lack thereof comes from. It's basically sales execution. It's been miserable. It's reflected in all the operating results. It is completely unacceptable, and it's not that hard to fix. I accept all the criticism the company has received. I think it's well-deserved. Okay? I really do. I think the revenue multiple is well-earned. It is. The good news, not that hard to turn around. I think we fix the sales problem, it fixes revenue growth, it fixes RPO, it fixes cash generation, it fixes everything. For those who, Pat, you know me a little bit, and I'm not entirely unfamiliar with enterprise sales. Maybe I have a little experience in that. I think this is definitely a turnaround situation.

Speaker #6: That's where the RPO comes from. That's where the profitability, or the lack thereof, comes from. It's basically sales execution that's been miserable. It's reflected in all the operating results.

Speaker #6: It is completely unacceptable. And it's not that hard to fix. It is a I accept all the criticism. The company has received. I think it's well deserved.

Speaker #6: Okay? I really do. I think the revenue multiple is well earned. It is. But the good news. Not that hard to turn around. And so I think we fixed the sales problem.

Speaker #6: I fixed his revenue growth. He fixed his RPO. It fixes cash generation. It fixes everything. And so, for those—Pat, you know me a little bit.

Speaker #6: And I'm not entirely unfamiliar with enterprise sales. Maybe I have a little experience in that. So, I think this is definitely a turnaround situation.

Speaker #6: We know how to fix it. The plan's in place. And stand by. Great. Thank you. And then as a follow-up, so totally hear you on the sales side, but for the company's churn must have been bigger than you wanted to, and non-renewals must have been bigger than you wanted.

Thomas Siebel: We know how to fix it, the plan's in place, and stand by.

Pat Walravens: Great. Thank you. As a follow-up, totally hear you on the sales side, but for the company, churn must have been bigger than you wanted too, and non-renewals must have been bigger than you wanted. What did you learn about that? What was causing the existing customers to spend so much less with you than they did before?

Patrick Walravens: Great. Thank you. As a follow-up, totally hear you on the sales side, but for the company, churn must have been bigger than you wanted too, and non-renewals must have been bigger than you wanted. What did you learn about that? What was causing the existing customers to spend so much less with you than they did before?

Speaker #6: What did you learn about that? What was causing the existing customers to spend so much less with you than they did before?

Thomas Siebel: There's a number of issues there. I'm not actually sure that this churn issue is really true. Could somebody help me with that? I don't know. I'm not sure that's true, Pat. I think it really is sales execution.

Speaker #5: There's a number of issues there. I'm not actually sure that this churn issue is really true. Could somebody help me with that? I'm not sure that's true, Pat.

Speaker #5: I think it really is sales execution. But.

Speaker #6: Yeah. We have not experienced a significant loss of production customers.

Hitesh Lath: Yeah, we have not experienced a significant loss of production customers.

Speaker #5: I'm not sure that's true, Pat. I think it really is sales execution. Market's huge. Product's great. Customers are happy. I think this is pretty fundamental.

Thomas Siebel: I'm not sure that's true, Pat. I think it really is sales execution. Market's huge, product's great, customers are happy. I think this is pretty fundamental. No question we see this as a turnaround situation, and that's what we're focused on. We're coming off of performance that is just completely unacceptable, laughably unacceptable. We're going to take a bat in the teeth for that. We deserve it, and now we're focused on turning this business around and focused on return to shareholders, and I think we can do that in a pretty big way.

Speaker #5: No question. We see this as a turnaround situation, and that's what we're focused on. We're coming off of and we're coming off of performance that is just completely unacceptable.

Speaker #5: Laughably unacceptable. And we're going to take a bat in the teeth for that. We deserve it. Now, we're focused on turning this business around and on returning value to shareholders.

Speaker #5: And I think we can do that in a pretty big way.

Speaker #6: Okay, thank you. I'll pass it on.

Pat Walravens: Okay. Thank you. I'll pass it on.

Patrick Walravens: Okay. Thank you. I'll pass it on.

Speaker #5: Thank you.

Thomas Siebel: Thank you.

Speaker #1: Thank you. One moment for the next question. And our next question will be coming from the line of Ratty, Sultan. Of UBS, please go ahead.

Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Radi Sultan of UBS. Please go ahead.

Speaker #4: I mean, thanks for taking the question. And Tom, good to see you back in the saddle. I wanted to start on the federal side.

Radi Sultan: Yeah, thanks for taking the question. Tom, good to see you back in the saddle. I wanted to start on the federal side. Saw your comments on C3 AI Federal. How is the ramp of the $450 million contract ceiling with the US Air Force tracking relative to your expectations, and how has sort of the restructuring of C3 AI Federal impacted that?

Speaker #4: So, your comments on C3.ai Federal. How is the ramp of the $450 million contract ceiling with the US Air Force tracking relative to your expectations, and how has the restructuring of C3.ai Federal impacted that?

Thomas Siebel: Wasn't the RSO a $100 million contract, Mr. Siebel? The honest answer is I am not been that in touch with the operating details of the business in the last four quarters, and I haven't looked into that. I think the RSO contract was $100 million. Honestly, I'm sorry?

Speaker #5: Wasn't the RSO a $100 million contract ceiling? The honest answer is I have not been that in touch with the operating details of the business in the last four quarters.

Speaker #5: And I haven't looked into that. I think the RSO contract was $100 million. But honestly—I'm sorry? Oh, did it? Okay. I'm sorry. It's a legitimate question.

Hitesh Lath: It got increased after.

Thomas Siebel: Oh, did it?

Hitesh Lath: Yes.

Thomas Siebel: Okay. I'm sorry. It's a legitimate question, and I don't know, and I'll find out and we'll get back to you.

Speaker #5: I don’t know, but I’ll find out and we’ll get back to you.

Radi Sultan: No problem. No problem. Yeah, no problem at all. Just to attach maybe on the fiscal 2027 guide, as we calibrate our models, could you just help us understand the moving parts around license and PES embedded in the guide this year? Maybe just post-restructuring, how should we be thinking about the role of demonstration licenses in the growth strategy post-restructuring? Thank you.

Speaker #4: No problem. No problem. Yeah, no problem at all. Just to attach, maybe on the fiscal 2027 guide, as we calibrate our models, could you just help us understand the moving parts around license and PES embedded in the guide this year?

Speaker #4: Maybe just post-restructuring, how should we be thinking about the role of demonstration licenses in the growth strategy post-restructuring? Thank you.

Speaker #6: Yeah. Hi, Ratty. As you know, we guide to total revenue. And as it relates to PES, or Prioritized Engineering Services, we expect PES to continue to contribute a large share of our total professional services revenue.

Hitesh Lath: Yeah. Hi, Radi. As you know, we guide to total revenue. As it relates to PES or Prioritized Engineering Services, we expect PES to continue to contribute a large share of our total professional services revenue. In terms of professional services mix, expect it to be between 10% to 15% of total rev.

Speaker #6: And in terms of professional services mix, we expect it to be between 10% to 15% of total revenue.

Thomas Siebel: Including PES.

Speaker #5: Including PES.

Hitesh Lath: Including PES. As it relates to revenue from demo licenses.

Speaker #6: Including PES, and as it relates to revenue from demo licenses.

Thomas Siebel: Let me try this. It's a very legitimate question, ladies and gentlemen. I think it's a "don't know." We have changed everything about the sales organization. We have changed everything about go-to-market. I think that while it's a very legitimate question, how much is going to be professional services? How much was demo licenses? How much is going to be PS? I don't think we really know. Okay. We have a plan to grow revenue. We really don't. I'm sorry that this doesn't work in helping you fill out your spreadsheet. We don't know. All we can assure you is that the revenue will be properly accounted for. We can't really tell you what that mix is. Make no mistake, we are focused on software revenue, guys, not services, ladies and gentlemen. Software revenue. We understand the difference. That's what we're focused on.

Speaker #5: Let me try this, okay? It's a very legitimate question. Ladies and gentlemen, I think it's a 'don't know.' I mean, we have a chance—everything about the sales organization.

Speaker #5: We have a chance to change everything about go-to-market. And I think that, while it's a very legitimate question, how much is going to be professional services?

Speaker #5: How much was demo licenses? How much is going to be PES? I don't think we really know. Okay? We have a plan to grow revenue, but we really don't and I'm sorry that this doesn't work in helping you fill out your spreadsheet.

Speaker #5: But we don't know. All we're going to assure you is that the revenue will be properly accounted for. And we can't really tell you what that mix is.

Speaker #5: Make no mistake, we are focused on software revenue, guys, not services. Ladies and gentlemen, software revenue. We understand the difference, and that's what we're focused on.

Speaker #5: But it's hard to tell how this is going to shake out. And I know that's not the answer you want to hear, but it's true.

Thomas Siebel: It's hard to tell how this is going to shake out, and I know that's not the answer you want to hear, but it's true.

Speaker #4: Got it. Thanks.

Radi Sultan: Got it. Thanks.

Speaker #1: Thank you. One moment for the next question, please. And our next question is coming from the line of Kalturi at Needham and Company. Please go ahead.

Operator: Thank you. One moment for the next question, please. Our next question is coming from the line of Matthew Calitri of Needham & Company. Please go ahead.

Speaker #7: Hey, guys. This is Matt Kalturi on for Mike Secos over at Needham. Thanks for taking our questions. Tom, welcome back, and great to hear that your health issues have been largely resolved.

Matt Calitri: Hey, guys. This is Matt Calitri on for Mike Cikos over at Needham. Thanks for taking our questions. Tom, welcome back, and great to hear that your health issues have been largely resolved. You mentioned in your prepared remarks that you're going to look at penetrating territories and large accounts rather than the more narrow focus on relatively small opportunities that was put in place. In the past, you guys had sort of run a small amount of deals that were large in size, and then we pivoted over to the pilot model. What exactly do you have in mind going forward? Is there sort of a sweet spot in the middle there, or how are you thinking about that balance?

Matthew Calitri: Hey, guys. This is Matt Calitri on for Mike Cikos over at Needham. Thanks for taking our questions. Tom, welcome back, and great to hear that your health issues have been largely resolved. You mentioned in your prepared remarks that you're going to look at penetrating territories and large accounts rather than the more narrow focus on relatively small opportunities that was put in place. In the past, you guys had sort of run a small amount of deals that were large in size, and then we pivoted over to the pilot model. What exactly do you have in mind going forward? Is there sort of a sweet spot in the middle there, or how are you thinking about that balance?

Speaker #7: You mentioned in your prepared remarks that you're going to look at penetrating territories in large accounts, rather than the more narrow focus on relatively small opportunities that was put in place.

Speaker #7: In the past, you guys had sort of run a small number of deals that were large in size, and then we pivoted over to the pilot model.

Speaker #7: What exactly do you have in mind going forward? Is there sort of a sweet spot in the middle there, or how are you thinking about that balance?

Thomas Siebel: How do I describe this? There was kind of a funny issue. I'm sorry, your first name one more time?

Speaker #5: How should I describe this? There was kind of a funny issue—I'm sorry. Your first name, one more time?

Matt Calitri: Matt.

Matthew Calitri: Matt.

Speaker #7: Matt.

Speaker #5: Matt, there's kind of a funny issue, Matt. Okay? When we looked into it and the way that territory assignments have worked, okay, in the last year—and the truth of the matter is, they had a focus on a limited number of major accounts, rather than looking at the entire market opportunity.

Thomas Siebel: Matt, this is kind of a funny issue, Matt. Okay. When we looked into it, in the way the territory assignments have worked, okay, in the last year. The truth of the matter is, they had a focus on a limited number of major accounts rather than looking at the entire market opportunity. I would say if you look at Europe or North America, they might have been only focused on really, I know this is hard to believe, but the sales organization might have been focused on total of 100 to 150 accounts in each of those organizations. I know it's hard to believe, but it really is true. Now you will see those North American and Federal and European sales organizations focused on order of 1,000 account opportunities rather than maybe even more than that, rather than order of 100.

Speaker #5: So I would say, if you look at Europe or North America, they might have been only focused on—really, I know this is hard to believe—but the sales organization might have been focused on a total of 100 to 150 accounts.

Speaker #5: Each of those organizations. And so, I know it's hard to believe, but it really is true. And so, now you will see those North American and federal and European sales organizations focused on order of 1,000 account opportunities, maybe even more than that, rather than on the order of 100.

Speaker #5: So, I mean, it's hard to believe that's the way it was set up, but it really was set up that way, and we fixed it.

Thomas Siebel: It's hard to believe that's the way it was set up, but it really was set up that way, and we've fixed it. Now, within that, they'll be focused on large deals. What's a large deal? I would say, $50 million to a couple of billion. They'll be focused on medium-sized deals, which might be $5 million to $50, and they'll be focused on smaller deals, which might be half a million to $2 million. I know there's a big gap there, but you get the idea.

Speaker #5: Now, within that, they'll be focused on large deals. What's a large deal? I would say $50 million to a couple of billion. They'll be focused on medium-sized deals, which might be $5 million to $50 million.

Speaker #5: And they'll be focused on smaller deals, which might be half a million to $2 million. I know there's a big gap there, but you get the idea.

Speaker #7: Got it. Yeah, that's very helpful. And then, just broadly, where are you seeing customers find budget for AI initiatives? And are you seeing any change in sales cycles, or just the pace of adoption, as organizations race to capture ROI and push AI initiatives?

Matt Calitri: Got it. Yeah, that's very helpful. Then just broadly, where are you seeing customers find budget for AI initiatives, and are you seeing any change in sales cycles or just the pace of adoption as organizations race to capture ROI and push AI initiatives?

Matthew Calitri: Got it. Yeah, that's very helpful. Then just broadly, where are you seeing customers find budget for AI initiatives, and are you seeing any change in sales cycles or just the pace of adoption as organizations race to capture ROI and push AI initiatives?

Speaker #5: Well, as you do your market analysis, as I’m sure you’ve done, Matt, on the pure kind of enterprise AI market—which would include Palantir, C3, and others—it was about a $6 billion market in 2025.

Thomas Siebel: Well, as you do your market analysis, as I'm sure you've done, Matt, on the pure kind of enterprise AI market, which would include Palantir Technologies, C3.ai and others, it was about a $6 billion market in 2025. It's about a $10 billion market in 2026, and it's projected to be about a $15 billion market in 2027. It doesn't look like these people are being too starved for opportunities. It's a $10 billion market growing at a 50% compound annual growth rate, which people are finding the budgets, that's for sure.

Speaker #5: It's about a $10 billion market in 2026, and it's projected to be about a $15 billion market in 2027. So it doesn't look like these people are being too starved for opportunities.

Speaker #5: It's a $10 billion market, growing at a 50% compound annual growth rate. People are finding the budgets, that's for sure.

Speaker #7: Great. Thanks so much.

Matt Calitri: Great. Thanks so much.

Matthew Calitri: Great. Thanks so much.

Speaker #1: Thank you. One moment for the next question. Our next question is coming from the line of Koji of I'll Think of America. Please go ahead.

Operator: Thank you. One moment for the next question. Our next question is coming from the line of Koji Ikeda of Bank of America. Please go ahead.

George McGrian: Hi, this is George McGrian for Koji Ikeda. Thanks for taking our question. I kind of wanted to ask maybe kind of a two in one. When we think about IPDs, and kind of over time, how the quantity of IPDs has kind of trended downwards, where would you say are there use cases or customer profiles that have been kind of harder to get recently? Then conversely, which type of customers or use cases are you most excited about kind of driving and capturing over the next few quarters? Thank you.

George McGreehan: Hi, this is George McGrian for Koji Ikeda. Thanks for taking our question. I kind of wanted to ask maybe kind of a two in one. When we think about IPDs, and kind of over time, how the quantity of IPDs has kind of trended downwards, where would you say are there use cases or customer profiles that have been kind of harder to get recently? Then conversely, which type of customers or use cases are you most excited about kind of driving and capturing over the next few quarters? Thank you.

Speaker #8: Hi, this is George McGreene on for Koji Aketa. Thanks for taking our question. I kind of wanted to ask maybe a two-in-one.

Speaker #8: And when we think about IPVs, and kind of over time, how the quantity of IPVs has kind of trended downwards, where would you say are there use cases or customer profiles that have been kind of harder to get recently?

Speaker #8: And then conversely, which types of customers or use cases are you most excited about driving and capturing over the next few quarters?

Speaker #8: Thank you. Well, as evidenced from Palantir, okay, and others, and Palantir has a go-to-market motion that is very much analogous to an IPV. I mean, the idea that the market opportunity isn't big is, I think, inconsistent with the performance you've seen out of Palantir.

Thomas Siebel: Well, as evidence from Palantir, okay, and others, and Palantir has a go-to-market motion that is very much analogous to an IPD. The idea that the market opportunity isn't big is, I think, inconsistent with the performance you've seen out of Palantir. The market is clearly there, and the execution is pretty damn good. Pretty impressive. I don't think there's the question of the market being there. Where do we see market being there? Do I think the execution on the behalf of C3 has been acceptable? It has been completely unacceptable, George. If you want us to fall on our sword or eviscerate ourselves in a public audience, put me on stage, give me the stage, give me a sword, and I'll do it. Okay?

Speaker #8: The market is clearly there. And the execution is pretty damn good. I mean, pretty impressive. So I don't think there's the question of the market being there.

Speaker #8: Where do we see the market being there? Do I think the execution on the behalf of C3 has been acceptable? It has been completely unacceptable, George.

Speaker #8: And if you want us to fall on our sword or eviscerate ourselves in a public audience, put me on stage. Give me the stage.

Speaker #8: Give me a sword and I'll do it, okay? But the opportunity going forward, look, the pure enterprise AI market—which we were, the enterprise AI application market, which we were most certainly in—looks like a $10 billion market growing at a 50% compound growth rate.

Thomas Siebel: The opportunity going forward, looks the pure enterprise AI market, enterprise AI application market, which we are most certainly in, looks like a $10 billion market growing at a 50% compound annual growth rate. We're not even growing, okay? We're not growing off a small base number, and we're growing at a level smaller than the market at large. That's just unacceptable. Do we think we know how to fix it? Yeah. Where's the market opportunity? It's in financial services. Okay. Is it in consumer packaged goods? It is. Is it in defense and intelligence? It is. Is it in agribusiness? It is. Is it in aerospace? Yes, sir, it is. I don't think as we get into 2028, 2029, 2030, I don't think there's anybody who believes that all of those markets don't address enterprise AI.

Speaker #8: We're not even growing, okay? So we're not growing off a small base number, and we're growing at a level smaller than the market at large.

Speaker #8: I mean, that's just unacceptable. Do we think we know how to fix it? Yeah. Where's the market opportunity? It's in financial services. Okay? Is it in consumer packaged goods?

Speaker #8: It is. Is it in defense and intelligence? It is. Is it in agribusiness? It is. Is it in aerospace? Yes, sir. It is. So I don't think, as we get into '28, '29, '30, I don't think there's anybody who believes that all of those markets don't address enterprise AI.

Thomas Siebel: You know they do, and even Bank of America probably believes that today, okay? You didn't in 2016, 2017, 2018, 2019, 2020, or 2021. I think even Bank of America believes that today. We just intend to play our full role in.

Speaker #8: You know they do. And you believe even Bank of America probably believes that today, okay? And you didn’t in 2016, '17, '18, '19, '20, or '21.

Speaker #8: I think even Bank of America believes that today. And we just intend to play our full role in.

Speaker #1: Thank you. And that ends the Q&A session for today. I would like to turn the call back over to Mr. Siebel for closing remarks.

Operator: Thank you. That ends the Q&A session for today. I would like to turn the call back over to Mr. Siebel for closing remarks. Please go ahead.

Speaker #1: Please go ahead.

Thomas Siebel: Ladies and gentlemen, thank you for the courtesy of your time. We really appreciate it. We hope we used it effectively. I hope you have a feel for the plan, and we look very much forward to reporting to you in the progress in the next 3 months and 6 months. Thank you very much.

Speaker #5: Ladies and gentlemen, thank you for the courtesy of your time. We really appreciate it. We hope we used it effectively. I hope you have a feel for the plan.

Speaker #5: And we look very much forward to reporting on you to you in the progress in the next three months and six months. Thank you very much.

Operator: Thank you for your participation today. You may now disconnect.

Q4 2026 C3.ai Inc Earnings Call

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