Q1 2027 C3.ai Inc Earnings Call

September 2, 2026

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

Speaker #1: If your question has been answered and you'd like to remove yourself from the queue, simply press *11 again. Please be advised that today's conference is being recorded.

Operator: Please be advised that today's conference is being recorded. Now I would like to hand the call over to today's host, Amit Berry. Please go ahead.

Speaker #1: And now, I'd like to hand the call over to today's host, Amit Berry. Please go ahead.

Speaker #2: Good afternoon, and welcome to C3.ai's earnings call for the first quarter of fiscal year 2027, which ended on July 31, 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 first quarter of fiscal year 2027, which ended on 31 July 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, and Hitesh Lath, chief financial officer. After the market closed today, we issued a press release with details regarding our first quarter 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. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date.

Amit Berry: Good afternoon, and welcome to C3.ai's earnings call for the Q1 of fiscal year 2027, which ended on 31 July 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, and Hitesh Lath, chief financial officer. After the market closed today, we issued a press release with details regarding our first quarter results, which can be accessed through the investor relations section on our website at ir.c3.ai.

Speaker #2: With me on the call today are Tom Siebel, Chairman and Chief Executive Officer, and Hitesh Lath, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our first quarter results.

Speaker #2: This call can be accessed through the Investor Relations section on our website at ir.c3.ai. The call is being webcast, and a replay will be available on our IR website following the conclusion of the call.

Amit Berry: 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. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date.

Speaker #2: During today's call, we will make statements related to our business that 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.

Speaker #2: We disclaim any obligation to update 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.

Amit Berry: We disclaim any obligation to update 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. 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.

Speaker #2: 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-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.

Amit Berry: A reconciliation of GAAP to non-GAAP financial measures, to the extent reasonably available, is included in our press release. 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.

Speaker #2: Finally, at times in our prepared remarks or 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.

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.

Amit Berry: 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 #3: Good afternoon, everyone, and thank you for joining us. Three months ago, I returned as Chief Executive Officer with a mandate to turn this company around.

Thomas M. Siebel: Good afternoon, everyone, and thank you for joining us. Three months ago, I returned as Chief Executive Officer with a mandate to turn this company around. I returned as CEO because the company was candidly underperforming despite every advantage. The product offerings are exceptional, the market is huge and rapidly growing, and the balance sheet is rock solid. None of that was the problem. The problem was execution. One quarter into the turnaround, I believe the company is on track. In the past three months, we have restored fundamental management discipline to this business. We completely restructured the company. We restructured sales, we restructured products, we restructured services. We reset the cost structure, driving massive costs out of the business, and implemented rigorous cost controls. We reinstated the fundamental management practices necessary to run a serious business: clear ownership, hard deadlines, weekly reviews.

Thomas Siebel: Good afternoon, everyone, and thank you for joining us. Three months ago, I returned as Chief Executive Officer with a mandate to turn this company around. I returned as CEO because the company was candidly underperforming despite every advantage. The product offerings are exceptional, the market is huge and rapidly growing, and the balance sheet is rock solid. None of that was the problem. The problem was execution. One quarter into the turnaround, I believe the company is on track. In the past three months, we have restored fundamental management discipline to this business.

Speaker #3: I returned as CEO because the company was, candidly, underperforming despite every advantage. The product offerings are exceptional, the market is huge and rapidly growing, and the balance sheet is rock solid.

Speaker #3: None of that was the problem. The problem was execution. In one quarter into the turnaround, I believe the company is on track. In the past three months, we have restored fundamental management discipline to this business.

Speaker #3: We completely restructured the company. We restructured sales, we restructured products, and we restructured services. We reset the cost structure, drove massive costs out of the business, and implemented rigorous cost controls.

Thomas Siebel: We completely restructured the company. We restructured sales, we restructured products, we restructured services. We reset the cost structure, driving massive costs out of the business, and implemented rigorous cost controls. We reinstated the fundamental management practices necessary to run a serious business: clear ownership, hard deadlines, weekly reviews.

Speaker #3: We reinstated the fundamental management practices necessary to run a serious business: clear ownership, hard deadlines, weekly reviews. We rebuilt the selling motion around disciplined account management and pipeline development, rather than heroics.

Thomas M. Siebel: We rebuilt the selling motion around disciplined account management and pipeline development rather than heroics. We now have experienced executives in charge of every aspect of the business, in sales, in products, in services, in finance, in legal. This is the leadership team that will execute the turnaround. We refocused the product offerings on our agentic AI stack, our greatest technical strength and the largest and most rapidly growing segment of the market. This quarter showed meaningful progress. Revenue came in above our guidance. Bookings grew at 73%, and we took real costs out of the business to narrow our operating loss and generate free cash flow in the quarter. We closed 22 enterprise agreements in the quarter, including with Heidelberg Materials, Johnson & Johnson, Ford Motor Company, C-SPAN, Holcim, the Department of War, the Defense Logistics Agency, and the US Department of Agriculture.

Thomas Siebel: We rebuilt the selling motion around disciplined account management and pipeline development rather than heroics. We now have experienced executives in charge of every aspect of the business, in sales, in products, in services, in finance, in legal. This is the leadership team that will execute the turnaround. We refocused the product offerings on our agentic AI stack, our greatest technical strength and the largest and most rapidly growing segment of the market. This quarter showed meaningful progress.

Speaker #3: We now have experienced executives in charge of every aspect of the business: in sales, in products, in services, in finance, in legal. This is the leadership team that will execute the turnaround.

Speaker #3: We refocused the product offerings on our agentic AI stack, our greatest technical strength and the largest and most rapidly growing segment of the market.

Speaker #3: In this quarter, we showed meaningful progress. Revenue came in above our guidance, bookings grew at 73%, and we took real costs out of the business to narrow our operating loss and generate free cash flow in the quarter.

Thomas Siebel: Revenue came in above our guidance. Bookings grew at 73%, and we took real costs out of the business to narrow our operating loss and generate free cash flow in the quarter. We closed 22 enterprise agreements in the quarter, including with Heidelberg Materials, Johnson & Johnson, Ford Motor Company, C-SPAN, Holcim, the Department of War, the Defense Logistics Agency, and the US Department of Agriculture.

Speaker #3: We closed 22 enterprise agreements in the quarter, including with Heidelberg Materials, Johnson & Johnson, Ford Motor Company, C-SPAN, Holcim, the Department of War, the Defense Logistics Agency, and the U.S.

Speaker #3: Department of Agriculture. Federal business was particularly strong, with federal bookings growing 138% year over year. These results are early evidence that the turnaround is taking hold.

Thomas M. Siebel: Federal business was particularly strong, with federal bookings growing 138% year over year. These results are early evidence that the turnaround is taking hold. The C3 Agentic AI Platform remains the starting point of every sales engagement. It reflects over 15 years of software development in which we invested in excess of $3 billion. Last month, Forrester Research released a very significant study in which they evaluated the strengths of all the AI platform providers, and in that evaluation, they ranked C3 AI at the top of the stack. Forrester ranked the C3 AI Platform number 1 in data modeling, number 1 in agent development, number 1 in application development tools, number 1 in cohesive experience, number 1 in governance controls, number 1 in platform management, number 1 in security certification, and number 1 in supporting services and offerings.

Thomas Siebel: Federal business was particularly strong, with federal bookings growing 138% year over year. These results are early evidence that the turnaround is taking hold. The C3 Agentic AI Platform remains the starting point of every sales engagement. It reflects over 15 years of software development in which we invested in excess of $3 billion. Last month, Forrester Research released a very significant study in which they evaluated the strengths of all the AI platform providers, and in that evaluation, they ranked C3 AI at the top of the stack.

Speaker #3: The C3 agentic AI platform remains the starting point of every sales engagement. It reflects over 15 years of software development, in which we invested in excess of $3 billion.

Speaker #3: Last month, Forrester Research released a very significant study in which they evaluated the strengths of all the AI platform providers, and in that evaluation, they ranked C3.ai at the top of the stack.

Speaker #3: Forrester ranked the C3.ai platform number one in data modeling, number one in agent development, number one in application development tools, number one in cohesive experience, number one in governance controls, number one in platform management, and number one in security certification.

Thomas Siebel: Forrester ranked the C3 AI Platform number one in data modeling, number one in agent development, number one in application development tools, number one in cohesive experience, number 1 in governance controls, number 1 in platform management, number 1 in security certification, and number 1 in supporting services and offerings.

Speaker #3: And number one in supporting services and offerings. The other companies evaluated in the study include a who's who in software: Palantir, Google, Databricks, and eleven others.

Thomas M. Siebel: The other companies evaluated in this study include a who's who in software: Palantir, Google, Databricks, and 11 others. This study is a pretty significant benchmark and really a hallmark to the technology achievement of C3 AI in the marketplace over the last 15 years. Our primary offerings today include the C3 Agentic AI Platform, C3 Generative AI, C3 AI Studio, and importantly, C3 Code. The C3 AI Studio is our control plane for developing and operating large-scale enterprise AI applications. C3 Code is our agentic AI application builder that turns a natural language prompt into a working enterprise AI application in minutes to hours. C3 Code will be at the vanguard of our growth engine going forward. This product is absolutely remarkable, and I encourage you to go onto the web, take a look at it, and take it for a try.

Thomas Siebel: The other companies evaluated in this study include a who's who in software: Palantir, Google, Databricks, and 11 others. This study is a pretty significant benchmark and really a hallmark to the technology achievement of C3 AI in the marketplace over the last 15 years. Our primary offerings today include the C3 Agentic AI Platform, C3 Generative AI, C3 AI Studio, and importantly, C3 Code. The C3 AI Studio is our control plane for developing and operating large-scale enterprise AI applications. C3 Code is our agentic AI application builder that turns a natural language prompt into a working enterprise AI application in minutes to hours. C3 Code will be at the vanguard of our growth engine going forward. This product is absolutely remarkable, and I encourage you to go onto the web, take a look at it, and take it for a try.

Speaker #3: So, this study is a pretty significant benchmark and really a hallmark of the technology achievements of C3.ai in the marketplace over the last 15 years.

Speaker #3: Our primary offerings today include the C3 Agentic AI Platform, C3 Generative AI, C3 AI Studio, and, importantly, C3 Code. The C3 AI Studio is our control plane for developing and operating large-scale enterprise AI applications.

Speaker #3: And C3 Code is our agentic AI application builder that turns a natural language prompt into a working enterprise AI application in minutes to hours.

Speaker #3: C3 Code will be at the vanguard of our growth engine going forward. This product is absolutely remarkable, and I encourage you to go onto the web, take a look at it, and give it a try.

Speaker #3: As an example of the power of C3 Code, you can take an RFP, or you can take a six-inch-thick product specification. You can provide it to C3 Code.

Thomas M. Siebel: As an example of the power of C3 Code, you can take an RFP, or you can take a six-inch thick product specification. You can provide it to C3 Code. It assembles the data, it does the data aggregation, it autonomously builds the ontology, it develops the pipeline, it builds the machine learning models, it designs the user interface, and it autonomously delivers a working enterprise AI application without writing one line of manual code. This is really remarkable, and you have to see it to believe it. C3 Code, broader platform adoption, federal systems growth, and sales discipline are at the heart of our growth engine going forward. In closing, let me be clear about where we are going. Our priorities are clear. They are measured. The turnaround is on track. We have a well-designed plan, and this is all about execution.

Thomas Siebel: As an example of the power of C3 Code, you can take an RFP, or you can take a six-inch thick product specification. You can provide it to C3 Code. It assembles the data, it does the data aggregation, it autonomously builds the ontology, it develops the pipeline, it builds the machine learning models, it designs the user interface, and it autonomously delivers a working enterprise AI application without writing one line of manual code. This is really remarkable, and you have to see it to believe it. C3 Code, broader platform adoption, federal systems growth, and sales discipline are at the heart of our growth engine going forward. In closing, let me be clear about where we are going. Our priorities are clear. They are measured. The turnaround is on track. We have a well-designed plan, and this is all about execution.

Speaker #3: It assembles the data. It does the data aggregation. It autonomously builds the ontology. It develops the pipeline. It builds the machine learning models. It designs the user interface. And it autonomously delivers a working enterprise AI application without writing one line of manual code.

Speaker #3: This is really remarkable, and you have to see it to believe it. C3 Code brought our platform adoption, federal systems growth, and sales discipline are at the heart of our growth engine going forward.

Speaker #3: In closing, let me be clear about where we are going. Our priorities are clear. They are measured. The turnaround is on track. We have a well-designed plan, and this is all about execution.

Speaker #3: Return the company to quarter-over-quarter consistent revenue growth, attain free cash flow from operations, and reach non-GAAP profitability. Every objective in this company ties to those goals every day, every week, every month.

Thomas M. Siebel: Return the company to quarter-over-quarter consistent revenue growth, attain free cash flow from operations, and reach non-GAAP profitability. Every objective in this company ties to those goals every day, every week, every month. We're not going to ask the market to underwrite a story. Our plan is to deliver results quarter over quarter and let those results speak for themselves. With that, let me turn the call over to Hitesh Lath to talk about the specific financial results of the quarter.

Thomas Siebel: Return the company to quarter-over-quarter consistent revenue growth, attain free cash flow from operations, and reach non-GAAP profitability. Every objective in this company ties to those goals every day, every week, every month. We're not going to ask the market to underwrite a story. Our plan is to deliver results quarter over quarter and let those results speak for themselves. With that, let me turn the call over to Hitesh Lath to talk about the specific financial results of the quarter.

Speaker #3: We're not going to ask the market to underwrite a story. Our plan is to deliver results quarter over quarter, and let those results speak for themselves.

Speaker #3: And with that, let me turn the call over to Hitesh Lath to talk about the specific financial results of the quarter.

Speaker #2: Thank you, Tom. Total revenue for the quarter was $52.4 million. Subscription revenue was $49.2 million, representing 94% of total revenue. Professional services revenue was $3.2 million, of which $1.8 million was revenue from prioritized engineering services, or PES.

Hitesh Lath: Thank you, Tom. Total revenue for the quarter was $52.4 million. Subscription revenue was $49.2 million, representing 94% of total revenue. Professional services revenue was $3.2 million, of which $1.8 million was revenue from prioritized engineering services, or PES. Our subscription and PES revenue combined was $50.9 million and accounted for 97% of total revenue. Non-GAAP gross profit for the quarter was $26.1 million, and non-GAAP gross margin improved sequentially from 37% last quarter to 50%, primarily due to cost reduction actions we've taken over the last few months. Next quarter, as we make selective investments in a forward deployed engineering organization, we expect our non-GAAP gross margin to moderate to mid-40s. Non-GAAP operating loss for the quarter was $36.2 million. This was $8.3 million better than the midpoint of our guidance. Non-GAAP net loss for the quarter improved to $30.7 million and $0.20 per share.

Speaker #2: Our subscription and PES revenue combined was $50.9 million and accounted for 97% of total revenue. Non-GAAP gross profit for the quarter was $26.1 million, and non-GAAP gross margin improved sequentially from 37% last quarter to 50%.

Speaker #2: Primarily due to cost reduction actions we've taken over the last few months. Next quarter, as we make selective investments in a forward-deployed engineering organization, we expect our non-GAAP gross margin to moderate to the mid-40s.

Speaker #2: Non-GAAP operating loss for the quarter was $36.2 million. This was $8.3 million better than the midpoint of our guidance. Non-GAAP net loss for the quarter improved to $30.7 million and $0.20 per share.

Speaker #2: Our non-GAAP expenses for the quarter were $88.5 million. This reflects a reduction of almost $40 million compared to the actual non-GAAP expenses of $128.1 million in the same quarter last year.

Hitesh Lath: Our non-GAAP expenses for the quarter were $88.5 million. This reflects a reduction of almost $40 million as compared to the actual non-GAAP expenses of $128.1 million same quarter last year, and a reduction of over $17 million as compared to the last quarter. Free cash flow for the quarter was +$2.1 million as compared to -$34.3 million same quarter last year, and -$54.8 million last quarter. This was due to a significant reduction in our quarterly cash expenses as well as strong collections. We continue to be very well capitalized and closed the quarter with $651.1 million in cash equivalents, and marketable securities. Now a quick update on our restructuring plan. Our restructuring is almost complete, and we have been able to achieve annualized cost savings of approximately $135 million across our business.

Speaker #2: And a reduction of over $17 million as compared to the last quarter. Free cash flow for the quarter was positive $2.1 million as compared to negative $34.3 million in the same quarter last year, and negative $54.8 million last quarter.

Speaker #2: This was due to a significant reduction in our quarterly cash expenses, as well as strong collections. We continue to be very well capitalized and closed the quarter with $651.1 million in cash, cash equivalents, and marketable securities.

Speaker #2: Now, a quick update on our restructuring plan. Our restructuring is almost complete, and we have been able to achieve annualized cost savings of approximately $135 million across our business.

Speaker #2: This includes cost savings from approximately 40% headcount reduction across all organizations, as well as from a reduction in non-employee expenses. As we said on last quarter's earnings call, some of the cost savings will be fully realized starting in the second half of fiscal year 2027.

Hitesh Lath: This includes cost savings from approximately 40% headcount reduction across all organizations, as well as from reduction in non-employee expenses. As we said on the last quarter's earnings call, some of the cost savings will be fully realized starting with the H2 of fiscal year 2027. With a substantially improved cost structure, reorganized and focused sales services and products organizations, we are well-positioned to achieve revenue growth, materially improve our operating efficiency and free cash flow, and position the company for long-term success. Now I'll move on to our guidance for Q2 and fiscal year 2027. Our revenue guidance for Q2 of fiscal year 2027 is $51 million to $55 million. Our guidance for non-GAAP loss from operations for Q2 is -$34.5 million to -$42.5 million. Our revenue guidance for fiscal year 2027 is $210 million to $240 million.

Speaker #2: With a substantially improved cost structure, and by reorganizing and focusing our sales, services, and products organizations, we are well positioned to achieve revenue growth, materially improve our operating efficiency and free cash flow, and position the company for long-term success.

Speaker #2: Now, I'll move on to our guidance for the second quarter and fiscal year 2027. Our revenue guidance for the second quarter of fiscal year 2027 is $51 million to $55 million.

Speaker #2: Our guidance for non-GAAP loss from operations for the second quarter is $34.5 million to $42.5 million. Our revenue guidance for fiscal year 2027 is $210 million to $240 million.

Speaker #2: Our guidance for non-GAAP loss from operations for fiscal year 2027 is $123 million to $155 million. For the remainder of fiscal year 2027, we expect our free cash flow to broadly align with our guidance range for non-GAAP loss from operations.

Hitesh Lath: Our guidance for non-GAAP loss from operations for fiscal year 2027 is -$123 million to -$155 million. For the remainder of fiscal year 2027, we expect our free cash flow to broadly align with our guidance range for non-GAAP loss from operations. Now I'd like to turn the call over to the operator to begin the Q&A session. Operator?

Speaker #2: Now I'd like to turn the call over to the operator to begin the Q&A session. Operator?

Speaker #3: Certainly. And our first question for today comes from the line of Patrick Walravens from Citizens. Your question, please.

Operator 2: Certainly, and our first question for today comes from the line of Pat Walravens from Citizens. Your question please.

Operator: Certainly, and our first question for today comes from the line of Pat Walravens from Citizens. Your question please.

Speaker #4: Oh, great. Thank you. And Tom, congratulations on the beginning of the turnaround here. I mean, with federal up 138%, I think I have to start with that, which is what was sort of the biggest thing that you won?

Pat Walravens: Oh, great. Thank you. Tom, congratulations on the beginning of the turnaround here. With federal up 138%, I think I have to start with that, which is, what was sort of the biggest thing that you won? How did you win it, and what does the pipeline look like for more things like that in federal?

Speaker #4: How did you win it? And what does the pipeline look like for more things like that in federal?

Speaker #5: The pipeline in Federal looks very good. And I would say there’s an incumbent there that has a large market share, with very high levels of dissatisfaction, both with their product and their business practices.

Thomas M. Siebel: The pipeline in federal looks very good. I would say, there is an incumbent there that has a large market share with very high levels of dissatisfaction, both with their product and their business practices. A lot of that dissatisfaction is spinning off now in opportunities for us. In addition, the government is spending a lot of money on these types of technologies, particularly in the intelligence and the defense sectors. I think the defense budget is about to go from 1 billion to 1.5 billion this month, or next month.

Thomas Siebel: The pipeline in federal looks very good. I would say, there is an incumbent there that has a large market share with very high levels of dissatisfaction, both with their product and their business practices. A lot of that dissatisfaction is spinning off now in opportunities for us. In addition, the government is spending a lot of money on these types of technologies, particularly in the intelligence and the defense sectors. I think the defense budget is about to go from 1 billion to 1.5 billion this month, or next month.

Speaker #5: So, a lot of that dissatisfaction is spinning off now in opportunities for us. In addition, the government is spending a lot of money on these types of technologies, particularly in the intelligence and the defense sectors.

Speaker #5: I think the defense budget's about to go from a billion to $1.5 billion this month, or next month. So there's a lot—I'm sorry, trillion.

Pat Walravens: Trillion.

Thomas M. Siebel: I am sorry, trillion. Okay. 1 trillion to 1.5 trillion. Thank you. There is a lot of spending there, and we are getting a lot of traction.

Thomas Siebel: I am sorry, trillion. Okay. 1 trillion to 1.5 trillion. Thank you. There is a lot of spending there, and we are getting a lot of traction.

Speaker #5: Okay. One trillion to $1.5 trillion. Thank you. So there's a lot of spending there, and we're getting a lot of traction.

Speaker #4: That's great. And then as a follow-up, Tom and Hitesh, you mentioned this in your remarks too. So, you're going to invest more in a forward-deployed engineering organization.

Pat Walravens: Great. As a follow-up, Tom, Hitesh, you mentioned this in your remarks, too. You are going to invest more in a forward deployed engineering organization. What does that mean for C3.ai? Did you have forward deployed engineers before? If not, what are you doing differently here?

Speaker #4: What does that mean for C3? And did you have forward-deployed engineers before? And if not, what are you doing differently here?

Speaker #5: We've always—well, we've had forward-deployed engineers, I think, going back to about 2014. I could be wrong by a year or two. So, really, we've always had that function.

Thomas M. Siebel: Well, we have had forward deployed engineers I think going back to about 2014. I could be wrong by a year or 2. So really, we have always had that function. We need to be absolutely sure that each and every one of our satisfied customers are achieving what they need to achieve. So we are going to increase our investment in people to help them with these deployments. I think that investment in people is going to be offset in the medium run by this C3 Code product that you just have to see, where it is doing all of these data aggregation, pipeline building, machine learning development, user interface without any programmers. It is way cool. So that is going to mitigate the need for forward deployed engineers in the medium and the long run.

Thomas Siebel: Well, we have had forward deployed engineers I think going back to about 2014. I could be wrong by a year or 2. So really, we have always had that function. We need to be absolutely sure that each and every one of our satisfied customers are achieving what they need to achieve. So we are going to increase our investment in people to help them with these deployments. I think that investment in people is going to be offset in the medium run by this C3 Code product that you just have to see, where it is doing all of these data aggregation, pipeline building, machine learning development, user interface without any programmers. It is way cool. So that is going to mitigate the need for forward deployed engineers in the medium and the long run.

Speaker #5: And we need to be absolutely sure that each and every one of our satisfied customers are achieving what they need to achieve.

Speaker #5: And so we're going to increase our investment in people to help them with these deployments. I think that investment in people is going to be offset in the medium run by this C3 Code product that you just have to see.

Speaker #5: Where, I mean, it's doing all of these data aggregation pipeline building, machine learning development, user interface—without any programmers. It is way cool. So that's going to mitigate the need for forward-deployed engineers in the medium and long run.

Speaker #5: But in the short run, in the near term, we're going to overinvest in existing customers to assure they continue to realize the returns they're looking for.

Thomas M. Siebel: In the short run, near term, we are going to over-invest in existing customers to ensure they continue to realize the returns they are looking for.

Thomas Siebel: In the short run, near term, we are going to over-invest in existing customers to ensure they continue to realize the returns they are looking for.

Speaker #4: All right. Great, thank you. We did see it, by the way. We came in and did a demo, and it was remarkable. That was six months ago.

Pat Walravens: All right. Great. Thank you. We did see it, by the way. We came in and did a demo, and it was remarkable. That was 6 months ago, so I am sure it has evolved a lot since then. But it was really

Speaker #4: So I'm sure it's evolved a lot since then, but it was really pretty amazing. Thank you.

Thomas M. Siebel: It is

Thomas Siebel: It is

Thomas M. Siebel: pretty amazing. Thank you.

Thomas Siebel: pretty amazing. Thank you.

Speaker #5: Thank you, sir.

Thomas M. Siebel: Thank you, sir.

Thomas Siebel: Thank you, sir.

Speaker #3: Thank you. And our next question comes from the line of Reddy Salton from UBS. Your question, please.

Operator 2: Thank you. Our next question comes from the line of Radi Sultan from UBS. Your question please.

Operator: Thank you. Our next question comes from the line of Radi Sultan from UBS. Your question please.

Speaker #4: Awesome. Yeah. I guess maybe just to follow up on the Fed opportunity, I'm curious how much of that opportunity is in displacing incumbents, like you mentioned, versus sort of greenfield work.

Radi Sultan: Awesome. I guess I just want to follow up on the Fed opportunity. I am curious how much of that opportunity is in sort of displacing incumbents like you mentioned versus sort of greenfield work. What gives you confidence that you can displace that incumbent or those incumbents successfully?

Speaker #4: And then, what gives you confidence that you can displace that incumbent, or those incumbents, successfully?

Speaker #5: Well, we've been doing it for a while, and I think it accelerated last quarter. And there's—I mean, I think there are fine companies that make a good product, but there are people who want to replace them.

Thomas M. Siebel: Well, we have been doing it for a while, and I think it accelerated last quarter. I think they are a fine company and they have a good product, but there are people who want to replace them, and that creates an opportunity for us, I would say. There are lots of greenfield opportunity where we compete with them and win. Federal just has been and remains a really good business sector for us.

Thomas Siebel: Well, we have been doing it for a while, and I think it accelerated last quarter. I think they are a fine company and they have a good product, but there are people who want to replace them, and that creates an opportunity for us, I would say. There are lots of greenfield opportunity where we compete with them and win. Federal just has been and remains a really good business sector for us.

Speaker #5: And that creates an opportunity for us, I'd say. And then there's lots of greenfield opportunity where we compete with them and win. So, federal just has been and remains a really good business sector for us.

Speaker #4: Got it. And just one quick follow-up. If we think about the high end of the full-year guide, doesn't it imply a pretty steep acceleration if you hit that?

Radi Sultan: Got it. Then just one quick follow-up. If we think about the high end of the full-year guide, it does imply a pretty steep acceleration if you hit that. I guess my question is fundamentally, what needs to happen? What needs to go right for you to hit that high end of the guide? I guess, what gives you confidence that could happen?

Speaker #4: And I guess my question is, fundamentally, what needs to happen? What needs to go right for you to hit that high end of the guide?

Speaker #4: And I guess, what gives you—I guess, what gives you confidence that could happen?

Thomas M. Siebel: I will be honest with you, I am less interested in hitting the high end of that guide than I am making sure that we have built the pipeline and we have the sales organization in place to demonstrate consistent quarter-over-quarter revenue growth from Q3 on into perpetuity. I think that if we are able to demonstrate consistent revenue growth, if we are able to get to the point where we are running free cash flow operations and get the company to non-GAAP profitability, I think it is highly likely this company will not be trading at a revenue multiple of like 3.5. It will be trading at a revenue multiple of 10, 15, 20, or 25, and I think that will bode well for our investors.

Thomas Siebel: I will be honest with you, I am less interested in hitting the high end of that guide than I am making sure that we have built the pipeline and we have the sales organization in place to demonstrate consistent quarter-over-quarter revenue growth from Q3 on into perpetuity. I think that if we are able to demonstrate consistent revenue growth, if we are able to get to the point where we are running free cash flow operations and get the company to non-GAAP profitability, I think it is highly likely this company will not be trading at a revenue multiple of like 3.5. It will be trading at a revenue multiple of 10, 15, 20, or 25, and I think that will bode well for our investors.

Speaker #5: I'll be honest with you. I'm less interested in hitting the high end of that guide than I am in making sure that we build the pipeline and have the sales organization in place to demonstrate consistent, quarter-over-quarter revenue growth.

Speaker #5: From Q3 on into perpetuity, I think that if we're able to demonstrate consistent revenue growth, if we're able to get to the point where we're running free cash flow operations and get the company to non-GAAP profitability, I think it's highly likely this company will not be trading at a revenue multiple of like 3.5.

Speaker #5: It'll be trading at a revenue multiple of 10, 15, 20, or 25. And I think that will bode well for our investors.

Speaker #4: Thank you.

Radi Sultan: Thank you.

Speaker #3: Thank you. And our next question comes from the line of Mike Lattimore from Northland Capital Markets. Your question, please.

Operator 2: Thank you. Our next question comes from the line of Mike Latimore from Northland Capital Markets. Your question, please.

Operator: Thank you. Our next question comes from the line of Mike Latimore from Northland Capital Markets. Your question, please.

Speaker #2: Yeah. On the C3 code, obviously sounds really interesting. Is that a meaningful part of the pipeline, or are you still kind of in the early stages of marketing that?

Mike Latimore: Yeah. On the C3 Code, obviously sounds really interesting. Is that a meaningful part of the pipeline, or are you still kind of in early stages of marketing that?

Speaker #5: Honestly, Mike, we're in the early stages of marketing that. But hold on to your socks, because it doesn't have to be a multimillion-dollar acquisition.

Thomas M. Siebel: Honestly, Mike, we are in the early stages of marketing that. Hold onto your socks, because it does not have to be a multimillion-dollar acquisition. People could start small and then grow and grow. The initial customers who are using it just love it. I used it here to replace a pretty substantial piece of enterprise software that we have in place that will remain unnamed. We pay a lot of money for this application. It is in the kind of HR management space, and these guys built an application in a day, okay, that replaces an enterprise application here. In a day. It is unbelievable.

Thomas Siebel: Honestly, Mike, we are in the early stages of marketing that. Hold onto your socks, because it does not have to be a multimillion-dollar acquisition. People could start small and then grow and grow. The initial customers who are using it just love it. I used it here to replace a pretty substantial piece of enterprise software that we have in place that will remain unnamed. We pay a lot of money for this application. It is in the kind of HR management space, and these guys built an application in a day, okay, that replaces an enterprise application here. In a day. It is unbelievable.

Speaker #5: And so people could start small and then grow and grow. The initial customers who are using it just love it. And I used it here to replace a pretty substantial piece of enterprise software that we have in place that will remain unnamed.

Speaker #5: And these guys—and we pay a lot of money for this application; it's in the kind of HR management space—and these guys built an application in a day.

Speaker #5: Okay. That replaces an enterprise application here in a day. I mean, it's unbelievable.

Speaker #2: Yeah, that was great. And I mean, in the past, you've sort of promoted selling enterprise AI applications. It feels like you're maybe moving more towards a little bit of a platform strategy here, or is that the wrong interpretation?

Mike Latimore: Yeah. That was great. In the past, you have sort of promoted selling enterprise AI applications. It feels like you are maybe moving more towards a little bit of a platform strategy here, or is that the wrong interpretation?

Speaker #5: No, I think you nailed it, Mike. And we were that explicit about it. So, in the past, we have sold the AI platform.

Thomas M. Siebel: No, I think you nailed it, Mike. We weren't that explicit about it. In the past, we have sold the AI platform, then we have used the AI platform to build enterprise AI applications, which are kind of big applications that do things like predictive maintenance or demand forecasting or fraud detection or supply chain optimization. Going forward, all these applications have been broken down into their atomic particles. Atomic particles are, if you will, are embedded in the AI platform. If you want to build one of these applications for predictive maintenance for aircraft or process optimization in oil refining, whatever it might be, you can basically assemble those atomic particles in real-time that become that application.

Thomas Siebel: No, I think you nailed it, Mike. We weren't that explicit about it. In the past, we have sold the AI platform, then we have used the AI platform to build enterprise AI applications, which are kind of big applications that do things like predictive maintenance or demand forecasting or fraud detection or supply chain optimization. Going forward, all these applications have been broken down into their atomic particles. Atomic particles are, if you will, are embedded in the AI platform. If you want to build one of these applications for predictive maintenance for aircraft or process optimization in oil refining, whatever it might be, you can basically assemble those atomic particles in real-time that become that application.

Speaker #5: And then we have used the AI platform to build enterprise AI applications, which are kinds of big applications that do things like predictive maintenance, demand forecasting, fraud detection, or supply chain optimization.

Speaker #5: So, going forward, all these applications have been broken down into their atomic particles. And their atomic particles, if you will, are embedded in the AI platform.

Speaker #5: And if you want to build one of these applications for predictive maintenance, or aircraft, or process optimization in oil refining—whatever it might be—you could basically assemble those atomic particles in real time that become that application.

Speaker #5: So, it's not—they're just there, and there are thousands of those elements that kind of reassemble on demand, either because you ask them to do it or you did it through C3 code.

Thomas M. Siebel: They're just there, and there are thousands of those elements that kind of reassemble on demand, either because you asked them to do it or you did it through C3 Code. What's going forward is a little bit different. It's very insightful what you caught there.

Thomas Siebel: They're just there, and there are thousands of those elements that kind of reassemble on demand, either because you asked them to do it or you did it through C3 Code. What's going forward is a little bit different. It's very insightful what you caught there.

Speaker #5: So, what's going forward is a little bit different. It's good—very insightful what you caught there.

Speaker #2: All right, great, thanks. And then, just last, on customer concentration—any kind of metric you can provide there? Do you have any customer over 5% or over 10% of revenue, or what are your top 10 customers as a percent, anything like that?

Mike Latimore: Great. Thanks. Just last on customer concentration. Any kind of metric you can provide there? Do you have any customer over 5% or over 10% of revenue, or what are your top 10 customers or percent, anything like that?

Speaker #4: Yeah, Mike. Not a meaningful change from before. And we'll disclose that to the extent appropriate in our 10-Q, which will be out in a few days.

Hitesh Lath: Yeah, Mike, not a meaningful change from before. We'll disclose that to the extent appropriate in our 10-Q, which will be out in a few days.

Thomas M. Siebel: I don't think there's any one customer.

Thomas Siebel: I don't think there's any one customer.

Speaker #5: I don't think there's any one customer. Okay.

Mike Latimore: Okay, great. Thank you.

Speaker #2: Okay. Great. Thank you.

Speaker #5: Thanks. Bye.

Thomas M. Siebel: Thanks, Mike.

Thomas Siebel: Thanks, Mike.

Speaker #3: Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Mr. Sable for any further remarks.

Operator 2: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Mr. Siebel for any further remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Mr. Siebel for any further remarks.

Speaker #5: No, thank you, everybody, for your time. We appreciate it. And keep your eye on the ball. We're very focused here. All of these executives have their eye on the ball.

Thomas M. Siebel: Thank you, everybody, for your time. We appreciate it, and keep your eye on the ball. We are very focused here. All of these executives have their eye on the ball. I think if they continue to execute their plans as they have been, this will bode well for C3.ai investors, and that is the game we are playing. Thank you for your interest.

Thomas Siebel: Thank you, everybody, for your time. We appreciate it, and keep your eye on the ball. We are very focused here. All of these executives have their eye on the ball. I think if they continue to execute their plans as they have been, this will bode well for C3.ai investors, and that is the game we are playing. Thank you for your interest.

Speaker #5: And if they—I think if they continue to execute their plans as they have been, this will bode well for C3 investors. And that's what—that's the game we're playing.

Speaker #5: So, thank you for your interest.

Operator 2: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.