C3.ai Shares Jump After Smashing Revenue Estimates, Raising Outlook
Enterprise AI firm reports 29% revenue growth, driven by strong federal government contracts and an expanding Microsoft partnership.
Shares of C3.ai (NYSE: AI) climbed more than 4% on Wednesday after the enterprise software company posted fiscal second-quarter results that significantly outpaced analyst expectations and raised its full-year revenue forecast, signaling strong momentum in its government and commercial sectors.
The Redwood City, California-based firm announced revenue of $94.3 million for the quarter, a 29% increase from the same period last year. This figure comfortably beat the Wall Street consensus, which had anticipated revenue closer to $75 million. The company reported a non-GAAP net loss of $0.06 per share, a dramatic improvement over the projected loss of around $0.33 per share.
In a sign of growing confidence, C3.ai boosted its revenue guidance for the full fiscal year 2025 to a range of $378 million to $398 million. The midpoint of this new forecast is well above previous analyst estimates, providing a key catalyst for the stock's positive move in a market hungry for AI success stories.
"We had an outstanding quarter with strong top- and bottom-line performance to mark our seventh consecutive quarter of accelerating revenue growth," said Thomas Siebel, CEO of C3.ai, in the company's official statement. Siebel also highlighted the company's expanding partnership with Microsoft, calling it an "inflection point for Enterprise AI" that is driving growth by positioning C3 AI as a preferred application provider on the Azure cloud platform.
A significant driver of the quarter's success was the company's federal business, which secured a series of new and expanded contracts across the U.S. government. According to the earnings release, C3.ai deepened its relationships with the Department of Defense, including the Air Force, Army, Navy, and the Defense Logistics Agency. One notable award was a $23 million contract with the U.S. Army to deploy C3.ai's Decision Advantage application for transforming intelligence collection.
The company's subscription revenue, a critical metric for software firms, grew 22% year-over-year to $81.2 million, accounting for 86% of total revenue. This indicates a solid base of recurring income as the company continues to scale its operations.
In Wednesday trading, C3.ai stock rose approximately 4.5% to trade around $15.01. While the rally provided a boost for shareholders, the stock remains significantly below its 52-week high of over $45, reflecting a challenging year for many growth-oriented technology companies amid shifting investor sentiment and macroeconomic pressures.
Investors will be watching closely to see if the strong quarterly performance and optimistic guidance can build a sustained recovery. The robust federal bookings and the strategic leverage from the Microsoft alliance suggest C3.ai is solidifying its position in the competitive enterprise AI market, offering a more bullish narrative as it heads into the second half of its fiscal year.