C3.ai Stock Dives as Revenue Growth Slows

Published Date : 28/02/2025 

C3.ai's stock dropped 6% on Thursday following a slower revenue growth in the third quarter of fiscal 2025. Despite slightly exceeding analyst forecasts, the company anticipates moderation in gross and operating margins. 

Shares of C3.ai (AI) took a hit, falling 6% on Thursday, following a slowdown in revenue growth for the enterprise artificial intelligence (AI) technology firm.

The decline came a day after the company reported its fiscal 2025 third-quarter results, which showed a growth rate that was lower than in the previous quarter.

The company reported fiscal 2025 third-quarter revenue of $98.8 million, marking a 26% increase year-over-year.

This figure was slightly above the forecasts of analysts surveyed by Visible Alpha.

However, this growth rate was notably slower compared to the 29% increase seen in the second quarter.

Subscription revenue also rose by 22% to $85.7 million, which was marginally better than expected.

C3.ai's adjusted loss for the quarter came in at $0.12, which was about half of the estimates provided by analysts.

Despite the lower loss, the company's stock price has been on a downward trend.

After experiencing a significant jump at the end of 2024, C3.ai's shares have steadily declined, losing approximately 17% of their value over the past year.

In its earnings call, C3.ai management indicated that they anticipate some moderation in gross margins due to an increased mix of more costly pilots.

According to a transcript provided by AlphaSense, the company also expects a moderation in its operating margin in the near term as it continues to invest heavily in the business.

The company's strategic focus remains on expanding its AI solutions and investing in new technologies to stay ahead in the competitive landscape.

However, these investments are expected to impact margins in the short term, leading to the cautious outlook expressed by management.

For investors, the slowdown in revenue growth and the anticipated margin moderation raise concerns about the company's ability to maintain its previous momentum.

Despite these challenges, C3.ai continues to be a prominent player in the enterprise AI market, with a strong portfolio of solutions and a solid customer base.

As the company navigates these challenges, it will be crucial to monitor its progress in executing its strategic initiatives and the impact of these investments on its financial performance in the coming quarters. 

Frequently Asked Questions (FAQS):

Q: Why did C3.ai's stock drop?

A: C3.ai's stock dropped 6% on Thursday due to a slower revenue growth in the third quarter of fiscal 2025 compared to the previous quarter.

Q: What were C3.ai's third-quarter financial results?

A: C3.ai reported fiscal 2025 third-quarter revenue of $98.8 million, a 26% increase year-over-year, and an adjusted loss of $0.12, which was about half of the estimates.

Q: What does C3.ai anticipate for its margins?

A: C3.ai anticipates some moderation in gross and operating margins due to increased costs from new pilots and continued investments in the business.

Q: How has C3.ai's stock performed over the past year?

A: C3.ai's shares have lost about 17% of their value over the past year, despite a significant jump at the end of 2024.

Q: What is C3.ai's strategic focus?

A: C3.ai's strategic focus remains on expanding its AI solutions and investing in new technologies to stay competitive in the market. 

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