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C3.ai, Inc. (AI)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 revenue was $108.7M, up 26% y/y and above consensus ($107.7M*) with non-GAAP EPS of $(0.16), beating consensus ($(0.201)*) . Demonstration license revenue contributed $33.8M, supporting strong bookings of $135.4M .
  • Gross margin held at 69% non-GAAP (62% GAAP), with management flagging near-term margin moderation from higher initial production deployment mix and support investments .
  • Strategic catalysts: Baker Hughes partnership renewed/expanded through June 2028; USAF RSO raised the PANDA ceiling to $450M, with first task order issued .
  • FY2026 guidance: revenue $447.5–$484.5M and non-GAAP operating loss $(65)–$(100)M; Q1 FY2026 revenue $100–$109M and non-GAAP operating loss $(23.5)–$(33.5)M . Management targets FCF positive in Q4 FY2026 and non-GAAP profitability in H2 FY2027 .

What Went Well and What Went Wrong

What Went Well

  • Revenue beat with accelerating demand: “attaining 26% top-line growth in the fourth quarter” and a bookings surge to $135.4M; demonstration licenses enabled broader partner/customer adoption .
  • Strategic alliances: Baker Hughes renewal through 2028, expanded joint solutions and market access; deepening Microsoft/AWS/GCP/McKinsey/PwC alliances, with 59 partner-led Q4 agreements .
  • Federal momentum: USAF RSO increased contract ceiling to $450M for PANDA expansion; DLA Energy extended PLUTO use; first task order issued under new ceiling .

What Went Wrong

  • Losses remain material: GAAP net loss $(79.7)M; non-GAAP operating loss $(31.2)M; non-GAAP EPS $(0.16) .
  • Margin pressure expected near term due to higher initial production deployments and support capacity build-out, potentially moderating gross/operating margins .
  • Wider FY2026 guidance range reflects heightened geopolitical/budget risk impacting federal/commercial demand and execution (management cited government shutdown/trade friction risks) .

Financial Results

Core Financials vs prior quarters and y/y

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$94.338 $98.782 $108.723
Revenue Y/Y Growth (%)29% 26% 26%
GAAP Gross Margin (%)61% 59% 62%
Non-GAAP Gross Margin (%)70% 69% 69%
Non-GAAP Operating Loss ($USD Millions)$(17.160) $(23.144) $(31.165)
GAAP EPS ($)$(0.52) $(0.62) $(0.60)
Non-GAAP EPS ($)$(0.06) $(0.12) $(0.16)
Free Cash Flow ($USD Millions)$(32.390) $(22.382) $10.326
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$730.4 $724.3 $742.7

Revenue/EPS vs Consensus

MetricQ2 2025Q3 2025Q4 2025
Revenue Actual ($USD Millions)$94.338 $98.782 $108.723
Revenue Consensus Mean ($USD Millions)$91.023*$98.122*$107.698*
EPS Actual (Primary/Non-GAAP, $)$(0.06) $(0.12) $(0.16)
EPS Consensus Mean ($)$(0.1619)*$(0.2500)*$(0.2010)*

Values retrieved from S&P Global.*

Segment Breakdown

MetricQ2 2025Q3 2025Q4 2025
Subscription Revenue ($USD Millions)$81.162 $85.679 $87.333
Professional Services Revenue ($USD Millions)$13.176 $13.103 $21.390
Prioritized Engineering Services ($USD Thousands)$9,661 $5,698 $17,024
Service Fees ($USD Thousands)$3,515 $7,405 $4,366

KPIs

KPIQ2 2025Q3 2025Q4 2025
Agreements Closed (#)58 66 69
Pilots / Initial Production Deployments (#)36 pilots 50 pilots 36 IPDs
Partner-Supported Agreements (#)—47 59
Bookings ($USD Millions)——$135.4

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/ResultChange
Total RevenueQ4 FY2025$103.6–$113.6 Actual $108.7M In-range (met)
Non-GAAP Loss from OperationsQ4 FY2025$(30)–$(40)M Actual $(31.2)M Better (toward low end)
Total RevenueQ1 FY2026—$100–$109M New
Non-GAAP Loss from OperationsQ1 FY2026—$(23.5)–$(33.5)M New
Total RevenueFY2026—$447.5–$484.5M New
Non-GAAP Loss from OperationsFY2026—$(65)–$(100)M New

No guidance provided for OI&E, tax rate, or dividends in these materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2025)Previous Mentions (Q3 FY2025)Current Period (Q4 FY2025)Trend
Partner Ecosystem (Azure/AWS/GCP/McKinsey)Microsoft alliance launched; Azure listing/commissions; 62% agreements via partners 28 Microsoft agreements; 47 partner agreements; pipeline +244%; shorter cycles 59 partner agreements (+419% y/y partner bookings); PwC alliance added Expanding reach and velocity
Generative/Agentic AIPatent awarded; accelerators; enterprise-grade features First agentic AI earnings call; time-series embedding; 20 gen-AI pilots >100 agentic AI solutions deployed; ARR ~$60M; multi-agent planning, omni-modal parsing Product differentiation and adoption rising
Federal MomentumArmy/CDAO/Navy/USAF expansions (PANDA, contested logistics) DOD/USAF/DLA/MDA agreements; Tradewinds awardable status USAF RSO ceiling to $450M; first task order; DLA Energy PLUTO expansion; Arcfield partnership Scaling DoD deployments
Baker Hughes PartnershipNot highlightedO&G wins continued JV renewed/expanded through 2028; >$0.5B cumulative O&G/chem revenue tailwind Key tailwind sustained
Margins/Expense DisciplineNon-GAAP loss narrowed; FCF still negative Non-GAAP loss $(23.1)M; FCF $(22.4)M Non-GAAP loss $(31.2)M; FCF +$10.3M; near-term margin moderation expected Improving cash; investment-led margin mix
Guidance/Macro RiskFY2025 raised; band tighter Q4/FY2025 guidance set FY2026/Q1 set; wider band due to geopolitical/budget risks Cautious range, upside from alliances

Management Commentary

  • “We renewed the Baker Hughes agreement…extended through 2028…this alliance continues to bring us enormous credibility and market access in oil and gas globally.” (Tom Siebel)
  • “Revenue from sale of software licenses that are demonstration versions…was $33.8M during the quarter…a strong bookings quarter…$135.4M.” (CFO)
  • “We continue to be very well capitalized…closed the quarter with $742.7M in cash, cash equivalents, and marketable securities…expect to be free cash flow positive in Q4 FY2026 and non-GAAP profitable in H2 FY2027.” (CFO)
  • “We have the largest and most powerful partner ecosystem…arming our partners with demonstration licenses…think about that as an investment in future growth.” (Tom Siebel)
  • “Our guidance is predicated on the assumption of geopolitical stability…these risks are real…thus a broader range than usual.” (Tom Siebel)

Q&A Highlights

  • Microsoft activation: C3 AI pairs 100 sales reps with 10 Azure reps each, focusing on two accounts per rep, enabling demos on first calls and leveraging Microsoft paper to shorten cycles .
  • Baker Hughes economics: Under NDA; scope broadened significantly; multi-year extension; continued co-development and joint customer delivery worldwide .
  • Guidance band rationale: Management widened FY2026 range to reflect geopolitical/budget/kintetic risks (e.g., potential U.S. government shutdown, trade friction), acknowledging possible demand/execution impacts .

Estimates Context

  • Q4 FY2025 beat: Revenue $108.7M vs $107.7M*; EPS $(0.16) vs $(0.201)* .
  • Prior quarters: Q2 beat on revenue/EPS ($94.3M vs $91.0M*; $(0.06) vs $(0.162)); Q3 beat/slight top-line beat ($98.8M vs $98.1M; $(0.12) vs $(0.25)*) .
  • FY2026 consensus revenue $298.7M* trails company guidance $447.5–$484.5M, implying upward estimate revisions likely if execution continues (alliances, federal awards, IPDs conversion) .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Broad-based top-line momentum with recurring beats on revenue/EPS versus consensus; demonstration licenses and partner-led distribution are meaningful near-term revenue drivers .
  • Strategic tailwinds sustained: Baker Hughes renewal through 2028 and USAF ceiling to $450M catalyze multi-year visibility in energy/federal segments .
  • Watch margin mix: Higher initial production deployments/support investments temper near-term margins; still, FCF inflected positive in Q4 and management targets FCF positive by Q4 FY2026 .
  • Guidance band widened on macro/geopolitical risk—expect potential volatility around federal timing and global trade developments; but alliances shorten cycles and expand reach .
  • Estimate trajectory: FY2026 Street revenue appears below internal guidance; if partner motions/DoD expansions convert to subscriptions, consensus likely moves up materially*.
  • Conversion focus: 346 cumulative IPDs signed (263 active); conversion to ongoing subscriptions is a key lever for ARR scaling in FY2026 .
  • Cash runway remains strong (~$742.7M), enabling sustained investment in ecosystem, sales, and R&D while bridging to non-GAAP profitability targeted in H2 FY2027 .