C3.ai Erases Gains With Poor Revenue Outlook

Artificial intelligence software developer C3.ai (NYSE: AI) published fourth-quarter results after the bell on Wednesday, surpassing forecasts on the top and bottom lines but presenting a forecast that disappointed Wall Street.

The company announced fourth-quarter revenues of $72.4 million, which were higher than the $71 million projected, along with an adjusted loss per share of $0.13, which was lower than the $0.17 loss predicted by analysts.

C3.ai’s full-year revenue forecast, on the other hand, appears to have fallen short of Wall Street forecasts. The company stated that it anticipated revenue for fiscal year 2024 to range between $295 to $320 million; however, S&P Global Market Intelligence data revealed that analysts were expecting revenues closer to $321 million for the whole year.

Fiscal year 2023 saw the firm’s revenue jump to $266.8 million from last year’s $252.8 million. It also posted a wider net loss at $268.8 million compared to last year’s loss of $192.1 million.

After artificial intelligence (AI) players like Nvidia and Marvell Technology raised their projections on a rise in demand last week, investors appear to be judging C3.ai severely, with the stock down more than 23% since reporting.

“We believe it is generally agreed today that the market for enterprise AI applications is substantially larger and growing at a much greater growth rate than experts predicted,” the company said in a statement. “C3 AI has been at the vanguard of the enterprise AI market for over a decade as that market has developed from its roots in IoT, to unsupervised learning, supervised learning, NLP, deep learning, reinforcement learning, and now generative AI.”

Artificial intelligence is the trendiest topic on Wall Street, with businesses ranging from Nvidia and Marvell to Microsoft and Google riding the hype wave that began with the launch of ChatGPT in 2022.

Whereas Nvidia’s stock is up 162% since the beginning of 2023, C3.ai’s stock is up a stunning 203%.

The spike in valuation, however, hit a hitch in April when C3.ai became a target for a short seller report written by Kerrisdale Capital Management bringing about the allegedly “highly aggressive accounting” that the firm used to inflate its income statement.

Shareholders then sued the short seller for releasing a letter it wrote addressed to C3.ai’s auditing firm Deloitte & Touche that allegedly contained false and deceptive statements for the purpose of manipulating and driving down the price of the stock.

Elizabeth Coffey, representing the complainants, is said to have purchased 5.33426 shares in C3.ai back on March 6 at approximately $28.12 per share, or a total of $150.00. After the Kerrisdale letter was released, Coffey sold her shares the next day at “approximately $23.56 per share, or a total of $125.70, for a loss of $24.30.”

C3.ai develops enterprise AI software that is utilized in a variety of industries such as transportation, healthcare, and manufacturing. The company revealed on Tuesday that its own C3 Generative AI tool is now available through Amazon’s AWS marketplace, on top of Google’s Cloud Marketplace where it is currently accessible.

Unlike generative AI platforms such as ChatGPT, C3.ai’s service is tailored to enterprise environments. To that aim, it enables users to access company data using a natural language interface while keeping them from mistakenly disclosing that information to the outside world.

Information for this briefing was found via Yahoo Finance and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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