C3.ai Stock Rises After Earnings Update. It Sees Revenue Topping Forecasts.

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C3.ai shares soared Monday after the company said it would beat its previous financial forecasts for its fiscal fourth quarter, ended April 30, as enterprise demand for AI software spikes.

C3.ai (ticker: AI) stock rose 16% Monday to $22.48. The stock has doubled so far this year, despite being hit by a report from a short seller, because the launch late last year of OpenAI’s ChatGPT chatbot has triggered a surge in interest in artificial intelligence among investors.

“There is no CEO, no corporate board, where the issue of applying predictive analytics to business process is not one of top three things on their agenda,” C3.ai CEO Tom Siebel said in an interview with Barron’s. “The market has changed for enterprise AI. It’s just exploding, and we’re seeing that in our business pipeline. We’re in a pretty good position here. We have the product, the channel, and the sales organization.”

C3.ai

(ticker: AI) said it now expects to report an adjusted operating loss for the April quarter of between $23.7 million and $23.9 million, compared with a previous forecast range of $24 million to $28 million. 

The company now expects April quarter revenue of between $72.1 million and $72.4 million, compared with the $70.0 million to $72.2 million it had predicted.

In its fiscal third quarter ended in January, C3.ai posted revenue of $66.7 million and an adjusted operating loss of $15.0 million.

C3.ai said it closed 43 deals in the quarter and that its consumption-based pricing model continues to be well received by customers. The switch from a subscription-based model has been a focus of skepticism for some analysts, who said it was likely to be a drag on revenue growth.

Siebel said the company is on track to be profitable on a non-GAAP, or adjusted, basis by the end of fiscal 2024. He said the company expected faster growth in fiscal 2024, but declined to provide a more specific forecast.

The C3.ai chief said artificial intelligence changes the nature of enterprise search engines. “We take their ERP, CRM, manufacturing applications and supply chain applications and make them predictive,” he said. “We can predict system or device failures before they happen.”

“Enterprise interest in artificial intelligence remains elevated with C3.ai commenting on healthy growth in its pipeline. We expect an audited 10K [annual filing] will be the final boost of confidence in the stock near term,” analysts at D.A. Davidson led by Gil Luria wrote in a research note on Monday. D.A. Davidson has a Buy rating and $30 target price on the stock.

The company will report its fiscal fourth-quarter earnings on May 31.

Write to Adam Clark at [email protected] and Eric J. Savitz at [email protected]