C3.ai, Inc. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Partnerships: Significant milestones included the renewal and expansion of the partnership with Baker Hughes, which was extended through 2028, generating substantial revenue. Expanded partnerships with Microsoft, AWS, GCP, McKinsey Quantum Black, and PwC. For example, 73% of agreements in 2025 were delivered with partners, and partner-supported bookings grew 419% in Q4 2025.
• Vertical Growth: Diversification into multiple industries, with non-oil and gas revenue growing 48% year over year. Strong performance in manufacturing, state and local government, and life sciences. Federal business was a key strength, with achievements like the US Air Force expanding the Panda predictive maintenance platform.
• Agentic AI: Over 100 Agentic AI solutions deployed, annualizing to approximately $60 million ARR. C3.ai, Inc. owns the patent on Agentic AI, with solutions in defense, intelligence, state/local government, manufacturing, and oil and gas.

Segment Performance

• Fourth Quarter 2025: Total revenue reached $108.7 million, a 26% increase year over year. Subscription revenue was $87.3 million, up 9% year over year, representing 80% of total revenue. Revenue from demo licenses of C3 AI applications was $33.8 million. Bookings for the quarter were $135.4 million, up from $42 million in Q4 of the prior year. Non-Baker Hughes revenue grew 37% year over year in Q4 and 40% for the year. Professional services revenue was $21.4 million, with $17 million from prioritized engineering services.
• Full Fiscal Year 2025: Total revenue was $389.1 million, a 25% increase year over year. Subscription revenue was $327.6 million, accounting for 84% of total revenue and up 18% from the prior year. This marks the eighteenth consecutive quarter of meeting or exceeding revenue guidance.

Guidance

• Q1 Fiscal Year 2026: Revenue guidance is $100 million to $109 million.
• Full Fiscal Year 2026: Anticipated revenue range is $447.5 million to $484.5 million. Non-GAAP loss from operations guidance for Q1 FY2026 is $23.5 million to $33.5 million, and for the full year, it's $65 million to $100 million. Expectation to cross into non-GAAP profitability during the second half of fiscal 2027 and be free cash flow positive in Q4 FY2026 and subsequent years.

Risks

• Geopolitical Uncertainties: Potential impacts from geopolitical risks such as government shutdowns, budget issues, and global trade friction could have unknown and adverse consequences on business results.

Question and Answer

Q: How do you go about activating tens of thousands of Azure sales reps to deliver C3.ai, Inc.'s solutions?

A: C3.ai, Inc. is focusing on engaging with Azure sales reps at the local level, having C3 salespeople partner with Azure salespeople, providing demo tools, and making joint sales calls. This leverages the reach of tens of thousands of Azure sales reps globally.

Q: How did you think through guidance construction for FY2026, and what needs to happen to achieve the high end of the guidance band?

A: Guidance construction accounts for geopolitical risks. The broader range accommodates unanticipated risks. Achieving the high end of the guidance band would require navigating geopolitical challenges favorably and capitalizing on growth opportunities from partnerships and market expansion.