What happened
Shares of C3.ai (AI 3.52%) turned sharply lower Thursday morning, plunging as much as 24.3%. As of 10:40 a.m. ET, the stock was still down 18.1%.
The provider of enterprise artificial intelligence (AI) software solutions released quarterly results that illustrated its continuing struggles, even as the rapidly accelerating adoption of all things AI has lifted much of the sector in recent months.
So what
For its fiscal 2023 fourth quarter (ended April 30), C3.ai generated revenue of $72.4 million, which was flat year over year -- even in the face of the ongoing AI boom. Equally as troubling was the company's gross profit margin, which plunged from 76% to 66%.
Those challenges continued to the bottom line as C3.ai's operating loss of $73.3 million worsened by 77%, though the company's adjusted loss per share of $0.13 improved from a loss of $0.21 in the prior-year quarter.
If there was one bit of good news, it's that the results weren't as bad as expected. Analysts' consensus estimates were calling for revenue of $71.4 million and a loss per share of $0.17, so C3.ai cleared the low hurdle Wall Street set for it.
Now what
Unlike some other companies in the space, C3.ai has, at least thus far, been unable to leverage the ongoing AI boom. This was painfully evident in the company's guidance, which was tepid at best.
For its fiscal 2024 first quarter, management is expecting revenue of $71 million, or growth of roughly 9% at the midpoint of its guidance. The full-year forecast wasn't much better, guiding for revenue of $308 million, an increase of about 22%. Unfortunately, this missed Wall Street's expectations of $312 million. The company also expects its mounting losses to continue.
C3.ai continues to work through the changes it has made to its pricing strategy, shifting from a subscription-based to a consumption-based pricing model. It remains to be seen if the company can successfully navigate this business model pivot.
Even after today's plunge, C3.ai stock has nearly tripled so far this year, driven higher by the fervor surrounding AI. Unfortunately, it hasn't produced the commensurate financial results to support that move. Given the company's ongoing difficulties, there are simply better AI-related stocks for investors to choose from.
