C3.ai Inc

C3.ai, Inc. (NYSE: AI) is an enterprise artificial intelligence (AI) application software company. The Company has built a solution that enables its customers to rapidly develop, deploy, and operate enterprise AI applications. It offers families of software solutions, which it collectively refers to as its C3 AI software: The C3 AI Platform, C3 AI Applications, and C3 Generative AI.

Recent Business and Financial Updates

• Robust Financial Performance in Fiscal Q4 2024:
  • Revenue Growth: The company reported a total revenue of USD 86.6 million for the fourth quarter of fiscal 2024, reflecting a robust 20% increase from USD 72.4 million in the same quarter of the previous year.
  • Subscription Revenue Surge: Subscription revenue, comprising 92% of the total revenue, rose to USD 79.9 million, a significant 41% increase from USD 56.9 million the prior year.
  • Gross Profit Enhancement: The GAAP gross profit for the quarter amounted to USD 51.6 million, representing a 60% gross margin, while the non-GAAP gross profit reached USD 60.9 million, equating to a 70% non-GAAP gross margin.
  • Earnings and Cash Flow: The GAAP net loss per share was USD (0.59), and the non-GAAP net loss per share was USD (0.11). The company reported USD 750.4 million in cash, cash equivalents, and marketable securities, along with a positive free cash flow of USD 18.8 million.
• Strong Annual Financial Outcomes for FY 2024:
  • Annual Revenue Growth: The total revenue for fiscal year 2024 was USD 310.6 million, marking a 16% increase compared to USD 266.8 million from the previous fiscal year.
  • Subscription Revenue Strength: Subscription revenue for the fiscal year was USD 278.1 million, accounting for 90% of total revenue and reflecting a 21% increase from USD 230.4 million the previous year.
  • Gross Profit Metrics: The GAAP gross profit for the fiscal year stood at USD 178.6 million, with a 57% gross margin. The non-GAAP gross profit was USD 215.6 million, translating to a 69% non-GAAP gross margin.
  • Earnings Performance: The GAAP net loss per share for the fiscal year was USD (2.34), whereas the non-GAAP net loss per share was USD (0.47).
• Strategic Business Achievements:
  • Enterprise AI Leadership: C3 AI has reinforced its leadership in Enterprise AI applications, with application sales driving 88% of bookings and the C3 AI Platform accounting for 12%.
  • Significant Agreements: The company closed 191 agreements in FY24, a 52% year-over-year increase, including 123 pilot projects, a 151% increase year-over-year. In Q4 FY24, notable agreements were secured with industry giants such as ExxonMobil, General Mills, and the U.S. Navy.
  • Government Sector Expansion: The company expanded its state and local government engagements, including an enhanced agreement with Riverside County in California and a new collaboration with the Pasco County Sheriff’s Office.
  • Industry Distribution: The fourth quarter of FY24 saw diverse industry bookings, with Federal, Defense, and Aerospace sectors leading at 49.5%.
• Customer Success and Impact:
  • Predictive Maintenance Solutions: C3 AI continues to excel in AI-powered predictive maintenance, delivering significant economic value across Industrial, Manufacturing, and Energy sectors.
  • Dow's Enhanced Capabilities: Dow has effectively used C3 AI Reliability to reduce steam cracker downtime and plans to expand this solution to additional sites and assets. The implementation of C3 Generative AI aims to improve alert responses and expedite personnel onboarding.
  • Holcim’s Operational Efficiency: Holcim has achieved substantial advancements in operational efficiency and sustainability through the deployment of C3 AI Reliability across 31 facilities, monitoring 3,000 sensors.
  • Con Edison's AI Program: Con Edison leverages the C3 AI Platform to enhance operational efficiency, safety, and customer satisfaction, significantly benefiting from its advanced metering infrastructure project.
• Federal Sector Growth and Partner Network Expansion:
  • Federal Revenue Growth: C3 AI’s Federal business experienced remarkable growth, with revenue more than doubling in FY24. The company closed 65 Federal agreements, a 48% year-over-year increase, and expanded into 10 new Federal organizations.
  • Key Federal Agreements: In Q4 FY24, significant agreements were established with the U.S. Air Force, Navy, Marine Corps, Intelligence Community, and the National Science Foundation, enhancing the company's footprint in the Federal sector.
  • Partner Network Success: C3 AI’s partner network continued to thrive, closing 115 agreements in FY24, a 62% year-over-year increase. The joint 12-month qualified opportunity pipeline with partners grew by 63%, with partner-supported bookings increasing by 76% year-over-year in Q4 FY24.
  • Strategic Partnerships: The company deepened its partnerships with Fractal and Paradyme to support Version 8 upgrades and customer service engagements, with a commitment to training over 200 C3 AI-qualified engineers and data scientists in FY25.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 43.80, downward trending and moving towards oversold zone, with expectations of a consolidation or a short-term correction. Additionally, the stock's current positioning is around both 50-Day SMA and 200-Day SMA, which  can act as a short to medium term support or resistance level, deciding on the trend the stock takes.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to C3.ai, Inc. (NYSE: AI) at the current market price of USD 27.46 as of July 25, 2024, at 09:50 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is July 25, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.