TLDR:
- C3.ai reported Q2 FY2025 revenue of $94.3M, up 29% YoY, marking seventh consecutive quarter of accelerating growth
- Company announced major strategic alliance with Microsoft Azure making C3.ai the preferred AI application provider through 2030
- CEO Thomas Siebel plans to sell 12.78M shares by December 2026, representing significant portion of his voting power
- Company raised full year revenue guidance to $378-398M but expects increased losses due to Microsoft partnership investments
- Baker Hughes revenue contribution decreased to 18% of total revenue, down from 35% in FY2023
C3.AI (NYSE: AI) reported strong second-quarter fiscal 2025 results on Tuesday, with revenue growing 29% year-over-year to $94.3 million, exceeding analyst expectations. The company’s performance was highlighted by a major strategic alliance with Microsoft Azure, though news of CEO Thomas Siebel’s planned share sale created some market volatility.
Total revenue for the quarter surpassed guidance, with subscription revenue reaching $81.2 million, up 22% from the previous year. The company’s subscription and prioritized engineering services revenue combined was $90.8 million, representing 96% of total revenue and marking a 27% increase from the year-ago period.
“We had another outstanding quarter with strong top and bottom line performance. This quarter marked our seventh consecutive quarter of accelerating revenue growth,” said CEO Thomas Siebel during the earnings call.
The company’s non-GAAP loss per share was $0.06, better than the $0.14 loss analysts had predicted. Non-GAAP gross profit reached $66.3 million, maintaining a 70% gross margin.
A significant development during the quarter was the expansion of C3.AI’s strategic alliance with Microsoft Azure, signed on September 30, 2024, for a 5.5-year term ending March 2030. Under the agreement, C3.AI becomes Microsoft’s preferred enterprise AI application provider, while Microsoft Azure becomes C3.AI’s preferred cloud provider.
“The most significant event of the quarter and perhaps the most significant event in the company’s history was most certainly the substantial expansion of our strategic alliance with Microsoft Azure,” Siebel emphasized.
The partnership makes all C3.AI enterprise and generative AI solutions available on the Azure price list and marketplace, with Microsoft’s global sales force incentivized to sell C3.AI solutions. The agreement also allows customers to use their existing Microsoft enterprise licensing agreements, potentially shortening sales cycles.
In a separate development, a regulatory filing revealed CEO Thomas Siebel’s plans to sell 12.78 million shares with an expiration date of December 17, 2026. As of October 31, Siebel and related entities controlled approximately 87.8% of Class B common stock and 21.6% of Class A shares, representing about 53.9% of total voting power.
The company’s relationship with Baker Hughes continues to evolve, with Baker Hughes revenue now accounting for 18% of total revenue, down from 35% in fiscal year 2023. The exclusive marketing agreement with Baker Hughes is set to expire in June 2025 unless renewed.
C3.AI closed 58 agreements during the quarter, including 36 pilots, with new and expanded agreements across various sectors including ExxonMobil, Coke, Dow, Shell, and multiple government agencies.
Looking ahead, C3.AI raised its fiscal 2025 revenue guidance to $378-398 million. However, the company is no longer targeting to be cash flow positive for the full fiscal year 2025 due to planned investments in the Microsoft partnership, though it expects to maintain positive cash flow in Q4.
“We have more than sufficient cash, and we continue to plan to be cash flow positive in the fourth quarter of this year,” noted CFO Hitesh Lath.
The company ended the quarter with $730 million in cash and cash equivalents, maintaining a strong financial position as it scales operations and invests in growth opportunities.
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