c3.ai says that interest in ai applications is at its highest level historically

The California-based artificial intelligence software developer C3.ai acknowledged today that interest in AI applications and the implementation of the technology to business processes is at its highest point historically.

This and other comments from C3’s leadership team were made as part of the release of its financial results covering the fourth quarter and the entire 2023 fiscal year, which ended on 30 April.

“We believe it is generally agreed today that the market for enterprise AI applications is substantially larger and growing at a much greater growth rate than experts predicted”, the company stated in the press release that reveals its financial performance during the period.

“The interest in applying AI to business processes is more active than we’ve ever seen”, the management team asserted.

During the last quarter of the 2023 fiscal year, C3.ai generated revenues of $72.4 million, the majority of which came from subscription payments. More than half of the company’s bookings reportedly come from two industries: 1) oil and gas and federal and 2) defense, and aerospace.

The company believes that the demand for its services will experience a significant jump over the coming years as organizations are showing increasing interest in AI applications. In addition, C3.ai is implementing changes to its pricing model, shifting from a subscription-based scheme to “consumption-based pricing”.

This approach resembles that of other AI firms like OpenAI and Anthropic, which charge customers based on usage volumes via tokens that have a specific dollar value. The more prompts they send to the AI model, the more the company bills.

C3.ai Sees 52% Jump in the Number of Closed Deals in the Past Fiscal Year

During the three months ended in April, C3.ai reportedly closed 43 agreements with organizations including 19 pilots. A pilot is a thoroughly conceived program that helps enterprises implement one or more of the company’s applications within just six months.

Meanwhile, during the entire 2023 fiscal year, C3.ai closed a total of 126 agreements resulting in a 52% year-on-year jump. The firm also saw a reduction in the number of months that it took them to close a deal, with the metric dropping from 5 months back in Q4 2022 to 3.7 months in this last quarter of FY 2023.

According to data provided by C3, 14 of the 19 companies that signed a pilot agreement generate revenues exceeding $10 billion while 7 of them produce top-line figures exceeding $100 billion per year.

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Some of those clients included prominent multinational corporations like Shell, PwC, ExxonMobil, Baker Hughes, and Cargill.

c3.ai AI platform

In this past quarter, the company also released its C3 Generative AI solution powered by a proprietary large language model (LLM) that allows companies to tap into all of their data sources including PDFs, Excel spreadsheets, CRM, and ERP data, to come up with insights, perform searches, and execute complex tasks.

The solution is reportedly a “hallucination-free” product and it is already available to customers on the AWS and Google Cloud Marketplaces. C3.ai believes that the total addressable market for this solution is “extraordinarily large”.

In total, C3.ai has developed 40 different enterprise applications that help customers in enhancing their internal processes going from inventory management and supply network risk assessment to cash flow administration and enforcement of anti-money laundering policies.

C3.ai Remains on Track to Become a Profitable Business Endeavor

In the fourth quarter, the company produced positive free cash flows of $16.3 million and the management asserted that the firm remains on track to deliver positive non-GAAP net profits by the end of the 2024 fiscal year.

For this upcoming fiscal year, C3.ai expects to produce total revenues ranging between $295 and $320 million resulting in a year-on-year jump of up to 20%. On 22 June, C3.ai is scheduled to host an Investor Day event.

Market participants don’t appear to be greeting today’s report as shares of C3.ai are dropping by nearly 20% in pre-market stock trading action as the company missed analysts’ estimates for its FY2024 revenues.

It appears that 20% revenue growth for a company with such a huge total addressable market and experiencing such positive momentum is not impressing investors by any means.

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