C3 AI switches business models and reduces sales forecast; stock plunges

C3.ai Inc. shares plunged more than 15% in after-hours trading Wednesday, after the company’s chief executive announced a changed business model and reduced annual revenue guidance.

CEO Thomas Siebel announced that the software company would now charge customers based on how much they use C3’s software, instead of requiring a specific subscription price. Siebel said the change would bring C3’s pricing model in line with companies such as Snowflake Inc. SNOW,
and major cloud-computing providers, and promised a faster pathway to adjusted profit, now expected in the 2024 fiscal year.

“The economic downturn is real,” Siebel said in a statement. “Our customers are scrutinizing big deals like never before, which also makes this a smart time to launch consumption pricing.”

C3 executives guided for fiscal second-quarter revenue of $60 million to $62 million, while analysts on average were modeling sales of $71.7 million. They reduced their annual revenue forecast by roughly 17%, to a range of $255 million to $270 million from a previously stated range of $308 million to $316 million.

For the fiscal first quarter, C3 reported a loss of $71.9 million, or 67 cents a share, on revenue of $65.3 million, up from $52.4 million a year ago. After adjusting for stock compensation and related payroll taxes, the company reported a loss of 12 cents a share, improving from an adjusted loss of 22 cents a share last year. Analysts on average expected an adjusted loss of 28 cents a share on sales of $66 million, according to FactSet.

C3 went public in late 2020 at $42 a share, and saw the stock hit triple digits in its first day of trading. Shares have suffered since, closing Wednesday at $18 and falling close to $15 in after-hours trading following the announcement. C3 stock has declined 42.4% so far this year, as the S&P 500 index SPX,
has fallen 16.4%.


Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button