Artificial intelligence (AI) software company C3.ai (NYSE:AI) beat analysts' expectations in Q3 FY2024, with revenue up 17.6% year on year to $78.4 million. The company expects next quarter's revenue to be around $84 million, in line with analysts' estimates. It made a non-GAAP loss of $0.13 per share, down from its loss of $0.04 per share in the same quarter last year.
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C3.ai (AI) Q3 FY2024 Highlights:
- Revenue: $78.4 million vs analyst estimates of $76.14 million (3% beat)
- EPS (non-GAAP): -$0.13 vs analyst estimates of -$0.28
- Revenue Guidance for Q4 2024 is $84 million at the midpoint, roughly in line with what analysts were expecting
- Free Cash Flow was -$45.14 million compared to -$55.13 million in the previous quarter
- Gross Margin (GAAP): 57.8%, down from 66.6% in the same quarter last year
- Market Capitalization: $3.61 billion
Founded in 2009 by enterprise software veteran Tom Seibel, C3.ai (NYSE:AI) provides software that makes it easy for organizations to add artificial intelligence technology to their applications.
Data InfrastructureGenerating insights from system level data is an increasing priority for most businesses, but to do so requires connecting and analyzing piles of data stored and siloed in separate databases. This is the demand driver for cloud based data infrastructure software providers, who can more readily integrate, distribute and process information vs. legacy on-premise software providers.
Sales GrowthAs you can see below, C3.ai's revenue growth has been unremarkable over the last two years, growing from $69.77 million in Q3 FY2022 to $78.4 million this quarter.
This quarter, C3.ai's quarterly revenue was once again up 17.6% year on year. We can see that C3.ai's revenue increased by $5.17 million quarter on quarter, which is a solid improvement from the $867,000 increase in Q2 2024. Shareholders should applaud the re-acceleration of growth.
Next quarter's guidance suggests that C3.ai is expecting revenue to grow 16% year on year to $84 million, improving on the 0.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 17.7% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. C3.ai burned through $45.14 million of cash in Q3 , increasing its cash burn by 37% year on year.
C3.ai has burned through $92.87 million of cash over the last 12 months, resulting in a negative 31.3% free cash flow margin. This low FCF margin stems from C3.ai's constant need to reinvest in its business to stay competitive.
Key Takeaways from C3.ai's Q3 Results It was great to see C3.ai improve its gross margin this quarter. We were also glad its revenue outperformed Wall Street's estimates. On the other hand, cash burn remains high. Overall, this quarter's results seemed fairly positive. The stock is up 12.9% after reporting and currently trades at $33.52 per share.
