By Senad Karaahmetovic
C3.ai (NYSE:AI) saw its shares rise nearly 17% in premarket Friday after the company raised its full-year guidance for revenue.
For its fiscal third quarter, C3.ai reported a loss per share of $0.06 on revenue of $66.7 million, beating the average analyst estimate for a loss per share of $0.22 on revenue of $64.22M.
Subscription revenue came in at $57M, slightly below the $57.1M reported a year ago and the expected $57.2M. Overall, sales fell 4.4% year-over-year.
“The overall business sentiment appears to be improving. This is a dramatic change from what we experienced in mid 2022,” said CEO Thomas M. Siebel.
For this quarter, C3.ai guided to $70M-$72M in revenue, beating the $69.9M consensus. For FY23, the company narrowed the previously communicated range of $255M-$270M to $264M-266M. The midpoint of a new range came in ahead of the average analyst estimate of $261M.
“As we enter Q4 FY 23, we are seeing tailwinds from improved business optimism and increased interest in applying C3.ai solutions to address an increasing range of applications across a broad range of industries," Siebel said.
“We remain on track to become cash positive and non-GAAP profitable by the end of FY 24.”
Needham & Company analysts commented:
“We attribute some of the stock's share-price strength (up 16% pre-market) to short covering (with 25% short interest). Furthermore, the stock's year-to-date performance demonstrates Generative AI fervor and C3 getting caught up as a meme stock.”
Morgan Stanley analysts highlighted the upbeat tone from management, although the growth remains tepid.
“This optimism is yet to be reflected in numbers as 3Q rev fell YoY and 4Q guidance assumes growth will be flat to down. While accel could come in ~4 quarters this is likely factored in with shares at 8x CY24 sales,” they wrote in a note.