C3.ai, Inc.

Thank you for standing by and welcome to C3A1AI's fourth quarter fiscal year 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to Amit Berri. Please go ahead.

Good afternoon, and welcome to C3AI's earnings call for the fourth quarter of fiscal year 2025, which ended on April 30, 2025. My name is Amit Berri, and I lead investor relations for C3AI. With me on the call today are Tom Siebel, Chairman and Chief Executive Officer, and Hitesh Lath, Chief Financial Officer. After the market closed today, we issued a press release with details regarding our fourth quarter and full fiscal 2025 year result, as well as a supplemental to our results, both of which can be accessed through the investor relations section on our website at ir.c3.ai. This call is being webcast, and a replay will be available on our IR website following the conclusion of the call. During today's call, we will make statements related to our business that may be considered forward-looking under federal securities laws. These statements reflect our views only as of today and should not be considered representative of our views as of any subsequent date. We disclaim any obligation to update any forward-looking statements or outlook. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For a further discussion of the material risks and other important factors that could affect our actual results, please refer to our filings with the SEC. All figures will be discussed on a non-GAAP basis unless otherwise noted. Also during today's call, we will refer to certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures is included in our press release. Finally, at times in our prepared remarks and in response to your questions, we may discuss metrics that are incremental to our usual presentation to give greater insight into the dynamics of our business or our quarterly results. Please be advised that we may or may not continue to provide this additional detail in the future. And with that, let me turn the call over to Tom.

Thank you, Ahmed, and thank you, everyone. I'm very pleased to announce that we had a spectacular fiscal year 25 that we wrapped up in a spectacular fourth quarter. Our growth rates for the last three years, I think, have grown now from 6% two years ago to 16% last year. to 25% this year. So we have most certainly, Richard, with the new pricing model and the new product mix and the new partner ecosystem, returned to very rapid growth by any standards, attaining 26% top-line growth in the fourth quarter. If we look at the fact of the enterprise AI market. I think it is generally acknowledged today that this is an extraordinarily large and rapidly growing addressable market opportunity that is expected to accrue to billions, I'm sorry, trillions of dollars in annual economic benefit or annual economic value in terms of the addressable market. In fact, the largest market in the history of enterprise application software. We were the first to enter this market, as you recall, in 2009. And we've been talking about enterprise AI in 2014, 15, 16, 17, 18, 19, 20, 20. We talked about enterprise AI before anybody even thought of enterprise AI. Now let's look at where we are, the facts of the market in May of 2025. Okay. We have a generally acknowledged large and rapidly growing market. And we look at the AI stack and the companies that are playing at the bottom of the stack. We have the silicon providers, the Intel's, the AMD's, the Nvidia's. Above that, we have the infrastructure providers, the Microsoft, Azure's, AWS, GCP, et cetera. On top of that, we have the people providing the foundation models like OpenAI and Anthropic, Facebook, et cetera. On top of that, we have the providers of many thousands of utilities that are out there that do things like platform-independent relational database persistence or key value stores. or AutoML, or virtualization, or whatever it may be. And for the last 10 years, roughly going back to about 2014, people have been trying to assemble all of these components, the microservices provided by the hyperscalers, foundation models, various utilities provided by Cloudera and Hadoop and Snowflake and what have you, and using those in an attempt to build turnkey enterprise applications that offer value to enterprises. While, in fact, billions have been spent attempting to do this, frequently with large professional services providers. Few, if any, companies have succeeded at delivering these solutions. C3's approach has been unique and is highly differentiated from everyone in the market. We are an enterprise AI application pure play. So we spent billions of dollars building the C3 AI platform. And this platform enables us and has enabled us to build rapidly, design, develop, provision, and operate over 130 turnkey enterprise AI applications to solve real business problems, that deliver very real economic benefit. What are real business problems as it relates to AI? Real business problems are things like predictive maintenance, supply chain optimization, supply network risk, demand forecasting, fraud detection, drug discovery. These are real world business problems. And if you go on to our website at C3AI, you will see hundreds, countable hundreds of testimonials from Cargill, from Shell, from Exxon, from Koch, from the United States Air Force, from the U.S. intelligence community, okay, from others, attesting to the hundreds of millions, and in some cases, billions of dollars of economic benefit that they are realizing from the use of C3AI technology. enterprise applications today okay the result of this we've experienced as a result of the kind of realization of this enterprise ai kind of reality okay we've seen enormous growth in our market again in the last few years going from six percent to 16 to 25 percent um and uh our focus uh if we look at q3 and q4 of fiscal year 25 has been building an ecosystem to be able to address this huge sucking sound that we hear out there that is the demand for enterprise AI applications. And in order to address these applications, we need an army of partners. And so we have been focused in the last two quarters on establishing this army of strategic partners. and enabling this army of strategic partners to be effective at communicating the benefits of these applications and selling these applications. And so we form a strategic partnership with Azure. Okay, and as part of that strategic partnership, Azure acknowledged that the C3 Enterprise AI applications are their preferred AI solutions. Okay, and they provided these on the price list of their tens of thousands of Azure sales reps around the world, and they're paying the Azure sales reps commissions to sell the C3 AI enterprise applications. And we've spent, okay, and when, so now they get a commission for selling them, and we can sign the, after we do the demo, after we work with Azure to complete the initial production deployment, which most frequently is done in six months. Imagine six months we go to a polyethylene unit and install, configure, tune, do the user training and deliver a fully production enterprise predictive analytics application that's offering tens to hundreds of millions of dollars in economic benefit in six months. So very much of our effort the last six months has been forming these partnerships as we did with Azure, as we did with AWS, as we did with GCP, as we're doing with Booz Allen in the federal space and Arc Field in the federal space. Oh, lest I forget, let's not forget to talk about our good friends at Baker Hughes. So we formed our initial partnership with Baker Hughes to address the needs of the oil and gas market. I forget what month it was. In 2019, we did the initial relationship. We have expanded since then, until this quarter, we've expanded that agreement and extended that agreement, I believe, four times. And that was the current agreement was scheduled to expire, I believe, in June of 2025. And while our friends in the south side gave us no credit, okay, for the tailwind, okay, that accrued from that, come on, guys, that generated a half a billion dollars in revenue, okay, for C3AI. Was that in the best interest of C3AI shareholders, a half a billion dollars in revenue? from Shell, from ExxonMobil, from ENI, from Protonis, from Qatar Gas, from Qatar LNG, from Qatar Fertilizer, from Koch Industries, from Lionel Bissell, from, I mean, holy moly, how good can it get? And while we got very little credit from the cell site labs for the tailwinds, I've been reading as recently as this morning, okay, from... about the substantial headwinds that would accrue should that contract not be renewed. Well, surprise, surprise, as we expected, okay, that contract was renewed, okay, in the fourth quarter, and it was extended through 2028. What we were doing in the marketplace is expanding considerably, and so we continue to go to market. We continue to joint develop. We continue to deliver solutions to Baker Hughes, and we continue to deliver the solutions to the market. So as we edit our sell-side analyses, I'll be very pleased to read about the impending tailwinds, tail headwinds that now are the fact of tailwinds. So what else are we focused on in the last two quarters? We've been focused on enabling these partners to be effective. We have tens of thousands of salespeople at Azure. I believe tens of thousands of salespeople at AWS. Thousands of salespeople at GCP. They have lots of products to sell in their bag, and it's very confusing. So we need to make it simple. So in order to make it simple for them, we invested in building demo applications that run and take advantage of the full utility of the Azure stack or the AWS stack or the GCP stack. So these people in Frankfurt and Munich and Detroit and Madrid and Moline can go into their customer and give a demo of a complex application to a customer to show them what the economic benefit is. of supply chain optimization, of demand forecasting, of predictive maintenance. And we, so we accrued, so there was a very, very significant focus on arming our partner ecosystem. And I believe we have the largest and most powerful partner ecosystem in the enterprise application software world. Okay, I'm confident that we do. And I think we've done a done good work at arming our partners with demonstration licenses that constituted, I think, almost 30% of our revenue for the quarter. Think about that as an investment in future growth. Where else did we sell demonstration licenses? We sold demonstration licenses to our customers. Why would we do that? Because Dow Chemical or Shell or Coke or Cargill or the United States Air Force, whoever it may be. They have a hugely successful application in whatever it may be, in polyethylene or in protein distribution or in predictive maintenance for aircraft, in the case of the Air Force. And they want to... encourage others to use these applications. For example, the Air Force wants, you know, we have it, I think, on 22 platforms today, and they want to deploy the application across 44 platforms. At Dow, we've done a really excellent job of deploying the applications across their polyethylene units, but they want to deploy it across the rest of their chemical units. So they want demonstration applications so they can accelerate the change management and accelerate the adoption of these technologies within their organizations. So the investments we made in demonstration licenses that our partners and our customers are happy to pay for, think about that as an investment in future growth. So where does the growth accrue? Number one, if we look at the enterprise AI market writ large, It is just a huge sucking sound out there. We are really unique. We're the only enterprise AI application pure play that's out there. We're selling, I think, today in over 600 accounts as of today that we're jointly selling with Microsoft. By the time we had AWS, GCP, Booz Allen, Baker Hughes. It's hundreds more where we're selling at four and six-legged sales calls around the world. Okay, when we close the deal, we're able to sign the deal on Microsoft paper or AWS paper or GCP paper. Why is that important? Because they already have an enterprise application master agreement in place, and we just have to sign a two-page order for them. So it takes you know, two to five months out of a contract negotiation process and accelerates the sales cycle. So we are well positioned to grow. Where does the growth come from? Okay. Oil and gas business will grow. You'll see that we've had, you know, really very significant diversification in the last two years and especially the last year across manufacturing, life sciences, government, state and local government is huge, you guys. And this is enabled by this investment that we've made in enabling our customers and our partners to demonstrate their solutions within their organizations and to their partners. Let's take a look at generative AI. Generative AI, agentic AI, we've been, by the way, while everybody is kind of yapping about and we have people in the CRM business and the customer service business who have software stacks that they developed in the last century, yes, the last century, okay, that, you know, are now tacking, putting an AI sticker on their box and yapping about agentic AI. Meanwhile, C3AI has the patent. We own the patent on agentic AI. And it dates to December 20th. of 2022, December of 2022. That's a pretty early date, guys. So all of these, there is an opportunity there. So all of these people who are yapping about agentic AI, they're using intellectual property that is owned by C3AI. We have today, I think, over 100 agentic AI solutions deployed out there. in defense, in intelligence, in state government, in local government, in manufacturing, in oil and gas, in paper and pulp. And this is a large and rapidly growing business. So as of the fourth quarter, this annualizes to about a $60 million ARR business. We have, depending on how you count, someplace between 20 and 100 agentic AI solutions out there in production, in the hands of happy customers. And if we were to spin that business out, just that business out, and take it to an Andreessen Horowitz or a Bessemer or NVIDIA or whoever it is, that business alone would be valued at multiples of where C3 AI trades today. And we all know that's a true statement. So where is our growth going to come from? Our growth will come from additional applications. Our growth will come from our partner ecosystem. Our growth, we continue to make significant progress in the federal space, and there'll be more announcements coming in the next couple weeks about that. But we have an amazing footprint in the Air Force with The RSL PANDA application does predictive maintenance. We do intelligence analysis for the National Reconnaissance Organization. We're doing very sophisticated contested logistics for the Defense Logistics Agency. Our federal business is a large and rapidly growing business. And I am going to have to cut my Q&A short when we get to the calls. because I need to catch a red eye to Washington, D.C. to move some of this business along. So, net-net, business is good, guys. State and local government business is good. Agentic AI business is good. Agentic AI everywhere is really quite exciting. Our core businesses in Washington, in manufacturing, in supply chain, in demand chain are good. We grew again last quarter at 26% compound annual growth rate. We renewed the Baker Hughes agreement. Oh, let's talk about cash, okay? We've gone from 6% to 16% to 26%, okay? And I love to read these analysts' reports about how we're hemorrhaging cash. I mean, you know, I guess I need a class in, I need to go onto lynda.com and take a course in how to operate an Excel spreadsheet, okay? Because you guys look at your spreadsheets and see it's hemorrhaging cash. And yet, I look at my bank account, and two years ago, I had three-quarters of a billion dollars. One year ago, I had three-quarters of a billion dollars cash. Today, I have three-quarters of a billion dollars cash. In a year from now, I expect to have three-quarters of a billion dollars cash in the bank. So something's inconsistent with your Excel macros and the reality in the world that I live, where every time I look at the checking account, there's three-quarters of a billion dollars cash. Why is there cash? Because the test lab and these people are putting together... very robust financial controls, very, very robust expense management, and a clear path to profitability. Our revenue growth rate continues to exceed our expense growth rate. Fast math, without the Excel spreadsheet, it's It follows ipso facto that cash possibility and non-GAAP profitability is simply a matter of scale. And I expect in 2027 and beyond, we will cross that path into consistent cash positivity and annualized non-GAAP profitability um uh thereafter so it was a great quarter a great year customers are happy products are excellent market is huge and if there is anybody else in the enterprise ai applications business i'm unaware of who they are so with that i'm going to turn this call over for a little while uh to um C3 Agentic AI, and we fed in the C3 Agentic AI, our financial results, okay, and our KPIs, and we're asking C3 Agentic AI, we're not just talking about this as something that we're doing. This is not a myth. This is a production product, and I'm going to turn it over to C3 Agentic AI to talk about the high points of the quarter, then turn it over to my colleague, Hitesh Lath, our CFO, to talk about, to let him specific color on the quarter, and then we'll be most pleased to answer your questions. With that, I'll turn it over to C3 Adjantic AI to provide the highlights on the quarter and fiscal year 2025. Thank you.