The stock rose about 4 percent today, capping a strong week-long run that has pushed the price to its highest level since the spring. We think this is mostly the whole market moving, as tech and chip stocks rose today, rather than anything specific to the company.
Our view
The company is still losing a lot of cash as it tries to prove its new pricing model can actually lead to a profit. We'd want to see more pilots turn into big contracts before getting comfortable, so for now, there is nothing to do but wait for the next set of numbers.
The company granted about 827,000 restricted stock units to Tom MacMitchell, who recently joined as Senior Vice President and General Counsel. These are inducement grants, which are common ways for tech firms to attract and keep new executives by giving them a stake in the company's future stock price. While this creates some dilution, meaning there are more shares in total which can slightly lower the value of each existing share, it is a routine part of hiring for a firm at this stage. For a long-term owner, the focus remains on whether the leadership team can turn the company's many pilot programs into steady, profitable contracts.
Analysts recently issued a flurry of mixed rating updates and target adjustments. Only 6 of 28 experts recommend buying the stock, and the average price target of $8 sits 22% below the current price.
Average target$8-22%vs $10.22 today
TodayAvg price
Low $6High $12
Hold28 analysts
7Bearish
15Neutral
6Bullish
FirmRatingPrice TargetDate
UBS
Neutral
$9→$12
6/4/2026
Morgan Stanley
Underweight
$6→$7
6/4/2026
Canaccord Genuity
Hold
$8→$10
6/4/2026
Canaccord Genuity
Hold
$7→$8
5/13/2026
Gordon Haskett Capital Corporation
—
$7
2/26/2026
BMO Capital
—
$7
2/26/2026
D.A. Davidson
—
$7
2/26/2026
Wolfe Research
—
$6
2/26/2026
Oppenheimer
Perform
$10
1/30/2026
Morgan Stanley
Underweight
$22→$11
9/9/2025
UBS
Neutral
$23→$16
9/4/2025
UBS
Neutral
$17
8/12/2025
C3.ai earnings
Management has a habit of clearing the low bars set by analysts, beating expectations in seven of the last eight quarters even as total revenue has dropped sharply.
Earnings history
EstimateBeatMiss
C3.ai past earnings results
Expected
Actual
Surprise
EPS
$-0.38
$-0.33
+13.2%
Revenue
$52M
$52M
+0.0%
Key highlights
Revenue outlook remains cautious: Management expects revenue between $210 million and $240 million for the full fiscal year 2027, which would be a decrease from the $250.3 million the company earned this past year. This forecast suggests the business is still looking for a floor as it attempts to fix what the CEO called an entirely unacceptable sales performance.
Gross margins under pressure: GAAP gross margin, which is the percentage of revenue left after paying for the direct costs of providing the software and services, fell to 22% this quarter from 62% a year ago. This drop reflects higher costs to deliver products and a shift away from higher profit consulting work, which can make it harder for the company to reach overall profitability.
Subscription mix strengthens: Subscription revenue now makes up 94% of total sales, an increase from 80% at the end of last year. Moving more of the business to recurring subscriptions is generally good for long term stability, though total subscription dollars actually fell by about $39 million compared to the same quarter last year.
Leadership change and investment: Thomas Siebel has returned as CEO to lead a restructuring plan that cost $10.8 million in severance and related expenses this quarter. To show his commitment to the turnaround, Siebel personally invested in 6.17 million shares, helping bring the company's total cash and investments to $673 million.
Operational losses widening: The company expects a non-GAAP loss from operations, meaning the money lost running the day to day business, between $128 million and $160 million for the coming year. This follows a year where these operating losses already more than doubled to $217.8 million, showing that the turnaround plan will require significant spending before it pays off.
Our take: This was a difficult quarter that confirms the business is in a full scale transition. While the CEO is putting his own money into the stock, the sharp drop in gross margins to 22% and the weak sales outlook suggest the recovery will be slow. We are keeping a close eye on whether this new leadership can turn higher subscription percentages into actual growth.
C3.ai’s next earnings date
Q1 2027
SEP
9
Expectation
EPS
$-0.26
Revenue
$52M
Metrics we are tracking
Metric
Expectations
Status
Pilot Conversion Rate
Converting more than 30% of active pilots into production
191 pilots active as of Q4 FY2025
GAAP Gross Margin
Improving toward a threshold of 60% within 24 months
22% in Q4 FY2026
Consumption Revenue Mix
Subscription and consumption revenue reaching 90% of total sales
94% subscription revenue in Q4 FY2026
Federal Revenue Growth
Maintaining more than 20% growth in government contracts
