Due to the tightening of expenses by businesses under economic uncertainty, AI software service providers$C3.ai (AI.US)$announced quarterly subscription revenue that fell short of expectations for the first quarter of the 2025 fiscal year, and as a result, the company's stock price plummeted in post-market trading on Wednesday.
As of the time of writing, C3.ai fell more than 16% in after-hours trading.
Facing high interest rates and unstable business conditions, businesses' cautious attitude towards investing in new software has impacted the demand for C3.ai products. The company's first quarter subscription revenue was $73.5 million, with analysts' average expectation at $79.1 million.
The sharp drop in C3.ai's stock price highlights the need for technology companies to maintain an unstable balance between innovation and market stability. Although the company's overall revenue slightly exceeded expectations, the significant decrease in subscription revenue reflects the widespread concerns about business expenditure during uncertain economic periods.
Looking ahead, despite high-profile customers such as the U.S. Department of Defense and Dolce & Gabbana, C3.ai's guidance remains below analysts' expectations. The company maintains its revenue outlook for the 2025 fiscal year between $0.37 billion and $0.395 billion, with the midpoint lower than analysts' expected $0.3839 billion. It is expected that second quarter revenue will be between $88.6 million and $93.6 million, with the midpoint aligning with the expected $91.1 million.
The company's situation highlights the broader trend of businesses readjusting their technology budgets under economic uncertainty. The company's solutions utilize generative AI technology to cater to the needs of different industries such as manufacturing, defense, aviation, aerospace, and pharmaceuticals. However, the expectations for this fiscal year and the next quarter indicate a cautious optimism. As businesses adapt to the turbulent economic environment, the resilience of the technology industry will be tested.
However, the company's total revenue reached $87.2 million, a year-on-year growth of 20.5%, exceeding analysts' expected $86.94 million, with an adjusted loss of $0.05 per share, compared to the market expectation of a $0.13 per share loss.
Benefiting from the enterprise customers' interest in artificial intelligence, c3.ai has been launching products with generative artificial intelligence. The company, headquartered in Redwood City, California, stated that it had completed 17 generative artificial intelligence pilot projects with large companies and government institutions in the quarter ended July 31.
c3.ai Chairman and CEO, Thomas M. Siebel, said: "We have had a strong start to our fiscal year, with continuous revenue acceleration for the sixth consecutive quarter, driven by the increasing demand for enterprise artificial intelligence. C3.ai is the earliest enterprise artificial intelligence company. We are committed to addressing the most challenging issues in enterprises, making us the highest customer satisfaction company in the industry."
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